UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period
ended April 30, 2000
/ /Transition report under Section 13 OR 15(d) of the
Exchange Act for the transition period from to
Commission File Number:
Mirador Diversified Services, Inc.
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(Exact Name of Registrant as Specified in its
Charter)
Nevada 88-0431561
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(State of Incorporation)
(I.R.S. Employer Identification No.)
675 Lynnhaven Parkway 2nd Floor, Virginia Beach VA 23452
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------------(Address of Principal Executive Offices)
(757) 463-9646
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------------(Issuer's Telephone Number, Including Area
Code)
TCT Financial Group B, Inc.
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------------
(Former Name)
Mirador Diversified Services, Inc. (1) has filed all
reports required by Section 13 or 15(d) of the Securities
exchange Act of 1934 during the preceding 12 months has
been subject to such filing requirements for the past 90
days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of each classes of common
stock, as of the latest practicable date:
COMMON STOCK, $0.001 PAR VALUE PER SHARE: 25,000,000 (AS
OF MARCH 31, 2000).
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------------
Transition Small Business Disclosure Format (check one):
[ ] Yes [X] No
Item
PART I -FINANCIAL INFORMATION
Item 1. Financial Statements.
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet 2
Statement of Income and Retained Earnings 3
Statement of Changes in Stockholders' 4
Equity
Statement of in Cash Flows 5
Schedule of Computation of Adjusted Net 6
Worth
Notes to Financial Statements 7-
8
Report of the Internal Control Structure 9-
10
Report on Compliance with Specific
Requirements Applicable to 11
Major HUD Programs
Comments and Recommendations 12
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Mid-America Mortgage Corp.
Denver, Colorado
We have audited the accompanying balance sheet of Mid-
America Mortgage Corp. as of January 31, 2000 and 1999,
and the related statements of operations, stockholders'
equity, cash flows and analysis of net worth for the years
then ended. These financial statements are the
responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally
accepted auditing standards and Government Auditing
Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Mid-America Mortgage Corp. as of January 31,
2000 and 1999, and the results of its operations, cash
flows its analysis of net worth for the year then ended in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an
opinion on the financial statements taken as a whole. The
supporting data included in this report is presented for
the purposes of additional analysis and is not a required
part of the basic financial statements of Mid-America
Mortgage Corp. Such information has been subjected to the
auditing procedures applied in the audit of the financial
statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements
taken as a whole.
Michael Johnson & Co., LLC
Denver, Colorado
April 19, 2000
Mid-America Mortgage Corp.
Balance Sheet
As of July 31, 2000
Jul '00
ASSETS
Current Assets
Bank One 374.11
Keybank - Operating -39,916.92
Total Checking/Savings -39,542.81
Accounts Receivable
Accounts Receivable 15,000.00
Total Accounts Receivable 15,000.00
Other Current Assets
Cash On Hand 4,671.35
Employee Advances 200.00
Total Other Current Assets 4,871.35
Fixed Assets
Accumulated Depreciation
Computers -19,132.40
Furniture & Fixtures -22,424.83
Vehicles -15,448.58
Total Accumulated Depreciation -57,005.81
Equipment
Computers 30,701.87
Vehicles 24,530.23
Equipment - Other 149.00
Total Equipment 55,381.10
Furniture & Fixtures 25,606.03
Total Fixed Assets 23,981.32
Other Assets
Investment 400.00
Investment - Arrngton Homes 28,914.69
Mortgage Loan Receivable 34,250.26
Organizational Costs 400.00
Refundable Deposits 850.00
Total Other Assets 64,814.95
TOTAL ASSETS 69,124.84
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable 20,837.48
Total Accounts Payable 20,837.48
Other Current Liabilities
Bank Loan - LOC 15,110.40
Note Payable
TB Financial -111,027.74
Note Payable - Other-11,706.24
Total Note Payable -122,733.98
Payroll Liabilities
OCC Withholding -75.53
Payroll Liabilities - Other
9,761.51
Total Payroll Liabilities 9,685.98
Total Other Current Liabilities-97,937.60
Total Current Liabilities -77,100.12
Total Liabilities -77,100.12
Equity
Additional Paid in Capital 160,000.00
Common Stock 69,105.11
Opening Bal Equity -3,658.89
Retained Earnings -60,307.39
Net Income -18,913.87
Total Equity 146,224.96
TOTAL LIABILITIES & EQUITY 69,124.84
Mid-America Corp.
Profit & Loss
April, 2000
Apr, Feb -
'00 Apr '00
Ordinary
Income/Expense
Income
Fees 25,101.23 106,307.23
Total Income
25,101.23 106,307.23
Expense
Advertising - 485.81
Automobile
Expense 1,051.67 1,071.67
Bank Service
Charges 35.62 1,201.81
Commission 56.21 5,661.08
Cost of Sales
Appraisal Fees 2,675.00 11,010.00
Credit Reports 42.00 3,042.00
Freight/Express - 530.84
Origination
Labor Costs - 250.00
Cost of
Sales/Other 900.00 1,299.23
Total Cost of
Sales 3,617.00 16,132.07
Insurance
Liability
Insurance - 307.21
Insurance -
Other 2,382.97 6,752.33
Total Insurance 2,382.97 7,059.54
Interest Expense
Finance Charge 29.27 162.94
Total Interest
Expense 29.27 162.94
Licenses and
Permits 25.00 540.00
Office Supplies 200.00 4,305.29
Outside Services
5,038.67 29,369.09
Payroll Expenses
Officer Salary 2,296.80 8,253.00
Payroll
Expenses - 3,876.94 11,672.83
Other
Total Payroll
Expenses 6,173.74 19,925.83
Postage and
Delivery - 400.00
Printing and
Reproduction - 2,118.41
Professional Fees
Accounting - 3,540.00
Legal Fees
- 52.50
Total
Professional Fees - 3,592.50
Rent 1,678.25 3,555.50
Repairs 643.80 2,357.50
Telephone
1,639.72 6,969.91
Travel & Ent
Entertainment - 261.48
Meals
31.92 31.92
Travel & Ent -
Other - 1,000.00
Total Travel &
Ent 3,502.76 7,564.24
Uncategorized
Expenses - -
Utilities
Gas and
Electric 1,159.83 2,007.17
Total Utilities
1,159.83 2,007.17
Total Expense
27,234.51 114,480.36
Net Ordinary Income (2,133.28) (8,173.34)
Net
Income (2,133.28) (8,173.34)
MID-AMERICA MORTGAGE CORP.
Notes to Financial Statements
January 31, 2000
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Mid-America Mortgage Corp. was incorporated in
October 1990 under the laws of Colorado and began
operations in February 1991. The Company is an
approved loan correspondent under the Department of
Housing and Urban Development.
Capital Stock Transactions
The authorized capital stocks of the corporation are 75,000
shares of common stock with no par value.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments,
purchased with an original maturity of three months or
less, to be cash equivalents.
Property and Equipment
Property and equipment is stated at cost. The cost
of ordinary maintenance and repairs is charged to
operations while renewals and replacements are
capitalized. Depreciation is figured on a straight-
line basis as follows:
Vehicles 5 years
Computers & Furniture 7 years
Depreciation expense for 2000 was $14,398.
Note 2. NOTE PAYABLE - LINE OF CREDIT:
Note payable represents a $15,000 line of credit to
the Company from Key Bank at an annual interest rate
of 11.25 percent. The amount borrowed on the line at
January 31, 2000 was $14,383.
Note 3. NOTE PAYABLE:
Represents funds advanced to the Company by T.L. Byrd
non-interest bearing, due on demand.
Note 4. NET (LOSS) PER COMMON SHARE
The net (loss) per share has been computed by dividing net
income (loss) by the weighted average number of common
shares and equivalents outstanding.
Note 5. LEASE OBLIGATION:
The Company leases its' main office space for approximately
$900 a month. The current lease expires in June of 2000.
The Company also leases a branch office in Colorado
Springs for $475 a month. This lease expires in March of
2001.
-7-
MID-AMERICA MORTGAGE CORP.
Notes to Financial Statements (Continued)
January 31, 2000
Note 6. INCOME TAXES:
Significant components of the Company's deferred tax
liabilities and assets are as follows:
Deferred Tax Liability $ 0
Deferred Tax Assets
Net Operating Loss Carryforwards 57,117
Book/Tax Differences in
Bases of Assets 15,200
Less Valuation Allowance (72,317)
Total Deferred Tax Assets $ 0
Net Deferred Tax Liability $ 0
As of January 31, 2000, the Company had a net operating loss
carryforward for federal tax purposes approximately equal
to the accumulated deficit recognized for book purposes,
which will be available to reduce future taxable income.
The full realization of the tax benefit associated with
the carryforward depends predominantly upon the Company's
ability to generate taxable income during the carryforward
period. Because the current uncertainties of realizing
such tax assets in the future, a valuation allowance has
been recorded equal to the amount of the net deferred tax
asset, which caused the Company's effective tax rate to
differ from the statutory income tax rate. The net
operating loss carryforward, if not utilized, will begin
to expire in the year 2010.
Note 7. INVESTMENT ARRYNGTON HOMES CORPORATION:
During 1996, Mid-America invested $28,915 into Arryngton Homes
Corporation. Mid-America received 10,000 shares or 10
percent of the corporation, which is developing a townhome
and condominium project pre-appraised at $420,000.
-8-
Independent Auditor's Report on Internal Controls
To the Board of Directors of
Mid-America Mortgage Corp.
Denver, Colorado
We have audited the financial statements of Mid-America
Mortgage Corp., as of and for the years ended January 31,
2000 and 1999, and have issued our report thereon dated
April 19, 2000. We conducted our audit in accordance with
generally accepted auditing standards and Government
Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement and about whether Mid-America Mortgage Corp.
complied with laws and regulations, noncompliance with
which would be material to a HUD-assisted program.
In planning and performing our audits, we obtained an
understanding of the design of relevant internal controls
and determined whether they had been placed in operation,
and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our
opinion on the financial statements of Mid-America
Mortgage Corp. and on its compliance with specific
requirements applicable to its major HUD-assisted programs
and to report on internal controls in accordance with the
provisions of the Guide and not to provide any assurance
on internal controls.
The management is responsible for establishing and
maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management
are required to assess the expected benefits and related
costs of internal control structure policies and
procedures. The objectives of an internal control
structure are to provide management with reasonable, but
not absolute, assurance that assets are safeguarded
against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's
authorization and recorded properly to permit the
preparation of financial statements in accordance with
generally accepted accounting principles and that HUD-
assisted programs are managed in compliance with
applicable laws and regulations. Because of inherent
limitations in any internal control structure, errors or
irregularities may nevertheless occur and not be detected.
Also, projection of any evaluation of the structure to
future periods is subject to the risk that procedures may
become inadequate because of changes in conditions or that
the effectiveness of the design may deteriorate.
We performed tests on controls, as required by the Guide,
to evaluate the effectiveness of the design and operation
of internal controls that we considered relevant to
preventing or detecting material noncompliance with
specific requirements applicable to Mid-America Mortgage
Corp. HUD-assessed programs. Our procedures were less in
scope than would be necessary to render an opinion on
internal control structure policy and procedures.
Accordingly, we do not express such an opinion.
Our consideration of the internal control structure would
not necessarily disclose all matters in the internal
control structure that might be material weaknesses under
standards established by the American Institute of
Certified Public Accountants. A material weakness is a
reportable condition in which the design or operation of
the specific control structure elements does not reduce to
a relatively low level the risk that errors or
irregularities in amounts that would be material in
relation to the financial statements being audited, or
that noncompliance with laws and regulations that would be
material to a HUD-assisted program may occur and not be
detected within a timely period by employees in the normal
course of performing their assigned functions. We noted
no matters involving the internal control structure and
its operation that we consider to be material weaknesses
as defined above.
This report is intended for the information of the audit
committee, management, and the Department of HUD.
However, this report is a matter of public record and its
distribution is not limited.
Denver, Colorado
April 19, 2000
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS
APPLICABLE TO MAJOR HUD PROGRAMS
To the Board of Directors
of Mid-America Mortgage Corp.
Denver, CO
We have audited the financial statements of Mid-America
Mortgage Corp. as of and for the year ended January 31,
2000 and 1999, and have issued our report thereon dated
April 19, 2000. In addition, we have audited the Mid-
America Mortgage Corp.'s compliance with specific assisted
programs, for the years ended January 31, 2000 and 1999.
The management of the Mid-America Mortgage Corp. is
responsible for compliance with those requirements. Our
responsibility is to express an opinion on compliance with
those requirements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD
Programs (the "Guide") issued by the US Department of
Housing and Urban Development, Office of Inspector
General. Those standards and the Guide require that we
plan and perform the audit to obtain reasonable assurance
about whether material noncompliance with the requirements
referred to above occurred. An audit includes examining,
on a test basis, evidence about the Mid-America Mortgage
Corp.'s compliance with those requirements. We believe
that our audit provides a reasonable basis for our
opinion.
In our opinion, Mid-America Mortgage Corp. complied, in
all material respects, with the requirements described
above that are applicable to its major HUD-assisted
programs for the years ended January 31, 2000 and 1999.
This report is intended for the information of the audit
committee, management, and the Department of Housing and
Urban Development. However, this report is a matter of
public record and its distribution is not limited.
Denver, Colorado
April 19, 2000
COMMENTS AND RECOMMENDATIONS
Of the loan files examined, we found no major
deficiencies.
Improvements have been made in the appearance and contents
of the loan files.
TRANSMITTAL LETTER
FEDERAL ID# 84-1470933
ENGAGEMENT PARTNER
Michael B. Johnson
9175 E. Kenyon Avenue
Suite 100
Denver, Colorado 80237
(303) 796-0099
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, when read in
conjunction with the audited Financial Statements for the
years ended August 31, 1998 and 1999 contained in Form 10-
K of MIRADOR DIVERSIFIED SERVICES, INC. (the "Company")
filed with the Securities and Exchange Commission for the
fiscal year ended August 31, 1999, the accompanying
unaudited Condensed Consolidated Financial Statements
contains all of the information necessary to present
fairly the financial condition of
the Company at March 31, 2000, the results of its
operations for the six months ended March 31, 1999 and
March 31, 2000, the change in
stockholders' equity for the six months ended March 31,
2000, and the cash flows for the six months ended March
31, 1999 and March 31, 2000. Certain reclassifications
have been made to conform prior periods with the current
period presentation.
The preparation of financial statements, in
conformity with generally accepted accounting principles
("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. In the opinion of management, all material
adjustments, which are normal and recurring
in nature, necessary for the fair presentation of these
statements have been included herein. The results of
operations for the six months ended February 30, 1999 are
not necessarily indicative of the results to be expected
for the full
year.
The Company records gain on sale of loans as
required by Statement of Financial Accounting Standards
No. 125 ("SFAS 125") which, among other things, requires
management to estimate the fair value of certain mortgage
related securities and servicing assets utilizing future
prepayment and loss assumptions. Such assumptions will
differ from actual results and the differences could be
material. Management utilizes assumptions based on a
variety of factors including historical trends,
consultation with its financial
advisors and assumptions utilized by its peers. Historical
trends may not be an indication of future results, which
may be affected by changes in interest rates, credit
quality, availability of alternative financing options and
general economic conditions. The application of SFAS 125
is required for all entities with certain mortgage banking
activities including originators and sellers of mortgage
loans. Management believes that its assumptions are
similar to those
utilized by other sub prime mortgage loan originators.
ITEM 2. Recent Events.
In August, 200 the The Company closed all of its
existing branches; including those acquired in previous
purchases, with the exception of its Denver Operations
Branch formely known as Mid America.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
In the opinion of management, when read in
conjunction with the audited financial statements for the
years ended January 31, 1999 contained Form 10-k of
Mirador Diversified Services (the "Company") filed with
the Securities and exchange Commission for the fiscal year
ended January 31,2000.
ITEM 3. Management's Discussion and Analysis of Financial
Condition and Results of Operations
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS
The following Management's Discussion and Analysis
of Financial
Condition and Results of Operations section contains
certain forward-looking statements and information
relating to the Company that are based on the beliefs of
management as well as assumptions made by and information
currently available to management. Such forward-looking
statements include, without limitation, the Company's
expectations and estimates as to the Company's business
operations, including the introduction of new loan
programs and products and future financial performance,
including growth in revenues and net income and cash
flows. In addition, included herein the words
"anticipates," "believes," "estimates," "expects,"
"plans," "intends" and similar expressions, as they relate
to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the
current views of the Company's management with respect to
future events and are subject to certain risks,
uncertainties and assumptions. Also, the Company
specifically advises readers that the factors listed under
the caption "Liquidity and Capital Resources" could cause
actual results to differ materially from those expressed
in any forward-looking statement. Should one or more of
these risks or uncertainties materialize, or should
underlying assumptions prove incorrect,
actual results may vary materially from those described
herein as anticipated, believed, estimated or expected.
GENERAL
MIRADOR DIVERSIFIED SERVICES, INC., (the
"Company") is a specialized consumer finance company that
makes both prime borrowers generally do qualify for
traditional "A" credit mortgage loans, and sub-prime
residential mortgage loans for the purpose of debt
consolidation or creating liquidity from the borrower's
home equity secured by deeds of trust. The Company sells
these consumer loans to other financial institutions. The
Company's borrowers generally do not qualify for
traditional "A" credit mortgage loans. Typically, their
credit histories, income or other factors do not conform
to the lending criteria of government-chartered agencies
(including GNMA, FHMA, FHLMC) that traditional lenders
rely on in evaluating whether to make loans to potential
borrowers.
The Company's current loan products are first
mortgage loans and home equity loans ("Home Equity loans")
typically secured by first liens, and in some cases by
second liens, on the borrower's residence. In making Home
Equity loans, the Company relies primarily on the
appraised values of the borrower's residences. The Company
determines the loan amount based on the appraised values
and the creditworthiness of the borrowers.
The Company also makes high loan-to-value loans
("Equity + loans") based on the borrowers' credit. These
loans typically are secured by second liens on the
borrowers' primary residences. The Company pre-sell all of
its home improvement and Equity + loan.
The Company's loans are produced by its wholesale
and retail
origination platforms and a significant number come
from an internet site that is owned and maintained by a
third part who is a sales agent for The Company. The
retail platform represents the Company's largest source of
loan production. Through its wholesale platform, the
Company funds loans originated through a nationwide
network of licensed mortgage brokers. The wholesale
platform conducts operations from its Virginia Beach,
Virginia.
The Company's marketing strategies are typical of
those used in retail production including: telemarketing,
direct mail, television and radio advertising, third-party
loan programs and consumer trade shows. A Company
www.911equitymortgageloan.com is currently under
construction and may be used to provide consumer loan
applications and information to the public about the
Company's products and services. The retail production
platforms are located in Virginia Beach, Virginia and
Denver, Colorado.
OVERVIEW
THE COMPANY
The Company was organized to acquire and develop
companies with financial related products and services in
various markets throughout the United States. In late
1999, the Company established a new strategic objective of
refocusing the Company's mission to pursue new
complimentary Internet-related and e-commerce
opportunities in the mortgage banking markets. In The
first quarter of 2000, the Company actively implemented
its new mission by purchasing a company whose business
thrust is in line with the new strategy. See "The
Company's Business Case for New Electronic Commerce and
Internet Business Directions."
Upon closing the Mirador acquisition, the Company
established itself as a provider of Internet-based,
electronic commerce services in a rapidly growing market
for financial information services, serving an expanding
base of households offering financial services via both E-
commerce and conventional delivery methods.
MIRADOR'S principal service integrates a user-
friendly, Internet-based interface with a sophisticated
data-warehousing system to deliver automated solutions for
the financial services market typically involving hundreds
or, in some cases, thousands of properties and activities
worldwide. By automating the users search process, and
also providing user-friendly Internet access to a
sophisticated data warehousing system, MIRADOR can provide
dramatic cost savings to users, typically 25% or more
compared to costs for manual processes. The Internet-
based, electronic commerce and operational platforms
developed to support MIRADOR can be used to address
similar needs in other vertical markets.
THE MIRADOR DIVERSFIED SERVICES, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2000
__________________________________________________________
__________
The growth of loan clients attests to the Company's
increasing market visibility and acceptance within the
global mortgage banking community. The Company's Internet-
based, e-commerce services are now being used by more than
35,000 hits per month producing an average of 700 mortgage
loan applications per month. Additionally individual users
of our mortgage loan service by homebuilders and real
estate agencies are on the rise due to the expanded
product line and the inclusion of E-commerce delivery
methods. While there are no assurances such growth can be
sustained or the Company will have sufficient funding to
meet future needs, management believes the Company's
growth and performance to date is consistent with the
Company's objective of attaining a leadership position in
the market for Internet-based, mortgage loan applications
and expanding into other e-commerce services.
The integration of operations was consistent with the
Company's planned strategy of refocusing its business
objectives to pursue new e-commerce and Internet-based
business opportunities to create significant shareholder
value.
The Company will retain the accountancy firm of
Michael Johnson & Company, LLC, and 9175 East Kenyon Ave.,
Suite 100, Denver, Colorado 80237. Michael Johnson &
Company, LLC was the accounts for Mid America Mortgage the
Company's largest subsidiary. Management chose to change
the corporate fiscal year end to January 31 to coincide
with that of Mid America Mortgage.
The Company's principal executive offices are located
at 675 Lynnhaven Parkway 2nd Floor, Virginia Beach,
Virginia, 23452 and its telephone number is (757) 463-
3303.
THE COMPANY'S BUSINESS CASE FOR NEW ELECTRONIC COMMERCE
AND INTERNET BUSINESS DIRECTIONS
Since inception, the Company has primarily pursued
opportunities in the conventional financial services
market. Recognizing the explosive growth of the Internet,
and the long-term prospects for integrating Internet-based
services with conventional delivery methods, in late 1999
the Company established a new business objective to pursue
new opportunities on the Internet To User, ("I2U"),
electronic commerce markets in conjunction with its
consumer-based operations. In 1998, the consumer segment
of electronic commerce consumer retailing revenues totaled
$7.8 billion; with business-to-business e-commerce service
revenues estimated at $43 billion, according to a recent
study by Forrester Research, a leading information
industry-consulting firm. By the year 2003, I2U e-commerce
is expected to increase to $1.3 trillion, representing
about 9% of all projected US trade in the year 2003. The
recently closed acquisition of MIRADOR; the Company's
initial step in entering the market for e-commerce,
Internet-based electronic commerce services which
management believes is the optimum strategy to deliver
substantial value to the Company's shareholders.
Another key element in the Company's new growth
strategy is to focus on next generation, "pro-active" I2U
electronic commerce solutions which employ e-commerce
solutions to address labor-intensive processes, rather
than to solely displace paper-based solutions. Management
believes such pro-active
e-commerce solutions, which go well beyond today's basic
electronic cataloging, web portals and web-based ordering
services, will change users' business processes, create
significant operating efficiencies and dramatically reduce
users' costs. More importantly, management believes such
pro-active e-commerce services will play a key role in the
future market for I2U e-commerce services described above.
MIRADOR represents a pro-active e-commerce service, which
in management's view, is ideally positioned to meet the
needs of the financial services market. Mirador's
expanding corporate user base demonstrates strong, growing
market acceptance for the Company's e-commerce services.
The total base of users has increased to more than 700
clients per month as of May 2, 2000, further attesting to
the growing acceptance of the Company's service.
The Company is expanding its management team and
plans to secure new financing to support both expansion of
the MIRADOR revenue base, as well as development of new
enhancements and related Internet-based services targeting
the middle-income consumers. See "Recent Events -
Management Additions."
While the outlook for Internet-based, electronic
commerce services is impressive, there can be no
assurances that the Company will secure the additional
investment capital needed to succeed in this highly
competitive, rapidly changing and technology driven
market, nor are there any assurances that the Company's
initial acquisition of MIRADOR will be successful.
Investors should carefully review the risk factors
described in this document and other documents filed by
the Company with the Securities and Exchange Commission.
See "Management Discussion and Analysis of Financial
Condition and Results of Operations - Forward Looking
Statements."
PRODUCTS AND CUSTOMERS
MIRADOR is the Company's current flagship service
provider and is the first of a family of new Internet-
based e-commerce services developed to meet the needs of
the Company's customers and strategic partners. MIRADOR
offers an Internet-based system that automates the process
for providing consumers a financial check up. MIRADOR
integrates a user-friendly Internet interface,
sophisticated data-warehousing system and a powerful
relational database system to deliver automated solutions
for the referral process to assist its sales staff in
crosses selling its services. MIRADOR is a retail provider
of proven financial products via electronic commerce
solutions that automate user application processes,
dramatically reduces costs, eliminates paper-based
communications, improves operations and enhances
management control of labor and capital.
The Company offers or expects to soon offer e-
commerce solutions to its sales staff including:
- On-site credit approval
- Financial Needs Analysis
- Data Management and Mining Companies
- Real Estate-Agencies.
ISSUANCE OF SECURITIES
NONE
SEASONALITY
The Company's production of residential mortgages is
seasonal to the extent that borrowers use the proceeds for
home improvement contract work. The Company's production
of loans for this purpose tends to build during the spring
and early summer months, particularly where the proceeds
are used for pool installations. This change in seasons
also precipitates the need for new siding, window and
insulation contracts. Production declines dramatically
from the
holiday season (February and December) through the winter
months. While the Company does not have substantial
experience making loans to borrowers who intend to use the
proceeds to purchase a residence, management believes that
the market for such loans will follow the home sale cycle,
higher in the spring through early fall than during the
remainder of the year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK
The Company's various business activities generate
liquidity, market and credit risk:
- Liquidity risk is the possibility of
being unable to meet all present and future financial
obligations in a timely manner.
- Market risk is the possibility that
changes in future market rates or prices will make the
Company's positions less
Valuable.
- Credit risk is the possibility of loss from a
customer's failure to perform according to the terms of
the transaction.
Compensation for assuming these risks is reflected
in interest income and fee income. Although the Company is
exposed to credit loss in the event of non-performance by
the borrowers, this exposure is managed through credit
approvals, review and monitoring procedures and to the
extent possible, restricting the period during which
unpaid balances are allowed to accumulate.
There are certain shortcomings inherent to the
Company's sensitivity analysis. The model assumes interest
rate changes are instantaneous parallel shifts in the
yield curve. In reality, changes are rarely instantaneous.
Although certain assets and liabilities may have similar
maturities or periods to re-pricing, they may not react in
line with changes in market interest rates. Also, the
interest rates on certain types of assets and liabilities
may fluctuate with changes in market interest rates while
interest rates on other types of assets may lag behind
changes in market rates. Prepayments on the Company's
mortgage related instruments are directly affected by a
change in
interest rates. However, in the event of a change in
interest rates, actual loan prepayments may deviate
significantly from the Company's assumptions. Further,
certain assets, such as adjustable rate loans, have
features, such as annual and lifetime caps that restrict
changing the interest rates both on a short-term basis and
over the life of the asset. However the Company currently
pre-sells all of its loans.
MANAGEMENT ADDITIONS
In April of 2000, the Company appointed Elroy Eugene
Gravely, Chief Executive Officer of the Company. Mr. John
Jones, one of the co-founders of Mirador Diversified
Services, Inc., was appointed Acquisitions Officer of the
Company on April 13, 2000.
List all Officers and Directors
John Jones, CEO/President, Age: 50, Mr. Jones has more
than twenty-seven years success as manager, administrator
with several of the country's premiere fortune 500
companies as well as President and owner of several
acquisitions including Mirador Diversified Services, Inc.
As a licensed insurance agent of Jones Financial Services,
Mr. Jones became a Regional Account Manager. For more than
five years Mr. Jones coordinated implementation and
servicing of new and existing accounts, introduced new
products as well as product updates; he trained over 250
agents to utilize computer generated financial needs
analysis and all fields of sales and marketing of Life,
Health, Disability, HMO, Home and Auto Insurance Products.
Elroy "Gene" Gravely, Chairman, Age: 55, Co-Founder of
California Finance Express, with 27 years mortgage and
marketing experience. Former Western Vice President for
Empire of America retail division. Second Vice President
of Gill Mortgage Los Angeles Division. Responsible for
development and implementation of marketing and
origination strategies in specialized areas as FHA/VA
Fannie Mae.
Linda Raynell, Corporate Secretary and Vice President,
Age: 51, With over twenty years managing corporate
recruitment with a major fortune 500 company Ms. Raynell
has placed top corporate executives throughout the world.
Ms. Raynell's experience includes extensive interface with
foreign consulates involving visas, immigration and
relocation of management and their families. As manager
of over 500 employees Ms. Raynell implemented and obtained
the corporation's ISO 9002 Quality Program for the
employment services division. Her knowledge of corporate
building and mass recruiting service infrastructure brings
together MDSI's executive management team.
Charles James, Outside Director, Age: 60, over 30 years
of experience in sales, sales management and
administration of life and health insurance products.
Major strengths in problem solving, communication,
motivation, organization, operations, recruiting, and
training. Direct sales and marketing activities. Supervise
a sales force of over 500 employees. Develop marketing
plans, sales strategies, and campaigns to achieve premium
income and profit objectives. Manage an annual operating
budget of over $2 million. Recruit, select, and provide
management development manpower development, review
procedures, and product development. Successfully managed
company marketing and sales forces through conversion from
debit sales force to ordinary sales force Established a
company record for now sales. Improved productivity
reduced staff and sales expenses.
David Alexander, Vice President Age: 33, Summary of
Experience, as co-founder of Mirador Diversified Services,
Inc. and Principle Engineer, Mr. Alexander brings to the
organization 15 years of experience in the high tech
industry in the development and testing of communications
technology. He is currently involved with a leading
developer and supplier of Light Pulse fibre channel
technology, an ANSI standard communications interface that
delivers unprecedented bandwidth, connectivity and
reliability to both I/O and networking applications
offering full duplex fiber channel 1,065 Gb/s transfers
with full support for FC services Class 2, 3 and
intermixed, while extending connectivity distances up to
10 kilometers. His broad knowledge of networking
capabilities will bring Mirador to the high performance
levels to communicate and eliminate the bottlenecks that
degrade performance.
T.L. Byrd, Outside Director Age: 39, Summary of
Experience, eighteen years of in-depth, diverse experience
and proven ability in the management of services
activities in the financial industry. Fourteen years
experience at the management level. Effective in liaison
with secondary marketing, underwriters, legal counsel,
consultants, realtors, board members, investors and
government agencies. Multi-disciplined background in the
financial industry with direct experience in personnel
administration, training and organizational goal setting.
Education includes management and accounting training at
the American Institute of Banking, and Jones Real Estate
College Law Practice.
The Company obtained the operations of its Internet-
based information and electronic commerce services
servicing the Mortgage Services market in the first
quarter of 2000. E-commerce revenues for the first quarter
of 2000 are expected to increase to $50,000 from $0 in the
first quarter of 2001. The Company expects that revenues
from MIRADOR will continue to grow at an accelerated rate
on a long-term basis.
COST OF GOODS SOLD
Total cost of money for the first quarter of 2000
increased primarily due to the Company's growing use of
warehouse borrowing to fuel its loan volume.
GROSS PROFIT/MARGIN
The gross profit margin for the first quarter of 2000
will increase in the future as the company's strategic
partners initiate volume discount pricing to the Company
for warehouse borrowing.
The Company does not expect the variable portion of cost
of loans sold to increase for 2000 due to the fact that
costs are decreasing as we gain experience in the e-
commerce marketplace.
OPERATING EXPENSES
Selling, general and administrative expenses
increased in the first quarter of 2000 from $0 in the
fourth quarter of 1999 due to establishing a corporate
structure for the holding company. The increase in
selling, general and administrative expenses was due to
the hiring and development of an experienced management
and operations team. Wages and associated taxes increased
in the first quarter of 2000 from $0 in the fourth quarter
of 1999 those developing a corporate administrative staff.
An increase in expenses related to consultants required
while the Company was building its internal capabilities
rose in the first quarter of 2000 from $0 in the fourth
quarter of 1999. The Company expects to reduce its
expenditures for external consultants in the future. Legal
and professional fees increased in the first quarter of
2000 from $0 in the fourth quarter of 1999 the company's
unusual high number of corporate strategic acquisitions.
There are no comparisons for past performance due to the
recent formation of the existing business.
Operating expenses increased in the first quarter of
2000 from $0 in the fourth quarter of 1999. In addition to
the increase in selling, general and administrative
expenses discussed above, the increase in operating
expenses was due to amortization of goodwill in
association with the MIRADOR purchase. According to
generally accepted accounting principles, the amortization
expense of was recorded in the first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
** The Company has incurred significant operating
expenses as a result of the development and operation of
its service platform and supporting networks. The Company
does not expect such losses would continue to increase as
the Company focus on the development, construction and
expansion of its service platform and underlying networks
and expands its customer base. Cash provided by operations
would be sufficient to fund the regulated growth
internally but would require additional funding for the
planned expansion of the product offerings and resultant
client base. The Company is continually reviewing various
sources of additional financing to fund its growth. As of
May1, 2000, the Company had received advances from private
investors.
RELATED PARTY TRANSACTIONS
NONE
FORWARD-LOOKING STATEMENTS
Market Opportunity -- The market for Mirador is
virtually unbounded. While stock brokers and
banks/insurance companies go after the top tier of the
market and home finance companies go after the bottom of
the market, no one has successfully defined a strategy for
the bulk of the market -- homeowners making between $50-
$100,000 per year.
The market opportunity as seen through Mirador's
strategy is to capture the financial needs of mid-market
homeowners. These homeowners are most often married with
children with both parents working. These homeowners need
all of the elements of financial assistance starting with
a financial plan. From the financial plan the next steps
are most often disability and/or life insurance followed
by a savings and investing plan.
Mirador is in the development stage of an alliance
with a national financial Services Company to cross sell
mortgages, insurance and investments (mutual funds).
Statements that are not historical facts, including
statements about the Company's confidence in its prospects
and strategies and its expectations about expansion into
new markets, growth in existing markets, and the Company's
ability to attract new sources of financing, are forward-
looking statements that involve risks and uncertainties.
These risks and uncertainties include, but are not limited
to:
THE COMPANY REQUIRES SIGNIFICANT ADDITIONAL CAPITAL,
WHICH IT MAY NOT BE ABLE TO OBTAIN. As the Company
continues to implement its business plan, present sources
of financing will not be adequate to support the Company's
increased cash needs. Furthermore, the Company's entry
into new Internet and electronic commerce business areas
will create additional demands for investment capital. The
Company may not be able to obtain future equity or debt
financing on satisfactory terms or at all. If the Company
fails to obtain necessary short-term financing, it will
not be able to continue operations. Long-term liquidity
will depend on the Company's ability to obtain long-term
financing and attain profitable operations. The Company's
auditors issued an opinion with its most recent audit of
the Company's financial statements raising doubt about the
Company's ability to continue as a going concern if it
does not obtain additional debt or equity financing.
- - - THE COMPANY'S FAILURE TO PROTECT OR MAINTAIN ITS
INTELLECTUAL PROPERTY RIGHTS COULD PLACE IT AT A
COMPETITIVE DISADVANTAGE AND RESULT IN LOSS OF REVENUE AND
HIGHER EXPENSES. The Company's performance and ability to
compete are dependent to a significant degree on its
proprietary electronic commerce services. The steps the
Company has taken to protect its proprietary intellectual
property rights may not prevent or deter someone else from
using or claiming rights to its intellectual property.
Third party infringement or misappropriation of trade
secrets, copyrights, trademarks or other proprietary
information could seriously harm the Company's business.
The Company also cannot assure that it will be able to
prevent the unauthorized disclosure or use of its
proprietary knowledge, practices and procedures if its
senior managers or other key personnel leave it. In
addition, although the Company believes that its
proprietary rights do not infringe on the intellectual
property rights of others, other parties may claim that it
has violated their intellectual property rights. These
claims even if not true, could result in significant legal
and other costs and may distract management.
- - THE COMPANY'S BUSINESS PROSPECTS DEPEND ON DEMAND
FOR AND MARKET ACCEPTANCE OF THE INTERNET. The Company is
currently dependent on the Internet as an access and
transmission medium to provide its services. Although the
Company believes that the acceptability and usability of
the Internet will increase over time, any increase in the
rates charged by Internet service providers resulting in a
decreased usage of the Internet or decreased use of the
Internet for electronic commerce transactions, would have
a materially adverse effect on the Company's operating
margins. Failure to promote Internet access as the
preferred means of accessing the Company's service could
also have a materially adverse effect on the Company,
including the possibility that the Company may need to
significantly curtail or cease its Internet based e-
commerce operations or to develop its own capabilities at
a cost in excess of the Company's ability to fund such
undertakings.
- - IF THE COMPANY'S MARKET DOES NOT GROW AS
EXPECTED, ITS REVENUES WILL BE BELOW ITS EXPECTATIONS AND
ITS BUSINESS AND FINANCIAL RESULTS WILL SUFFER.
The Company is engaging in a developing business with
an unproven market. Accordingly, it cannot accurately
estimate the size of its market or the potential demand
for its services. If its customer base does not expand or
if there is not widespread acceptance of its products and
services, its business and prospects will be harmed. The
Company believes that its potential to grow and increase
its market acceptance depends principally on the following
factors, some of which are beyond its control:
(a) The effectiveness of its marketing strategy and
efforts;
(b) Its product and service quality;
(c) Its ability to provide timely, effective customer
support;
(d) Its distribution and pricing strategies as
compared to its competitors;
(e) Its industry reputation; and
(f) General economic conditions.
- - - ANY FAILURE OF THE COMPANY'S INTERNET AND E-COMMERCE
INFRASTRUCTURE COULD LEAD TO SIGNIFICANT COSTS AND
DISRUPTIONS WHICH COULD REDUCE REVENUES AND HARM BUSINESS
AND FINANCIAL RESULTS. The Company's success,
PART II --OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings at this time and
Management is not aware of any pending legal actions.
However the possibility exist due to the reversal of some
of the company's previous business acquisitions by some of
its owners become dis-satisfied with the stock value in
the coming months.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
No changes in securities
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No defaults upon senior securities occurred during
the first quarter of 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
At the regular meeting of the security holders held
in Las Vegas NV on April 13, 2000 the Security Holders
approved the merger of TCT Financial Group B, Inc and
Mirador Diversified Services Inc.
The Name of the Company was changed to reflect the
merger.
ITEM 5. OTHER INFORMATION.
On April 26, 2000 Mirador Diversified Services, Inc.
(the Company) filed Articles of Merger with the Nevada
Secretary of State changing the name of the Company from
TCT Financial Group B, Inc. to Mirador Diversified
Services, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits being filed with this Quarterly Report:
27 Financial Data Schedule
(b) The Company filed a Report on Form 8-K dated on
May 15, 2000, relating to the Company's acquisition of
MIRADOR DIVERSIFIED SERVICES, INC.
- - --------------------------------------------------------
- ------------
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 thereunto duly
authorized.
Mirador Diversified Services,
Inc.
Date: August 27, 2000 /s/John Edward Jones
----------------------------
- ------
By John Edward Jones,
Chief Executive Officer
INDEX
ARTICLE I -- SALE AND TRANSFER OF STOCK
1.1 TCT Stock...............
1.2 Purchase Price.....................
1.3 Spin-off of Operating
Divisions....................
1.4 TCT Distribution..................
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF Mirador
Diversified Services
2.1 Valid Corporate Existences; Qualification........
2.2 Capitalization.................
2.3 Subsidiaries......................
2.4 Consents.................................
2.5 Title to Mirador Diversified Services Stock,
etc..........
2.6 Financial Statements, etc.......
2.7 Liabilities..................................
2.8 Actions Since Mirador Diversified Services
Balance Sheet Date..
2.9 Adverse Developments.............
2.10 Taxes.................................
2.11 Ownership of Assets; Trademarks, etc......
2.12 Litigation; Compliance with Law.............
2.13 Real Property...............................
2.14 Agreements and Obligations; Performance.....
2.15 Permits and Licenses..........
2.16 Salary Information................
2.17 Employee Benefit Plans..............
2.18 No Breach...........................
2.19 Brokers.................................
2.20 Untrue or Omitted Facts................
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF TCT
3.1 Valid Corporate Existence; Qualification. ...
3.2 Capitalization...............
3.3 Subsidiaries..........................
3.4 Consents..............................
3.5 Corporate
Authority............................
3.6 Financial Statements, etc....................
3.7 Liabilities... ..................
3.8 Actions Since TCT Balance Sheet Date...
3.9 Adverse Developments..............
3.10 Taxes........................
3.11 Ownership of Assets.....................
3.12 Litigation; Compliance with Law ......
3.13 Insurance.............................
3.14 Permits and Licenses.................
3.15 Real Property............................
3.16 Agreements and Obligations; Performance.......
3.17 Banking Arrangements.................
3.18 Salary Information.....................
3.19 Employment Benefit Plans................
3.20 No Breach....................
3.21 Brokers.......................
3.22 Untrue or Omitted Facts............
ARTICLE IV -- PRE-CLOSING COVENANTS
4.1 TCT and Mirador Diversified Services Covenants...
ARTICLE V -- CONDITIONS PRECEDENT TO THE OBLIGATION OF
TCT TO CLOSE
5.1 Representations and Warranties.............
5.2 Covenants..............................
5.3 Employee Contracts.......................
5.4 No Actions.................................
5.5 Consents; Licenses and Permits............
5.6 Certificate...............................
5.7 Additional Documents...................
5.8 Approval of Counsel........................
ARTICLE VI -- CONDITIONS PRECEDENT TO THE OBLIGATION OF
Mirador Diversified Services AND THE STOCKHOLDERS TO CLOSE
6.1 Representations and Warranties.............
6.2 Covenants................................
6.3 No Actions...............................
6.4 Consents; Licenses and Permits.............
6.5 Certificate........................
6.6 Additional Documents......................
6.7 Approval of Counsel... ..................
ARTICLE VII -- CLOSING
7.1 Location................................
7.2 Items to be delivered by Mirador Diversified
Services and its Stockholders
7.3 Items to be delivered by TCT...............
7.4 Other Items to be delivered by TCT........
ARTICLE VIII -- SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
8.1 Survival. ................................
8.2 Indemnification...........................
8.3 Defense of Claims . . ..........
8.4 Rights Without Prejudice...................
ARTICLE IX -- TERMINATION AND WAIVER
9.1 Termination................................
9.2 Waiver.....................................
ARTICLE X -- MISCELLANEOUS PROVISIONS
10.1 Expenses.................................
10.2 Confidential Information..................
10.3 Modification, Termination or Waiver.........
10.4 Publicity..............................
10.5 Notices.................................
10.6 Binding Effect and Assignment............
10.7 Entire Agreement.......................
10.8 Exhibits................................
10.9 Governing Law............................
10.10 Counterparts..........................
10.11 Section Headings...................
Schedule of Exhibits
SCHEDULE OF EXHIBITS
Exhibit
2.1 Mirador Corporate Documents
2.6 1999 Mirador financial Statements
2.13 Mirador Lease
2.14 List of Mirador Agreements
2.16 Salaries/employment
3.7 TCT Liabilities
3.11 TCT intellectual property
3.12 Pending Litigation
3.16 TCT Agreements
3.17 TCT Bank Accounts
Schedule
1 TCT Capitalization
2 Capitalization of Mirador Acquisitions
3 TCT beneficial owners