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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------ ------
Commission File No. 0-31235
CONX CAPITAL CORPORATION
----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 62-1736894
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
502 N. DIVISION STREET, CARSON CITY, NV 89703
--------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(702) 886-0713
-------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
As of September 30, 2004, the Registrant had 6,605,200 shares of
Common Stock, $.01 par value per share, outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
This quarterly report on Form 10-Q contains forward-looking
statements as defined by the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements should be read in
conjunction with the cautionary statements and other important
factors included in this Form 10-Q as well as in other filings
made by the Company with the Securities and Exchange Commission
("SEC") . These forward-looking statements are subject to a
number of risks and uncertainties, which could cause the
Company's actual results to differ materially from those
anticipated in such statements and include statements concerning
plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which
are other than statements of historical facts. Factors which
could cause such results to differ include the Company's limited
operating history, the Company's dependence on the operations of
an affiliated party, reliance upon third party financing, the
need for additional financing and other factors discussed in the
Company's filings with the SEC, including the Risk Factors set
forth in the Company's Form 10 dated January 16, 2001. Such
forward-looking statements may be identified, without limitation,
by the use of the words "anticipates," "believes," "estimates,"
"expects," "intends," "plans," "predicts," "projects," and
similar such expressions.
The Company's expectations, beliefs and projections are
expressed in good faith and are believed by the Company to have a
reasonable basis, including without limitation, management's
examination of the historical operating trends, data contained in
the Company's records and other data available from third
parties. There can be no assurance, however, that the Company's
expectations, beliefs or projections will be achieved or
accomplished.
-1-
CONX Capital Corporation
Accountants' Report and Financial Statements
September 30, 2004 and December 31, 2003
-2-
CONX Capital Corporation
September 30, 2004 and December 31, 2003
Contents
Report of Independent Registered Public Accounting Firm ..... 4
Financial Statements
Balance Sheets ............................................ 5
Statements of Income ...................................... 6
Statements of Stockholders' Equity ........................ 7
Statements of Cash Flows .................................. 8
Notes to Financial Statements ............................. 9
Report of Independent Registered Public Accounting Firm
Audit Committee, Board of Directors
and Stockholders
CONX Capital Corporation
Little Rock, Arkansas
We have reviewed the accompanying balance sheet of CONX Capital
Corporation as of September 30, 2004 and the related statements
of income for the three-month and nine-month periods ended
September 30, 2004 and 2003, and stockholders' equity and cash
flows for the nine-month periods ended September 30, 2004 and
2003. The interim financial statements are the responsibility of
the Company's management.
We conducted our reviews in accordance with standards of the
Public Company Accounting Oversight Board (United States). A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with standards of the Public Company
Accounting Oversight Board, the objective of which is the
expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with accounting
principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United States),
the balance sheet as of December 31, 2003, and the related
statements of income, stockholders' equity and cash flows for the
year then ended (not presented herein), and in our report dated
April 26, 2004, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of December 31, 2003, is
fairly stated, in all material respects, in relation to the
balance sheet from which it has been derived.
/s/ BKD, LLP
Little Rock, Arkansas
November 18, 2004
-4-
CONX Capital Corporation
Balance Sheets
September 30, 2004 and December 31, 2003
Assets
September
30, December
2004 31,
(Unaudited) 2003
----------------------
Cash $ 23,204 $ 90,465
Accounts receivable - other 93,404 93,404
Accounts receivable - affiliated companies 431,894 236,735
Notes receivable - affiliated companies 3,841,985 3,233,815
Equipment, at cost, net of accumulated
depreciation 3,565,280 5,193,799
--------- ---------
$ 7,955,767 $ 8,848,218
========= =========
Liabilities and Stockholders' Equity
Liabilities
Accounts payable/accrued expenses -
affiliated companies $ 139,226 $ 37,719
Income taxes payable 212,867 296,563
Long-term debt 2,505,193 3,690,649
Deferred income taxes 1,246,906 1,253,750
--------- ---------
Total liabilities 4,104,192 5,278,681
--------- ---------
Stockholders' Equity
Common stock, $.01 par value, 7,000,000
shares authorized and issued 70,000 70,000
Retained earnings 3,859,365 3,517,537
Treasury stock, at cost
Common -2004 - 394,800 shares, 2003 -
350,000 shares (77,790) (18,000)
---------- ----------
3,851,575 3,569,537
---------- ----------
$ 7,955,767 $ 8,848,218
========== ==========
See Notes to Financial Statements
-5-
CONX Capital Corporation
Statements of Income
Three Months and Nine Months
Ended September 30, 2004 and 2003
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
----------------- ----------------
Lease Income $ 354,900 $ 722,851 $ 1,402,200 $ 2,402,925
Gain on Sale of
Equipment 309,949 114,400 532,908 128,475
--------- --------- -------- --------
664,849 837,251 1,935,108 2,531,400
--------- --------- --------- ---------
Operating Expenses
Management fees 30,000 15,000 80,000 45,000
Depreciation 354,768 544,076 1,229,927 1,657,687
Professional fees 7,200 7,200 21,600 21,600
Directors fees 5,000 5,000 15,000 15,000
Rent 1,500 1,500 4,500 4,500
Taxes and licenses -- 564 11,988 10,889
Interest 51,656 70,767 147,660 248,447
Other 3,772 25 3,894 45
--------- --------- --------- ---------
453,896 644,132 1,514,569 2,003,168
--------- --------- --------- ---------
Operating Income 210,953 193,119 420,539 528,232
Other Income
Interest 35,977 28,394 97,382 86,844
--------- --------- --------- ---------
Income Before Income
Taxes 246,930 221,513 517,921 615,076
Provision for Income
Taxes 69,862 187,373 176,093 252,301
-------- -------- -------- --------
Net Income $ 177,068 $ 34,140 $ 341,828 $ 362,775
======== ======== ======== ========
Earnings Per Share
Net income $ 177,068 $ 34,140 $ 341,828 $ 362,775
Weighted average
shares of common
stock 6,605,200 6,650,000 6,634,958 6,650,000
--------- --------- --------- ---------
Basic earnings
per share $ .0268 $ .0051 $ .0515 $ .0546
========= ======== ========= ========
See Notes to Financial Statements
-6-
CONX Capital Corporation
Statements of Stockholders' Equity
Nine Months Ended September 30, 2004 and 2003
Common Retained Treasury
Stock Earnings Stock Total
---------------------------------------------
Balance, January 1, 2003 $ 70,000 $ 3,032,346 $ (18,000) $ 3,084,346
Net income (unaudited) -- 362,775 -- 362,775
------- --------- -------- ---------
Balance, September 30,
2003 (Unaudited) 70,000 3,395,121 (18,000) 3,447,121
Net income (unaudited) -- 122,416 -- 122,416
------- --------- --------- ---------
Balance, December 31, 2003 70,000 3,517,537 (18,000) 3,569,537
Stock purchase 44,800
shares (unaudited) -- -- (59,970) (59,790)
Net income (unaudited) -- 341,828 -- 341,828
-------- -------- -------- --------
Balance, September 30,
2004 (Unaudited) $ 70,000 $ 3,859,365 $ (77,790) $ 3,851,575
======= ========= ======== =========
See Notes to Financial Statements
-7-
CONX Capital Corporation
Statements of Cash Flows
Nine Months Ended September 30, 2004 and 2003
September September
30, 30,
2004 2003
(Unaudited) (Unaudited)
------------------------
Operating Activities
Net income $ 341,828 $ 362,775
Items not requiring cash
Depreciation 1,229,927 1,657,687
Gain on sale of equipment (532,908) (128,475)
Deferred income taxes (6,844) (185,358)
Changes in
Accounts receivable (195,159) (48,287)
Accounts payable and
accrued expenses 41,717 (2,657)
Income tax payable (83,696) 362,248
--------- ---------
Net cash provided by
operating activities 794,865 2,017,933
--------- ---------
Investing Activities
Proceeds from sale of equipment 931,500 283,550
Increase in notes receivable (608,170) (616,988)
--------- ---------
Net cash provided by (used in)
investing activities 323,330 (333,438)
--------- ---------
Financing Activities
Payments on long-term debt (1,185,456) (1,657,193)
--------- ---------
Net cash used in financing
activities (1,185,456) (1,657,193)
--------- ---------
Increase (Decrease) in Cash (67,261) 27,302
Cash, Beginning of Period 90,465 56,487
--------- ---------
Cash, End of Period $ 23,204 $ 83,789
========= ==========
Supplemental Cash Flow Information
Interest paid $ 147,661 $ 248,447
Income taxes paid $ 278,363 $ 61,316
See Notes to Financial Statements
-8-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
Note 1: Nature of Operations and Summary of Significant
Accounting Policies
Nature of Operations
CONX Capital Corporation, a Delaware Corporation, is a
specialty commercial finance company engaged in the business
of originating and securing loans and equipment leases to
smaller businesses, with a primary initial focus on regional
trucking companies. The Company was organized in April 1998
with its headquarters located in Carson City, Nevada. The
Company originates loans and leases through marketing offices
located in Carson City, Nevada and Little Rock, Arkansas.
For the nine months ended September 30, 2004 and the year
ended December 31, 2003, all lease income was derived from one
affiliated company. The results of operations for the nine
months ended September 30, 2004, are not necessarily
indicative of the results to be expected for the full year.
Accounting Policies
All adjustments made to the unaudited financial statements
were of a normal recurring nature. In the opinion of
management, all adjustments necessary for a fair presentation
of the results of interim periods have been made. The
results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with
the financial statements and notes thereto included in the
Company's Form 10 filed with the Securities and Exchange
Commission.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure 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.
Accounts Receivable
Accounts receivable are stated at the amount billed to
customers. The Company provides an allowance for doubtful
accounts, which is based upon a review of outstanding
receivables, historical collection information and existing
economic conditions. Delinquent receivables are written off
based on individual credit evaluation and specific
circumstances of the customer.
Equipment
Equipment is depreciated over the estimated useful life of
each asset. Annual depreciation is computed using
accelerated methods.
-9-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
Income Taxes
Deferred tax liabilities and assets are recognized for the
tax effects of differences between the financial statement
and tax bases of assets and liabilities. A valuation
allowance is established to reduce deferred tax assets if it
is more likely than not that a deferred tax asset will not be
realized.
Revenue Recognition
The Company recognizes operating lease income on the straight-
line basis over the life of the operating leases. These
operating leases contain provisions for service charges on
late payments equal to 2% of the lease payment or, if less,
the highest rate allowed by Nevada law. The leases also
contain excess mileage charges in the amount of five cents
per mile for miles in excess of 150,000 miles determined on
an annual basis. Initial direct costs are expensed over the
life of the corresponding lease in proportion to the
recognition of lease income.
At September 30, 2004, the approximate future minimum lease
income under these operating leases are as follows:
(Unaudited)
---------
2004 $ 296,000
2005 1,185,600
2006 1,026,000
----------
$ 2,507,600
=========
Earnings Per Share
Earnings per share have been computed based upon the weighted-
average common shares outstanding during each period. There
are no dilutive or potentially dilutive shares.
Operating Leases
The Company leases equipment under noncancelable operating
leases. These leases expire in various years through 2006
and convert to a month to month basis if the Company does not
receive notice of termination. These leases require the
lessee to pay all executory costs (property taxes,
maintenance and insurance). Rental income under these
operating leases was $1,402,200 and $2,402,925 for the nine
months ended September 30, 2004 and 2003, respectively.
-10-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
Equipment under operating leases consists of the following at
September 30, 2004 and December 31, 2003:
2004
(Unaudited) 2003
-------------------------
Tractors $ 5,188,014 $ 8,461,527
Trailers 2,412,661 2,412,661
--------- ---------
7,600,675 10,874,188
Less accumulated depreciation 4,035,395 5,680,389
--------- ---------
$ 3,565,280 $ 5,193,799
========== ==========
Note 2: Long-term Debt
2004
(Unaudited) 2003
-------------------------
Note payable - Navistar
Financial Corporation (A) $ 2,238,210 $ 3,261,922
Note payable - GE Capital
Corporation (B) 266,983 428,727
--------- ---------
$ 2,505,193 $ 3,690,649
========= =========
Aggregate annual maturities of long-term debt
at September 30, 2004:
2004 $ 305,565
2005 1,249,742
2006 949,886
---------
$ 2,505,193
=========
(A) Due in monthly installments through 2006 ranging from
$36,050 to $58,062 with total monthly payments of approximately
$100,000; including interest from 6.0% to 7.4%; secured by
tractors and trailers. Notes are guaranteed by Continental
Express SD, Inc. (see Note 4)
(B) Due December 1, 2005; payable $19,850 monthly, including
variable rates 3.19% at September 30, 2004; secured by tractors.
Note is guaranteed by Continental Express SD, Inc. (see Note 4)
-11-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
NOTE 3: Income Taxes
The provision for income taxes includes these components:
Nine Months Ended
September September
30, 2004 30, 2003
(Unaudited) (Unaudited)
-------------------------
Taxes currently payable $ 182,937 $ 376,343
Deferred income taxes (6,844) (124,042)
--------- ----------
$ 176,093 $ 252,301
========= ==========
A reconciliation of income tax expense at the statutory rate
to the Company's actual income tax expense is shown below:
Nine Months Ended
September September
30, 2004 30, 2003
(Unaudited) (Unaudited)
-------------------------
Computed at the statutory
rate (34%) $ 176,093 $ 209,126
Increase (decrease) resulting
from other -- 43,175
-------- ---------
Actual tax provision $ 176,093 $ 252,301
======== =========
The tax effects of temporary differences related to deferred
taxes shown on the balance sheets were:
2004
(Unaudited) 2003
--------------------------
Net deferred tax liability
Accumulated depreciation $ (1,246,906) $ (1,253,750)
-12-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
Note 4: Related Party Transactions
The Company leases all of its equipment to Continental
Express SD, Inc., an affiliated company, which has common
ownership with the company. The lessor is required to pay
all executory costs (maintenance and insurance). The Company
uses the management and office supplies of Harvey
Manufacturing Corporation, an affiliated company, which is
owned by the Company's principal stockholder. The Company
paid Harvey Manufacturing Corporation $80,000 and $45,000
during the nine months ended September 30, 2004 and 2003,
respectively.
At September 30, 2004 and December 31, 2003, the Company had
a note receivable including interest due from Harvey
Manufacturing Corporation in the amounts of $897,425 and
$854,197, respectively.
At September 30, 2004 and December 31, 2003 the Company had a
note receivable including interest due from Continental
Express SD, Inc., in the amounts of $2,944,560 and
$2,319,059, respectively.
At December 31, 2003, the Company had a note receivable
including interest due from Great Western, LLC, an affiliated
company, which is owned by a stockholder, in the amount of
$60,559.
At September 30, 2004 and December 31, 2003, the Company also
had accounts receivable from Continental Express SD, Inc. of
$340,894 and $206,735, respectively.
At September 30, 2004, the Company also had accounts
receivable from Great Western, LLC of $91,000.
At September 30, 2004, the Company also had accounts payable
to Great Western Leasing LP, an affiliated company, of
$71,000.
Continental Express SD, Inc., Harvey Manufacturing, LLC,
Great Western, LLC, and Great Western Leasing LP have
received a commitment from the individual who is the
principal stockholder or member of each of these entities and
the Company. The commitment indicates that, should any of
these entities not have sufficient resources to repay the
amounts due to the Company or any of the other affiliated
entities, the principal stockholder/partner will provide that
entity with resources to enable it to satisfy these
obligations in full. Notes receivable from these entities
are generally due on demand and bear interest at rates of
3.35% to 8.25%. Interest is computed monthly on the average
balance outstanding and added to the note principal.
-13-
CONX Capital Corportation
Notes to Financial Statements
September 30, 2004 (Unaudited) and December 31, 2003
Note 5: Disclosures About Fair Value of Financial Instruments
The following methods were used to estimate the fair value of
financial instruments.
The fair values of certain of these instruments were
calculated by discounting expected cash flows, which method
involves significant judgments by management and
uncertainties. Fair value is the estimated amount at which
financial assets or liabilities could be exchanged in a
current transaction between willing parties, other than in a
forced or liquidation sale. Because no market exists for
certain of these financial instruments and because management
does not intend to sell these financial instruments, the
Company does not know whether the fair values shown below
represent values at which the respective financial
instruments could be sold individually or in the aggregate.
Long-term Receivables and Payables with Related Parties
It was not practical to estimate the fair value of long-term
receivables and payables with related parties. The terms of
the amounts reflected in the balance sheets at September 30,
2004 (Unaudited) and December 31, 2003 are more fully
discussed in Note 4.
Long-term Debt
Fair value is estimated based on the borrowing rates
currently available to the Company for loans with similar
terms and maturities. The estimated fair value and carrying
amount of long-term debt was $2,627,446 and $2,505,193 at
September 30, 2004 (Unaudited), respectively, and $3,870,967
and $3,690,649 at December 31, 2003, respectively.
-14-
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
The following discussion and analysis below should be read
in conjunction with the financial statements, including the notes
thereto, appearing elsewhere in this Quarterly Report on Form 10-
Q. To date, the Company's only activities and sources of
operating revenue have been leases of tractor and trailer truck
equipment to one affiliated company, Continental Express SD, Inc.
Results of Operations
Three Month Period ended September 30, 2004
Lease income was $354,900 for the quarter ended September 30,
2004, as compared to $722,851 for the same period in 2003, a
decrease of $367,951 or 50.9%. Operating expenses (consisting
primarily of interest and depreciation) for the three month
period ended September 30, 2004 were $453,896. For the same
period in 2003, operating expenses were $644,132, a
decrease of $190,236 or 29.5%.
Operating Income for the quarter ended September 30, 2004 was
$210,953, as compared to $193,119 for the third
quarter of 2003, resulting in an increase of $17,834 or
9.2% in 2004 over 2003. Other income for the three month
period ended September 30, 2004 was $35,977, as compared to
$28,394 for the third quarter of 2003. Income before income
taxes for the quarter ended September 30, 2004 was $246,930,
with a provision for income taxes of $69,862, resulting in net
income for the three month period ended September 30, 2004 of
$177,068. For the quarter ending September 30, 2003, income
before income taxes was $221,513, with a provision for income
taxes of $187,373 resulting in net income for the period of
$34,140. As a result, income before income taxes increased
$25,417 or 11.4% and net income increased $142,928 or
approximately 418% for the third quarter of 2004 from the same
period in 2003. This increase in net income is primarily
attributable to a gain realized on the sale of equipment during
the quarter coinciding with a decrease in operating expenses.
-15-
Nine Month Period Ended September 30, 2004
Lease income was $1,402,200 for the nine months ended
September 30, 2004, as compared to $2,402,925 for the same
period in 2003, a decrease of $1,000,725 or 41.7%. Operating
expenses (consisting primarily of interest and depreciaton) for
the nine month period ended September 30, 2004 were
$1,514,569, and operating expenses as a percentage of lease
income was 78.3%. For the same period in 2003, operating
expenses were $2,003,168, a decrease of $488,599 or 24.4%.
Operating expenses as a percentage of lease income were 79.1%
for the nine month period ended September 30, 2003.
Operating Income for the nine months ended September 30, 2004
was $420,539, as compared to $528,232 for the first
nine months of 2003, resulting in a decrease of $107,693, or
20.4% in 2004 from 2003. Other income for the nine month
period ended September 30, 2004 was $97,382, as compared to
$86,844 for the first nine months of 2003. Income before
income taxes for the first nine months of 2004 was $517,921,
with a provision for income taxes of $176,093, resulting in
net income for the nine months ending September 30, 2004 of
$341,828. For the nine months ending September 30, 2003,
income before income taxes was $615,076, with a provision
for income taxes of $252,301, resulting in net income for the
period of $362,775. As a result, income before income taxes
decreased $97,155 or 15.8% and net income decreased $20,947
or 5.8% for the first nine months of 2004 from the same
period in 2003. This decrease in net income is primarily
attributable to a decrease in lease income for the nine
month period.
Liquidity and Capital Resources
The Company's current assets and working capital are
sufficient to meet its needs for the next twelve months of
operation as the Company is currently operating. However, the
Company has an ongoing need to finance its lending activities.
This need is expected to fluctuate as the volume of the Company's
loan and lease originations increase and decrease over the next
twelve months. The Company's primary cash requirements include
the funding of (i) loans to affiliated entities entering into
equipment leases, (ii) interest, fees, and expenses associated
with the Company's credit facilities with certain financial
institutions, (iii) federal income tax payments, and (iv)
ongoing administrative and other operating expenses.
-16-
To date, the Company has funded these cash requirements
by credit facilities granted by Navistar Financial Corporation,
Banc One Leasing Corporation, GE Capital Corporation and Fleet
Capital Leasing and guaranteed by the Company's affiliate,
Continental Express SD, Inc.
Inflation
The impact of inflation is reflected in the increased cost
of the Company's operating expenses, excluding depreciation and
interest expense. Changes in interest rates generally have a
greater impact on the Company's performance than do the
effects of general levels of inflation. Inflation affects
the Company primarily through its effect on interest rates,
since interest rates normally increase during periods of high
inflation and decrease during periods of low inflation. The
Company intends to manage its exposure to inflationary
interest rate risks by closely monitoring the difference or
spread between the effective rate of interest received by the
Company and the rates payable by the Company.
ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk
Market risk represents the potential loss resulting from
adverse changes in the value of financial instruments, either
derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates, commodity prices, and equity
security prices. The Company handles market risks in accordance
with its established policies; however, the Company does not
enter into derivatives or other financial instruments for trading
or speculative purposes. The Company does not have financial
instruments to manage and reduce the impact of changes in
interest rates at September 30, 2004 and December 31, 2003.
The Company held various financial instruments at September 30,
2004 and 2003, consisting of financial assets and liabilities
reported in the Company's Balance Sheets. (For additional
information regarding these financial instruments, refer to
Note 2 to the Company's financial statements.)
Interest Rate Risk - The Company is subject to interest rate
risk by financing operations through the issuance of certain
long-term Notes issued to various lenders. The fair market value
of long-term, fixed-interest rate debt is subject to interest
rate risk. Generally, the fair value of fixed-interest rate debt
will increase as interest rates fall and will decrease as
interest rates rise.
Foreign-Exchange Rate Risk - The Company currently has no
exposure to foreign-exchange rate risk because all of its
financial instruments are denominated in U.S. dollars.
Commodity Price Risk - The Company has no financial
instruments subject to commodity price risk.
Equity Security Price Risk - The Company has no financial
instruments subject to equity security price risk.
ITEM 4. Control and Procedures.
The Company maintains disclosure controls and procedures
that are designed to ensure that information required to be
disclosed in the Company's reports pursuant to the Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief
Executive Officer and its Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosures. In designing and evaluating the disclosure controls
and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can
provide only reasonable assurances of achieving the desired
control objectives, and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
Within 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the
participation of the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures, as
that term is defined in Rule 13a-14(c) under the Securities
Exchange Act of 1934, as amended. Based on this evaluation, the
Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures
are effective in timely alerting the Company's Chief Executive
Officer and Chief Financial Officer to material information
required to be disclosed in the periodic reports filed with the
SEC.
In addition, the Company's Chief Executive Officer and Chief
Financial Officer have reviewed the Company's internal controls,
and there have been no significant changes in the Company's
internal controls or in other factors that could significantly
affect those controls subsequent to the date of the last
evaluation.
-17-
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no legal proceedings involving the Company as a party
or involving any of the Company's assets or leased properties.
ITEM 2. Changes in Securities
None of the rights of the holders of any of the Company's
securities were materially modified during the period covered by
this report. In addition, no class of securities of the Company
was issued or modified which materially limited or qualified any
class of its registered securities.
ITEM 3. Defaults Upon Senior Securities
During the period covered by this report there was no material
default in the payment of any principal, interest, sinking or
purchase fund installment, or any other material default not
cured within 30 days with respect to any indebtedness of the
Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders.
ITEM 5. Other Information
None
ITEM 6. (a) Exhibits and Reports on Form 10-Q
Exhibit Number Description of Exhibit
-------------- ----------------------
99.1 Certificate of Chief Executive
Officer of CONX Captial Corporation
pursuant to 18 U.S.C. Section 1350.
99.2 Certificate of Chief Financial
Officer of CONX Captial Corporation
pursuant to 18 U.S.C. Section 1350.
(b) Reports on Form 8-K
No reports were filed for the period covered by this report.
-18-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CONX Capital Corporation
By: /s/ Edward M. Harvey
------------------------------------
Edward M. Harvey, Chairman, Director
and President (Principal Executive
Officer)
Dated: November 22, 2004
By: /s/ Todd W. Tiefel
------------------------------------
Todd W. Tiefel, Secretary, Treasurer
and Director (Principal Financial and
Accounting Officer)
Dated: November 22, 2004
Certifications
--------------
I, Edward M. Harvey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CONX
Capital Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 22, 2004
/s/ Edward M. Harvey
---------------------------
Principal Executive Officer
-19-
I, Todd W. Tiefel, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CONX
Capital Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 22, 2004
/s/ Todd W. Tiefel
-----------------------
Chief Financial Officer
Exhibit 99.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CONX CAPTIAL CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying report on Form 10-Q for
the period ending September 30, 2004 and filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Edward
M. Harvey, Chief Executive Officer of CONX Capital Corporation,
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that:
1. The report fully complies with the requirements
of Section 13 (a) or 15 (d) of the Secutities
Exchange act of 1934; and
2. The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the company.
/s/ Edward M. Harvey
---------------------------
Edward M. Harvey
Chief Executive Officer
-20-
Exhibit 99.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CONX CAPTIAL CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying report on Form 10-Q for
the period ending September 30, 2004 and filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Todd W.
Tiefel, Chief Financial Officer of CONX Capital Corporation, hereby
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes - Oxley Act of 2002, that:
1. The report fully complies with the requirements
of Section 13 (a) or 15 (d) of the Secutities
Exchange act of 1934; and
2. The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the company.
/s/ Todd W. Tiefel
----------------------------
Todd W. Tiefel
Chief Financial Officer
-21-