SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K / A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 31, 2000.
MIRADOR DIVERSIFIED SERVICES, INC.
(Formerly TCT Financial Group B, Inc.)
Nevada 0-28197 88-0431561
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
675 Lynnhaven Parkway 2nd Floor, Virginia Beach VA 23452
(Address of Principal Executive offices)
Registrant's telephone number, including area code: (757) 463-
9646, fax (757) 463-9690
Item 1. Changes of Control of Registrant
No change of control
On October 15, 2000 at a special shareholders' meeting, a quorum
being present all votes present (either by proxy or in person):
the following measures were carried:
1) To issue John Edward Jones, President and CEO 370,000 shares
of common stock in lieu of cash payment for services for the ten-
month period from January 1, 2000 to October 1, 2000.
2) To issue Linda Raynell, Vice President and Secretary 170,000
shares of common stock in lieu of cash payment for services for
the ten-month period from January 1, 2000 to October 1, 2000.
3) To issue Rick Smith, website provider, 18 Radiance Lane,
Rancho Santa Margarita, California 92688, 10,000 shares in lieu
of cash payment for services provided.
4) To issue Tim Gunsalus 5,000 shares, 2605 Meadows Landing,
Chesapeake, Virginia 23321, in lieu of cash payment for services
provided..
Item 2. Acquisition or Disposition of Assets
None
Planned Acquisitions have been cancelled to allow for more
beneficial acquisitions in the future.
Item 3. Bankruptcy or receivership
Not Applicable.
Item 4. Changes in Registrant's Certifying Public Accountant
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 is the accountancy
firm for Mid-America Mortgage.
Item 5. Other Events
In August, 2000 The Company decided to target Internet
transactions and keep the number of offices at a minimum that
consists of the Denver Operations Branch, doing business as Mid-
America Mortgage and Mirador Diversified Services, Inc. in
Virginia Beach, which serves as a sales office and the corporate
headquarters.
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 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 5,000 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 is the
accountancy firm used by Mid-America Mortgage. 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) 463-9646.
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."
Number of shares outstanding of each classes of common stock, as
of the latest practicable date:
COMMON STOCK, $0.001 PAR VALUE PER SHARE: 23,205,414 (AS OF
October 31, 2000).
The name of The Company was changed to MIRADOR DIVERSIFIED
SERVICES, INC. and the mailing address of The Company was changed
to: 675 Lynnhaven Parkway 2nd Floor, Virginia Beach VA 23452.
MANAGEMENT
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 such 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 stiff 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.
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). Clients can access our
web site at www.911EquityMortgageLoans.com or
www.Mortgage411/clients/280308.
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.
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.
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.
Item 6. Resignations of registrant's directors
None
Item 7. Financial Statements and Exhibits
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 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.
MID-AMERICA MORTGAGE CORP.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JANUARY 31, 2000
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 FOR THE
YEAR ENDED
January 31, 2000
2000 1999
ASSETS:
Current Assets:
Cash 147,399 97,259
Accounts Receivable 15,200 6,210
Total Current Assets
162,599 103,469
Fixed Assets - Note 1:
Vehicle 24,530 24,530
Computers & Furniture 56,457 56,308
Total Fixed Assets 80,987 80,838
Less Accumulated Depreciation
(57,006) (42,608)
Net Fixed Assets 23,981 38,230
Other Assets:
Investment 29,315 29,315
Refundable Deposits 850 850
Mortgage Loans Receivable 34,250 34,250
Organization Cost 400 400
Total Other Assets 64,815 64,815
TOTAL ASSETS
$251,395 $206,514
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current Liabilities:
Accounts Payable 20,838 23,053
Taxes Payable 16,499 4,587
Note Payable - LOC - Note 2 14,383 14,388
Note Payable - Note 3 33,968 12,748
Total Current Liabilities 85,688 54,776
Stockholders' Equity:
Common Stock - Authorized 75,000
shares
no par value - issued and
outstanding 52,000 shares 222,824 180,057
Retained (Deficit)
(57,117) (28,319)
Total Stockholders' Equity 165,707 151,738
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $251,395 $206,514
MID-AMERICA MORTGAGE CORP.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED
January 31, 2000
2000 1999
REVENUE:
Loan Origination Fees 599,480 720,912
Interest Income - 2,054
Total Revenue 599,480 722,966
OPERATING EXPENSES:
Loan Origination Costs 501,630 551,251
General and Administrative 126,648 233,962
Total Expenses 628,278 785,213
Operating Income (Loss)
(28,798) (62,247)
Net Profit (Deficit) - 33,928
Beginning (28,319)
Net (Deficit) - Ending (57,117) $(28,319)
Net Profit (Loss) Per $(1.10) $(0.54)
Common Stock
Weighted Average Shares 52,000 52,000
Outstanding
MID-AMERICA MORTGAGE CORP.
STATEMENT OF CASHFLOW
FOR THE YEAR ENDED
January 31, 2000
2000 1999
Cash flows from operating
activities:
Net Income (Loss) $(28,798) $(62,24&)
Adjustments to reconcile net
income
to net cash provided by
operating activities:
Depreciation 14,398 10,107
Decrease (increase) in accounts
receivable (8,990) 10,966
Decrease (increase) in investments - (400)
(Decrease) in accounts payable (2,215) (10,853)
(Decrease) increase in taxes 11,912
payable (1,085)
(Decrease) increase in notes 21,215
payable
Decrease in mortgage loan - 64,299
receivable
Cash flows provided by operations 7,522 10,787
Cash flows from investing activities:
Purchase of fixed assets (149) (7,000)
Net cash used by investing (149) (7,000)
Financing activities:
Capital investment 42,767 42,599
Net cash provided by financing
activities 42,767 42,599
Increase in cash and cash 50,140 43,006
equivalents
Cash and cash equivalents at
beginning of year 97,259 54,253
Cash and cash equivalents at end
of year $147,399 $97,259
Cash paid during year for interest $6,062 $10,427
No income taxes were due or paid $- $-
MID-AMERICA MORTGAGE CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JANUARY 31, 2000
Total
Retained Stockholders'
Capital Earnings Balance
Balance - January
31, 1998 $137,458 $33,928 $171,386
Capital investment 42,599 - 42,599
Net Deficit
January 31, 1999 - (62,247) (62,247)
Balance - January
31, 1999 180,057 (28,319) 151,738
Capital investment 42,767 - 42,767
Net Defict January
31, 2000 - (28,798) (28,798)
Balance - January
31, 2000 $222,824 $(57,117)$165,707
MID-AMERICA MORTGAGE CORP.
COMPUTATION OF ADJUSTED NET WORTH
TO DETERMINE COMPLIANCE WITH
FHA NETWORTH REQUIREMENTS
FOR THE YEAR ENDED
2000 1999
Stockholders' Equity per Balance
Sheet $165,707 $151,738
Less Unacceptable Assets:
Organizational Costs 400 400
Total Unacceptable Assets 400 400
Adjusted Net Worth for FHA
Requirement Purposes $165,307 $151,338
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.
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
carryfoward 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
uncertainty 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.
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
Item 8. Change in fiscal year
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934. For the year ended January 31,
2000. The Company changed its fiscal year end to January 31.
Item 9. Sales of Equity Securities Pursuant to Regulation S
None
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has caused this report to be signed in
its behalf by the undersigned, hereunto duly authorized.
Dated: November 7, 2000 MIRADOR DIVERSIFIED SERVICES,INC.
S/S___John Edward Jones
John Edward Jones, President