SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
Commission File Number: 0-20806
FIRSTMARK CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
Maine 01-0389195
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
P.O. Box 1398
Richmond, Virginia 23218
(Address of Principal Executive Offices)
(804) 648-9048
(Issuer's Telephone Number, Including Area Code)
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 _____
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
5,342,043 shares of common stock, par value $0.20 per share,
outstanding as of May 17, 2001
FIRSTMARK CORP.
TABLE OF CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2001 (Unaudited) and December 31, 2000.......................3
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 2001 and 2000.............................5
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2001 and 2000.............................6
Notes to Consolidated Financial Statements (Unaudited)........................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation...............................................8
Part II. Other Information
Item 1. Legal Proceedings............................................................10
Item 2. Changes in Securities and Use of Proceeds....................................10
Item 3. Defaults Upon Senior Securities..............................................10
Item 4. Submission of Matters to a Vote of Security Holders..........................10
Item 5. Other Information............................................................10
Item 6. Exhibits and Reports on Form 8-K.............................................10
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
FIRSTMARK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
================================================================================
ASSETS
March 31, 2001 December 31, 2000
-------------- -----------------
(Unaudited)
Cash and cash equivalents $4,276,264 $4,680,993
Receivables - other, net -- 7,173
Investments:
Marketable securities 25,719 35,134
Real estate and other investments 270,724 316,751
---------- ----------
Total investments 296,443 351,885
---------- ----------
Other assets:
Property, plant and equipment - net 6,587 7,106
Deferred tax asset - net of valuation allowance 19,290 19,290
Other assets 14,629 25,188
---------- ----------
Total other assets 40,506 51,584
---------- ----------
TOTAL ASSETS $4,613,213 $5,091,635
========== ==========
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FIRSTMARK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 2001 December 31, 2000
-------------- -----------------
(Unaudited)
LIABILITIES:
Accounts payable and other liabilities $ 71,407 $ 69,717
Deferred tax liability 19,290 19,290
------------ ------------
Total liabilities 90,697 89,007
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $0.20 par value -
authorized 250,000 shares; issued:
2001 - 35,500 shares, 2000 - 52,500 shares
(liquidation preference: 2001 - $1,420,000
2000 - $2,100,000) 7,100 10,500
Common stock, $0.20 par value - authorized
30,000,000 shares; issued 5,501,430 shares 1,100,286 1,100,286
Additional paid-in capital - preferred 1,524,689 1,998,289
Additional paid-in capital - common 11,298,177 11,298,177
Retained earnings (deficit) (8,797,132) (8,798,918)
Treasury stock, at cost - 159,387 shares (589,513) (589,513)
Net accumulated comprehensive income -
net of taxes (21,091) (16,193)
------------ ------------
Total stockholders' equity 4,522,516 5,002,628
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,613,213 $ 5,091,635
============ ============
The accompanying notes are an integral part of these financial statements.
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FIRSTMARK CORP. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
================================================================================
Three Months Ended
March 31,
---------
2001 2000
---- ----
REVENUES:
Interest and dividends $ 63,031 $ 81,939
Investment gains, net 24,520 23,951
----------- -----------
Total revenues 87,551 105,890
----------- -----------
EXPENSES:
General and administrative expenses 54,566 89,925
----------- -----------
Income before income taxes 32,985 15,965
INCOME TAX (BENEFIT) EXPENSE -- --
----------- -----------
NET INCOME 32,985 15,965
----------- -----------
PREFERRED STOCK DIVIDEND 31,200 32,100
----------- -----------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES 1,785 (16,135)
----------- -----------
Other comprehensive income (loss) - net of tax
Unrealized holding gains arising during period 2,563 41,612
Less: Reclassification adjustment for gains included in net income (7,461) --
----------- -----------
Other comprehensive income (loss) (4,898) 41,612
----------- -----------
COMPREHENSIVE INCOME (LOSS) APPLICABLE TO COMMON SHARES $ (3,113) $ 25,477
=========== ===========
Basic and diluted earnings (loss) per common share:
Net income (loss) per common share $ 0.00 $ 0.00
=========== ===========
Comprehensive income (loss) applicable to common shares $ 0.00 $ 0.00
=========== ===========
Weighted - average number of shares outstanding 5,342,043 5,322,043
=========== ===========
The accompanying notes are an integral part of these financial statements.
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FIRSTMARK CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
================================================================================
Three Months Ended
March 31,
---------
2001 2000
---- ----
OPERATING ACTIVITIES
Net income $ 32,985 $ 15,965
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and amortization 519 519
Gain on sale of marketable securities (24,520) --
Gain on sale of venture capital investments -- (25,000)
Net loss on sale of real estate investments -- 2,072
Other non-cash changes 2,523 (11,424)
Changes in assets and liabilities:
Decrease in:
Accounts receivable 7,173 11,619
Prepaid expenses and other current assets 10,559 9,489
Increase (decrease) in:
Accounts payable and other liabilities 1,690 (44,232)
----------- -----------
Net cash provided (used) by operating activities 30,929 (40,992)
----------- -----------
Cash flows from Investing Activities
Increase in real estate investments (2,750) (4,308)
Proceeds from sale of marketable securities 26,515 --
Proceeds from sale of venture capital investments -- 75,000
Proceeds from sale of real estate investments 48,777 38,228
----------- -----------
Net cash provided by investing activities 72,542 108,920
----------- -----------
Cash flows from Financing Activities
Preferred stock dividends (31,200) (32,100)
Purchase of preferred stock (477,000) --
----------- -----------
Net cash used by financing activities (508,200) (32,100)
----------- -----------
Net change in cash and cash equivalents (404,729) 35,828
Cash and cash equivalents, beginning of period 4,680,993 4,541,344
----------- -----------
Cash and cash equivalents, end of period $ 4,276,264 $ 4,577,172
=========== ===========
The accompanying notes are an integral part of these financial statements.
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FIRSTMARK CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
================================================================================
BASIS OF PRESENTATION
1. The accompanying unaudited consolidated financial statements, which are
for interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained
in the Annual Report on Form 10-KSB for the year ended December 31,
2000 of Firstmark Corp. (the "Company"), as filed with the Securities
and Exchange Commission (the "Commission"). The December 31, 2000
balance sheet was derived from the audited consolidated financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial
statements. The results of operations for the three months ended March
31, 2001 are not necessarily indicative of the results to be expected
for the full year.
3. Earnings (Loss) Per Common Share
Basic EPS is computed by dividing net income, less required dividends
on redeemable preferred stock, by the weighted average number of common
shares outstanding during the year. Diluted EPS is computed using the
weighted average number of common shares outstanding during the year,
including the dilutive effect of all potential common shares.
4. Reclassifications
Certain reclassifications have been made in the accompanying statements
to permit comparison.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Firstmark Corp. (the "Company") was incorporated in Maine on October
28, 1982. Until March 5, 1999, the Company was principally engaged in the
business of issuing title insurance through a subsidiary, Southern Title
Insurance Corporation ("STIC"). Until January 24, 1997, the Company also
actively traded public stocks and bonds and provided financial consulting
services to a select number of individuals and institutions.
On March 5, 1999, the Company sold Investors Southern Corporation
("ISC") and its subsidiaries, including STIC, to Old Guard Group, Inc. ("Old
Guard") for $6.75 million in cash and a three year earn-out in cash based on the
pre-tax net income of ISC and its subsidiaries, including STIC, for each of the
fiscal years ending December 31, 1999, 2000 and 2001. A complete discussion of
the Company's business is contained in Item 1, Description of Business, of the
Company's Annual Report on Form 10-KSB (the "Form 10-KSB"), filed with the
Securities and Exchange Commission on April 5, 2001.
Results of Operations
Three Months ended March 31, 2001
compared to the Three Months ended March 31, 2000
-------------------------------------------------
Interest and dividends revenue amounted to approximately $63,000 in the
current quarter compared to $82,000 in the comparable quarter of the prior year.
This decrease results from a lower amount invested at a lower rate in the
current year quarter as compared to the prior year quarter. Net investment gains
relating to the sale of marketable securities amounted to approximately $25,000
in the quarter ended March 31, 2001. Net investment gains relating to sales of
venture capital and real estate investments amounted to approximately $24,000 in
the prior year quarter.
General and administrative expenses decreased by approximately $35,000
during the current quarter compared to the prior year quarter. This decrease is
primarily the result of lower accounting, legal and other fees.
Liquidity and Capital Resources
At March 31, 2001, the Company's cash and cash equivalents amounted to
approximately $4.3 million, which is expected to exceed its obligations as they
become due. During the first quarter of 2001, the Company redeemed 17,000 shares
of its Series A preferred stock.
Recent Accounting Pronouncements
Statement of Financial Accounting Standards ("FAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," is effective for
all fiscal years beginning after June 15, 2000. FAS No. 133, as amended,
establishes accounting and reporting standards for
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derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Under FAS No. 133, certain
contracts that were not formerly considered derivatives may now meet the
definition of derivative. The Company adopted FAS No. 133 effective January 1,
2001. The adoption of FAS No. 133 did not have a significant impact on the
financial position, results of operation or cash flows of the Company.
Reference is made to the disclosures included under the heading "Recent
Accounting Pronouncements" in Item 6, Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the Form 10-KSB.
Forward-Looking Statements
Certain statements in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Although the Company believes that its expectations with respect to
certain forward-looking statements are based upon reasonable assumptions within
the bounds of its business and operations, there can be no assurance that actual
results, performance or achievements of the Company will not differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the disclosures in Item 3, Legal
Proceedings, of the Form 10-KSB for a description of the
Company's pending legal proceedings. There have been no
additional material developments with respect to these
proceedings.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
On February 13, 2001, the Company filed a Form 8-K
with the Commission to report the resignation of
George H. Morison and Steven P. Settlage from its
Board of Directors and the appointment of Arch Aplin,
III and Robert J. Ellis to its Board of Directors.
The change was in connection with the purchase by Mr.
Aplin of Company common stock owned by Messrs.
Morison and Settlage and Donald V. Cruickshanks, the
Company's President and Chief Executive Officer.
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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.
FIRSTMARK CORP.
Date: May 18, 2001 /s/ Donald V. Cruickshanks
--------------------------------------
Donald V. Cruickshanks
President and Chief Executive Officer
Date: May 18, 2001 /s/ Ronald C. Britt
--------------------------------------
Ronald C. Britt
Chief Financial Officer