SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended JUNE 30, 1999 Commission File 2-77085 SOUTHWARD VENTURES DEPOSITARY TRUST - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) FLORIDA 59-6737200 - ------------------------------- ---------------------------------- (State or other Jurisdiction of IRS Employer Identification Number Incorporation or Organization) C/O GINO J. DIMARCO, TRUSTEE 2499 GLADES ROAD, SUITE 203 BOCA RATON, FLORIDA 33431 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (561) 347-8663 NOT APPLICABLE - -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed since Last Report) Indicate by checkmark 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 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 ________ Indicate the number of shares outstanding at each of the Issuer's classes of common stock, as of the close of the period covered by this report: CLASS OUTSTANDING JUNE 30, 1999 - ----- ------------------------- Units of Beneficial Interest, Trust Certificate, No Par Value No Par Value 27,894 SOUTHWARD VENTURES DEPOSITARY TRUST INDEX PART I: PAGE NO.: --------- Financial Statements (Rider A) 5 PART II: Other Information Items 1 through 9 3 PART III: Signature Page 4 2 PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. None. Item 2. CHANGES IN SECURITIES. None. Item 3. CHANGES IN SECURITY FOR REGISTERED SECURITIES. None. Item 4. DEFAULTS UPON SENIOR SECURITIES. None. Item 5. INCREASE IN AMOUNT OF OUTSTANDING SECURITIES OR INDEBTEDNESS. None. Item 6. DECREASE IN AMOUNT OF OUTSTANDING SECURITIES OR INDEBTEDNESS. On July 25, 1998 the exchange program for outstanding units was terminated. However, since that date an extensive search has been conducted to locate missing unitholders in order to provide them with the opportunity to participate in the exchange program and to identify those accounts which are to be escheated. As of June 30, 1999 there were 27,894 new units outstanding that were held by 206 unitholders. As of the same date, there were 96,395 old units outstanding that were held by 156 unitholders. Item 7. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. Item 8. OTHER MATERIALLY IMPORTANT EVENTS. None. Item 9. EXHIBITS AND REPORTS ON FORM 8-K. 27 Financial Data Schedule 3 PART III SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. SOUTHWARD VENTURES DEPOSITARY TRUST Dated: August 13, 1999 BY: /s/ GINO J. DIMARCO, TRUSTEE ----------------------------------------- GINO J. DiMARCO, Trustee 4 SOUTHWARD VENTURES DEPOSITARY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS AND TRUST CERTIFICATE HOLDERS' EQUITY (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1999 1998 1999 1998 --------- --------- --------- --------- Revenues: Real estate sales $ -- $ 260,000 $ 10,000 $ 350,586 Rental income 21,428 20,928 42,356 41,856 --------- --------- --------- --------- 21,428 280,928 52,356 392,442 --------- --------- --------- --------- Costs & expenses: Cost of sales -- 4,872 -- 6,570 Selling expenses -- 36,400 187 47,134 General & administrative 11,498 13,914 21,131 25,604 Trustee fees 11,400 11,400 22,800 22,800 Legal & professional fees 42,241 41,740 104,870 65,992 Secretarial & bookkeeping fees 6,000 5,000 12,000 12,000 Other operating expenses 4,194 16,900 4,388 20,982 Depreciation 4,618 2,941 9,236 5,882 --------- --------- --------- --------- 79,951 133,167 174,612 206,964 --------- --------- --------- --------- Income (loss) before interest expense (58,523) 147,761 (122,256) 185,478 Interest expense 1,171 -- 1,391 -- --------- --------- --------- --------- Net income (loss) (59,694) 147,761 (123,647) 185,478 Trust certificate holders' equity, beginning of period 663,819 679,078 727,772 641,361 --------- --------- --------- --------- Trust certificate holders' equity, end of period $ 604,125 $ 826,839 $ 604,125 $ 826,839 ========= ========= ========= ========= Net income (loss) per trust certificate $ (2.08) $ 5.14 $ (4.30) $ 6.45 ========= ========= ========= ========= Certificates used in computing net income (loss) per trust certificate 28,735 28,735 28,735 28,735 ========= ========= ========= ========= SEE ACCOMPANYING NOTES. 5 SOUTHWARD VENTURES DEPOSITARY TRUST CONSOLIDATED BALANCE SHEETS AT JUNE 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998 (AUDITED) 1999 1998 ASSETS Cash $ 8,657 $ 17,443 Land and improvements held for development or sale 634,388 634,575 Property & equipment, net 155,780 165,016 Other assets 71,701 55,040 -------- -------- $870,526 $872,074 ======== ======== LIABILITIES AND TRUST CERTIFICATE HOLDERS' EQUITY Accounts payable and accrued liabilities $219,401 $119,302 Notes payable to related parties 47,000 20,000 Deposits on sales contracts -- 5,000 -------- -------- Total liabilities 266,401 144,302 Commitments Trust certificate holders' equity 604,125 727,772 -------- -------- $870,526 $872,074 ======== ======== SEE ACCOMPANYING NOTES. 6 SOUTHWARD VENTURES DEPOSITARY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) 1999 1998 Cash flows from operating activities: Net income $(123,647) $ 185,478 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 9,236 5,882 Net reductions of land and improvements held for development or sale 187 6,570 Increase in other assets (16,661) (21,962) Increase (decrease) in account payable and accrued liabilities 100,099 (29,201) Increase (decrease) in deposits on sales contracts (5,000) (35,150) --------- --------- Net cash provided by (used in) operating activities (35,786) 111,617 --------- --------- Cash flows from investing activities: Purchase of property and equipment -- (55,873) --------- --------- Net cash used in investing activities -- (55,873) --------- --------- Cash flows from financing activities: Proceeds from issuance of notes payable to related parties 47,000 -- Principal payments on notes payable to related parties (20,000) (15,000) Proceeds from notes payable to T. D. Fender -- 51,517 Principal payments on notes payable to T. D. Fender -- (51,517) --------- --------- Net cash provided by (used in) financing activities (27,000) (15,000) --------- --------- Net (decrease) increase in cash and cash equivalents (8,786) 40,744 Cash at beginning of period 17,443 42,147 --------- --------- Cash at end of period $ 8,657 82,891 ========= ========= SEE ACCOMPANYING NOTES. 7 SOUTHWARD VENTURES DEPOSITARY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 1. BASIS OF PRESENTATION The accompanying financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q promulgated by the Securities and Exchange Commission. These financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. The statements should be read in conjunction with the financial statements and footnotes thereto included in the Company" Annual Report on Form 10-K for the year ended December 31, 1998. 2. COMMITMENTS AND CONTINGENCIES PENDING LITIGATION In 1993, the Trust filed a complaint against an individual asserting claims for conversion and civil theft in relation to computer hardware and software which was ordered, paid for, but never delivered to the specified entity . The Trust did not prevail in a jury trial of the civil theft case. The Trust undertook an appeal of the adverse decision that was entered on April 15, 1997. On February 24, 1999 the Trust's appeal was denied. Since the Trust was not successful in that claim, the defendant's attorney fees and costs could be assessed against the Trust. In the opinion of the Trustee, it is not possible at this time to assess the amount of such fees and costs. However, as the matter has been vigorously litigated since 1993, these fees and costs could be substantial and have a material effect on the financial statements. A Motion to Tax Costs was heard on September 26, 1997. Although the judgement has not been entered as of this date, it is expected that the Defendant will be awarded against the Trust approximately $2,634 for costs plus interest from the date the judgement is signed. The amount of attorneys' fees to be awarded, if any, will require judicial determination at a future date. BAHAMIAN REAL PROPERTY TAXES The Trust has been advised by the Ministry of Finance of the Commonwealth of the Bahamas that property taxes pertaining to lots located on Great Harbour Cay were not included in a prior settlement that was understood to encompass all of the Trusts' properties on Great Harbour Cay. The Trust does not currently possess sufficient information to reasonably estimate the amount of liability to be recorded. However, the Trust believes that based upon future developments and determinations, it is possible the amount could have a material effect on the financial statements. 8 3. LEASE WITH GREAT HARBOUR MANAGEMENT LTD. As of August 13, 1999 the lease with Great Harbour Management, Ltd is in default due to non payment of rent for the months of March, April, May, June, July and August, 1999. The amount of rent due is currently subject to dispute as a result of certain offsets claimed by the Tenant 9 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 27 Financial Data Schedule