Note 4-Recent Developments
On September 6, 2013, the Company executed a new lease with respect to its sole asset, the Building, with 1st Manatee Bank, a Florida state bank with headquarters in Manatee County. 1st Manatee Bank intends to use the building as a branch and has applied for branch approval with the FDIC and the OFR. The initial three-year term of this lease will commence on the date such approval is obtained.
1st Manatee Bank, as the mortgagee with respect to the Building, has extended the September 10, 2013, maturity date of its mortgage loan to December 10, 2013, and has informed the Company that it will enter into a multi-year mortgage note arrangement with respect to the Building effective on the date its branch application is approved.
On November 8, 2013, the original maturity date of the private line of credit was extended to May 8, 2014. The outstanding principal balance of the line of credit on such date was $24,560.
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As of September 30, 2013, the Building was subject to an approximately $1.5 million first lien mortgage in favor of 1st Manatee (the "Building Note"), which matured on September 10, 2013. Accordingly, during the third quarter of 2013, our sole source of income consisted of rent under the Initial Lease and our net income consisted of an approximately $5,200 per month net margin between such revenue and the debt service with respect to the Building Note. As of September 30, 2013, we also owed $40,000 to certain current and former directors for unsecured, payable on demand, advances made by them to the Company in 2010 (the "Advances"). The maturity date of the Building Note was extended to December 10, 2013. In addition, 1st Manatee has informed us that it will enter into a multi-year extension of the Building Note simultaneously with the commencement date of the initial term of the New Lease. The monthly rental income under the New Lease is expected to continue to exceed the monthly debt service under the Building Note as extended.
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Management is also considering using the Company's status as a fully reporting public company to engage in a transaction in which a carefully selected privately held operating company would merge into the Company, i.e. a reverse merger. As a result of such a merger, whether or not the Building had in the meantime been sold, voting control of the Company would be held by the shareholders of the operating company. We intend to take all other commercially reasonable steps necessary to give the Company the best opportunity to act as a viable merger candidate.
While we believe that the intended multi-year renewal of the Building Note and the effectiveness of the New Lease have a very high likelihood of occurring in the next several weeks, as of the filing date of this Report, there is no complete assurance that on December 6, 2013, we will begin to receive rent under the New Lease and that and the Building will remain subject to a mortgage with a maturity date sufficiently in the future. There is also no assurance that we will be able to find the private operating company whose business has sufficient upside potential and where the terms and conditions of a merger with such company are in the best interests of our shareholders.
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All posts are strictly my opinion and are not buy or sell recommendations.
