Index to Financial Statements

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-K

 

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-8488

For the fiscal year ended December 31, 2009

 

 

TWENTY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

ALABAMA		63-0372577
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
20 Cropwell Drive - Suite 100 Pell City, Alabama		35128
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (205) 884-7932

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class:		COMMON STOCK
		7% Cumulative Preferred Stock *

 

 

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 twelve (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 ninety (90) days.    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer		¨		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act:    YES  ¨    NO  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [Not yet applicable to registrant.]    Yes  ¨    No  ¨

As of December 31, 2009, the Registrant had issued and outstanding 1,283,068 shares of common stock, par value of $0.10 per share, and as of December 31, 2009, the aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant, based upon the book value of such shares as of such date, was approximately $3,149,489.

Documents incorporated by reference: NONE

 

*	Includes 7% Cumulative Series A-1980 Preferred Stock, 7% Cumulative Series A-1981 Preferred Stock, 7% Cumulative Series A-1982 Preferred Stock, and 7% Cumulative Series A-1985 Preferred Stock.

 

 

 

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Index to Financial Statements

1.

BUSINESS.

(a) General Development of Business. Since its inception in 1955, Twenty Services, Inc. (hereinafter sometimes referred to as the “Registrant” or “Company”), has been engaged principally in the general finance business, including the purchase and sale of real estate. In October 1980, the stockholders of the Registrant authorized the Board of Directors to redeploy the Registrant’s assets and reinvest the proceeds derived from such redeployment in a business other than the general finance business. During 1982 and 1983, the Company and an affiliate of Twenty Services Holding, Inc. (“Holding”), the owner of approximately 56% of the Registrant’s outstanding common stock, acquired an interest in the common stock of The Statesman Group, Inc., an insurance holding company based in Des Moines, Iowa (“Statesman”). The investment in Statesman was sold in 1994. The Registrant invested the proceeds in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In 1995, the Company acquired an interest in the common stock of American Equity Investment Life Holding Company, an insurance holding company based in Des Moines, Iowa (“American Equity”). As of the date of this Annual Report on Form 10-K the Registrant owns 237,000 shares of common stock of American Equity Investment Life Holding Company.

Depending upon the financial condition of the Registrant, the opportunities available to the Registrant and other matters, the Registrant may acquire majority interests in, and thereafter direct the operations of, other corporations or business entities engaged in one or more active businesses. The Registrant will continue to engage in certain aspects of the general finance business, including extending credit to certain persons and collecting its loan receivables. As of the date of this annual report on Form 10-K, the Registrant does not believe that the composition of its investments and the nature of its business activities render it subject to the Investment Act of 1940, and the Board of Directors of the Registrant intend that any future acquisitions by and/or business activities of the Registrant will be structured in a manner so that the Registrant will not become subject to the Investment Company Act of 1940.

(b) Financial Information Regarding Industry Segments.

The Registrant is not required to supply information respecting industry segments. However, for certain information respecting the general finance and other business activities of the Registrant, see the Financial Statements of Twenty Services, Inc., including the notes thereto, which are included elsewhere herein.

(c) Narrative Description of Business.

General Finance Business. As stated above, the Registrant historically has engaged in the general finance business which has consisted of (i) extending credit to finance various real estate projects, including the purchase of single-family dwellings and commercial real estate, and to finance home improvements (the “Real Estate Loans”), and (ii) extending credit for business and miscellaneous purposes (the “Business and Miscellaneous Loans”).

Loan Portfolio. The following tabulation sets forth the outstanding balances of the Registrant’s loan portfolio as of December 31 of each year indicated below (including, if appropriate, unearned interest), classified according to the types of loans comprising the Registrant’s loan portfolio:

 

Type of Loans		2009			2008			2007			2006
Real Estate		$	—		$	—		$	—		$	—
Business and Miscellaneous		$	27,673		$	26,882		$	30,034			28,212
Total:		$	27,673		$	26,882		$	30,034		$	28,212

Of the Registrant’s aggregate loan portfolio as of December 31, 2009 100% was secured.

Interest Income. The following tabulation sets forth certain information respecting the Registrant’s net interest income for each of the years indicated:

 

		2009			2008			2007
Interest Income		$	71,733		$	78,187		$	90,811
Net Interest Income		$	71,733		$	78,187		$	90,811

The Registrant utilizes the interest (actuarial) method in recognizing income attributable to interest charges. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.

Other Business Activities. As described above, the Registrant’s stockholders have authorized the Registrant to redeploy the Registrant’s assets by conversion of such assets into cash and the reinvestment of the proceeds thereof in other business entities. The Registrant intends to invest in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In December 1996, the Company acquired a 19.75% interest in a newly formed insurance holding company, American Equity Investment Life Holding Company. The Chairman of the Des Moines, Iowa based company is also the Chairman of the Board of the Registrant. American Equity acquired a block of individual and group insurance policies in 1995 and 1996. In 1996, 1997, 1998 and 1999 American Equity obtained additional equity financing from other investors which reduced the Company’s interest therein to 1.64%.

 

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Competition. With respect to the general finance business, the Registrant is in direct competition with banks and other finance companies located within and without the State of Alabama. Many of these firms are substantially larger than the Registrant, have more capital available for lending activities, pursue more actively new loan activity and enjoy a distinct competitive advantage over the Registrant.

In 2003 American Equity made an initial public offering which decreased the Company’s interest therein to less than one percent. However, the offering had the effect of increasing the value of the Company’s investment by approximately $750,000.

Employees. During 2009 and 2008 the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position, and one (l) of such positions was a clerical/administrative position.

At February 2010, the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position and one (l) of such positions was a clerical/administrative position.

The Registrant considers its relationship with its employees to be good.

Certain Government Regulations. The Registrant is subject to federal and state regulations relating to consumer credit financing and is subject to periodic examinations by officials of the State of Alabama charged with the responsibility of enforcing such regulations. The last examination of the Registrant by officials of the State of Alabama occurred on July 31, 2009. As a result of such examination, the Registrant was found to be in compliance with the regulations described above, and the Board of Directors of the Registrant believes that the Registrant presently is in compliance with such regulations. No material monetary claim has been made by any borrower against the Registrant respecting failure to comply with such regulations.

The Registrant is not subject in any material way to regulations relating to the discharge of materials into the environment.

Other Matters. The Registrant’s business is not seasonal.

No material portion of the contracts or subcontracts of the Registrant is subject to renegotiation by the United States Government.

The business of the Registrant is not dependent upon any raw materials, and as of the date of this annual report on Form 10-K, the Registrant does not own any material patent, trademark, license, franchise or concession. During the last two (2) years, the Registrant has not spent any money on research and development activities.

Due to the nature of its business, the Registrant does not have backlogs of orders believed to be firm. In addition, except as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Registrant does not follow any specified practice with respect to working capital.

The Registrant is not dependent upon a single customer or related customers or a very few customers, the loss of any one (l) or more of which would have a materially adverse effect upon its business.

Financial Information Regarding Foreign and Domestic Operations and Export Sales.

All of the Registrant’s business activities have been conducted within the southeastern portion of the United States.

 

2.	PROPERTIES.

The Registrant maintains its principal executive office in an office facility located in Pell City, Alabama for which it pays aggregate annual rentals of $7,200. The Registrant believes its office facilities are adequate for its present needs.

The Registrant maintains its accounting records on a personal computer which is in compliance with the Y2K.

 

3.	LEGAL PROCEEDINGS.

As of the date of this annual report on Form 10-K, the Registrant is not a party of any legal proceedings.

 

4.	(RESERVED)

.

 

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Index to Financial Statements

PART II

 

5.	MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.

(a) Market Information. No broker or dealer makes an active market in the shares of Common Stock or the Series A-Preferred Stock of the Registrant. Thus, there is no established trading market for the Common Stock or the Series A-Preferred Stock of the Registrant.

(b) Holder of Records. As of December 31, 2009 there were 1,623 holders of record of the outstanding Common Stock of the Registrant, and 947 holders of record of the outstanding Series A-Preferred Stock of the Registrant.

(c) Dividends. During the past two (2) years, no dividends have been paid respecting the shares of Common Stock of the Registrant. Under Alabama law, cash dividends may be paid only out of earned surplus (or retained earnings) of the Registrant.

As of December 31, 2009, the Registrant has issued and outstanding 505,110 shares of Series A-Preferred Stock, consisting of four (4) series of such Preferred Stock issued in 1980, 1981, 1982 and 1985. The holders of the Series A-Preferred Stock are entitled to cumulative dividends at the rate of $.07 per share per annum before any dividend may be declared or paid respecting the shares of Common Stock of the Registrant. During 2009 and 2008, the Registrant paid a dividend of $.07 per share respecting the outstanding Series A-Preferred Stock.

The Registrant intends, to the extent that future earnings and its capital surplus permit, to pay dividends respecting the shares of Series A-Preferred Stock. The Registrant believes it is unlikely that dividends will be paid in the future respecting the shares of Common Stock of the Company, although such payment will depend upon the future earnings and business prospects of the Registrant.

SELECTED FINANCIAL DATA

The following tabulation sets forth certain financial information respecting the Registrant.

 

		2009				2008				2007				2006				2005
Revenues		$	123,631			$	145,549			$	138,285			$	146,328			$	144,610
Net Income (Loss)		$	(47,491	)		$	(58,595	)		$	9,435			$	(246	)		$	(11,913	)
Earnings (Loss) per Common Share:
Net Income (Loss)		$	(.07	)		$	(.07	)		$	(.01	)		$	(.05	)		$	(.05	)
Total Assets		$	3,393,252			$	3,265,101			$	3,853,546			$	5,086,593			$	5,145,847
Dividends Declared:
Common Stock		$	0			$	0			$	0			$	0			$	0
Preferred Stock		$	35,357	1		$	35,357	2		$	35,357	3		$	35,357	4		$	35,357	5
Total		$	35,357			$	35,357			$	35,357			$	35,357			$	35,357
Book Value Per Common Share Outstanding		$	2.53			$	2.66			$	2.67			$	2.90			$	2.51

 

1	Reflects dividend respecting Preferred Stock declared on February 26, 2010.

2	Reflects dividend respecting Preferred Stock declared on February 27, 2009.

3	Reflects dividend respecting Preferred Stock declared on February 28, 2008.

4	Reflects dividend respecting Preferred Stock declared on February 28, 2007.

5	Reflects dividend respecting Preferred Stock declared on February 28, 2006.

 

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Index to Financial Statements

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources. During 2009 the Registrant’s liquidity remained virtually unchanged. The Company has no notes payable nor long term debt and does not anticipate the need for borrowing in the near future. The Registrant has sufficient cash and temporary cash investments to meet its short term liquidity needs. Should long term liquidity needs exceed cash and temporary cash investments, then the Registrant would dispose of marketable securities as it deems appropriate. Current trends and known demands and commitments do not create a need for liquidity in excess of the Company’s current abilities to generate liquidity.

The Company anticipates that its operating activities and investing activities will continue to generate positive net cash flows and that its financing activities will continue to use cash flows.

Results of Operations. The Registrant reported a net loss of $47,491 in 2009 as compared to a net loss of $58,595 in 2008. General and administrative expenses decreased from $148,349 in 2008 to $129,943 in 2009.

Impact of Inflation. Inflation has an impact upon the Registrant’s financial position. Inflationary pressures generally increase the cost of borrowed funds to the Registrant, rendering it less economic for the Registrant to borrow money for re-lending purposes.

 

8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements of the Registrant are set forth at page F-3 through F-15 hereof and are incorporated herein by reference.

 

9.	DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There has been no disagreement between the Registrant and its independent certified public accountants respecting any matter of disclosure, during the past twenty-four (24) months.

 

Item 9A.

Controls and Procedures

Disclosure Controls and Procedures

Under the supervision, and with the participation of our management, including Twenty’s Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Subsequent to the filing on March 31, 2008 of the 2007 10-K, we identified that we had inadvertently omitted from the 2007 10-K management’s report on the Company’s internal control over financial reporting. This omission was remedied by the filing on August 25, 2008 of amendment No. 1 to the 2007 10-K. Twenty’s Chief Executive Officer and Chief Financial Officer have reconsidered the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2007 (the end of its 2007 fiscal year) in light of its inadvertent omission of management’s report from the 2007 10-K. Solely as a result of this inadvertent omission of management’s report on internal control over financial reporting from the 2007 10-K, Twenty’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures as of December 31, 2007 were not effective at the reasonable assurance level. In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on their evaluation of these disclosure controls and procedures, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the report the Company files or submits under the Exchange Act.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of Twenty’s Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2009 based on the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal controls over financial reporting was effective as of December 31, 2009. There were no changes in our internal controls over financial reporting during the year ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

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Index to Financial Statements

10.	RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.

As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Twenty’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. As discussed above, SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for the Company’s financial assets and liabilities on January 1, 2008. In February 2008, the FASB reached a conclusion to defer the implementation of the SFAS No. 157 provisions relating to non-financial assets and liabilities until January 1, 2009. The FASB also reached a conclusion to amend SFAS No. 157 to exclude SFAS No. 13 Accounting for Leases and its related interpretive accounting pronouncements. SFAS No. 157 is not expected to materially affect how the Company determines fair value. We have adopted SFAS No. 157 effective January 1, 2008 for financial assets and financial liabilities and do not expect this adoption to have a material effect on our consolidated results of operations or financial position but will enhance the level of disclosure for assets and liabilities recorded at fair value.

 

					Fair Value Measurements at Reporting Date Using
Description		12/31/2009			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Trading securities								—		—
Available-for-sale securities		$	3,053,898		$	3,053,898		—		—
Derivatives								—		—
Venture capital investments								—		—
Total		$	3,053,898		$	3,053,898

 

11.	FINANCIAL DISCLOSURE AND INTERNAL CONTROLS

Twenty Services, Inc. maintains internal controls over financial reporting, which generally include those controls relating to the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. As a small public company Twenty Services, Inc. is subject to the internal control reporting and attestation requirements under Section 13(a)-15 and 15(d)-15 of The Securities Exchange Act of 1934.

Twenty Services, Inc. has established processes to ensure appropriate disclosure controls and procedures are maintained. These controls and procedures as defined by the SEC are generally designed to ensure that financial information required to be disclosed in reports filed with the SEC is reported within the time periods specified in the SEC’s rules and regulations, and that such information is communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure.

Twenty Services, Inc.’s senior management is involved in the day-to-day operations of the Company. Management’s interaction and monitoring activities evaluate recent internal and external events to determine whether all appropriate disclosures have been made in reports filed with the SEC. The Forms 10-K and 10-Q are presented to the Board of Directors for approval. Financial results and other financial information are also reviewed with the Audit Committee annually.

 

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As required by applicable regulatory pronouncements, the CEO and CFO review and make various certifications regarding the accuracy of Twenty Services’ periodic public reports filed with the SEC, as well as the effectiveness of disclosure controls and procedures and internal controls over financial reporting.

Twenty Services, Inc.’s stock is not listed or traded and, therefore, not required to comply with corporate governance listing standards.

Part III

 

12.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a)-(e) - Identification of Directors and Executive Officers and Other Matters. The following tabulation sets forth certain information respecting the persons who are serving as the directors and executive officers of the Registrant as of February 26, 2010.

 

Names and Positions with the Registrant		Age		Material Occupations And Positions During The last five (5) years
David J. Noble Chairman of the Board		77		Chairman of the Board of Directors, Twenty Services, Inc. Pell City, Alabama (finance business), since 1979. Chairman of the Board of Directors, Treasurer and Director, Twenty Services Holding, Inc. Pell City, Alabama (holding company) since 1979; Chairman of the Board of Directors of American Equity Investment Life Holding Company Des Moines, Iowa since 1995.
Dr. A. J. Strickland, III Vice-Chairman of the Board and Chairman of Audit Committee		68		Director and Vice-Chairman of the Board of Directors of Twenty Services, Inc., Pell City, Alabama (general finance business), since 1977; Director, Twenty Services Holding, Inc., Pell City, Alabama (holding company), since 1979; Professor of Strategic Management -School of Commerce, University of Alabama, Tuscaloosa, Alabama since 1980; Director, American Equity Investment Life Holding Company, Des Moines, Iowa, since 1995.
Jack C. Bridges		82		Executive Vice-President, Twenty Services, Inc. Pell City, Alabama since April 1997.

There is no family relationship between any of the persons named above. Directors of the Registrant are elected at each annual meeting of the stockholders of the Registrant and serve until their successors have been elected and qualified. Executive officers of the Registrant are elected at a meeting of the Board of Directors immediately following each annual meeting of the stockholders of the Registrant. Mr. Noble was elected director of the Registrant in November 1979 pursuant to a resolution adopted by the Board of Directors of the Registrant stating that if Twenty Services Holding, Inc. acquired approximately 20% of the outstanding Common Stock of the Registrant, the Registrant would make available to nominees of Twenty Services, Inc. Holding, Inc. two (2) places on the Registrant’s Board of Directors.

(F) Involvement in Certain Legal Proceedings.

During the past ten (10) years, no officer or director of the Registrant has been involved in any event of the types described in Item 401(f) of Regulation S-K of the Securities Exchange Act of 1934 which is material to an evaluation of the ability or integrity of any officer and director. However, on March 3, 2010, Mr. Noble entered into a settlement with the Securities and Exchange Commission (the “SEC”) related to the 2006 proxy statement of American Equity Investment Life Holding Company (“American Equity”). American Equity, Mr. Noble and American Equity’s CEO agreed to settle the matter without admitting or denying the allegations of the SEC’s complaint. Under the settlement, American Equity, Mr. Noble, and American Equity’s CEO agreed to be permanently enjoined from committing future violations of certain provisions of the federal securities laws relating to proxy statements. Mr. Noble also agreed to pay a civil monetary penalty. The SEC’s complaint did not make any allegations of fraud against American Equity, Mr. Noble, or American Equity’s CEO, nor did the complaint allege misstatements in financial reporting. Additionally, the SEC did not limit Mr. Noble’s involvement with American Equity or any of its subsidiaries or other companies.

 

13.	EXECUTIVE COMPENSATION

Current Remuneration. During 2009 no officer or director of the Registrant received aggregate direct remuneration from the Registrant in excess of $60,000. The following tabulation sets forth certain information concerning all remuneration paid by the Registrant to all officers and directors of the Registrant during the year ended December 31, 2009.

 

Name of Individuals or Number of Persons In Group		Capacities which served		Salaries and Directors’ Fees
All directors and officers as a group (three (3) persons)		Directors and Officers		$	37,200

REMUNERATION IN THE FUTURE. As of December 31, 2009 no officer or director of the Registrant has any contract or other arrangement with the Registrant relating to any future remuneration, except that as long as such officers and directors continue to serve in such capacity, they will receive from the Registrant the customary fees and salaries at a rate to be agreed upon by the Registrant and such persons.

Directors’ Remuneration. All directors of the Registrant receive $300 per month.

Options, Warrants, or Rights. The Registrant does not maintain any plan pursuant to which persons are entitled to acquire any equity securities of the Registrant.

 

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Termination of Employment. Except as otherwise described in Item 11 of this annual report on Form 10-K, there are no plans or arrangements relating to payments to be made to any officer, or director of the Registrant, which resulted or will result from any person’s resignation, retirement, or termination or employment with the Registrant.

 

14.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owners.

As of the date of this annual report on Form 10-K, the only person who owns of record and directly more than 5% of the Registrant’s outstanding voting securities is Twenty Services Holding, Inc., a Delaware corporation, whose principal business address is 20 Cropwell Drive, Suite 100, Pell City, Alabama. As of such date, Twenty Services Holding, Inc. and an affiliate of Holding own 725,267 shares of Common Stock of the Registrant and approximately 57% of the combined outstanding shares of Common Stock and Series A Preferred Stock of the Registrant. Except as otherwise required by Alabama law and except for certain rights accorded by the Registrant’s Certificate of Incorporation in the event that dividends respecting the Series A-Preferred stock are not paid, the holders of the Series A-Preferred Stock are not entitled to vote respecting matters coming before any meeting of the stockholders of the Registrant.

By virtue of his ownership of Common Stock of Twenty Services Holding, Inc., Mr. David J. Noble, the Chairman of the Board or Directors of the Registrant, indirectly and beneficially, owns approximately 52% of the outstanding Common Stock of the Registrant.

(b) Security Ownership of Management. The following tabulation sets forth certain information regarding the shares of equity securities of the Registrant.

 

Title of Class		Name of Beneficial Owner		Approximate Amount and Nature of Beneficial Owner			Percent of Class
Common Stock		David J. Noble		668,183 Indirect	(1)		52.29	%
Common Stock		A.J. Strickland, III		49,638 Indirect	(1)		3.88	%
Common Stock		All directors and executive officers as a group (3) persons		717,821 Indirect	(1)		56.18	%

 

(l)

Reflects each person’s interest in the shares of common stock of the Registrant owned by Twenty Services Holding, Inc. based upon such person’s ownership of the outstanding shares of common stock of Twenty Services Holding, Inc. as of February 26, 2010, excluding 6,000 shares of common stock of Twenty Services Holding, Inc. held by the Registrant. Twenty Services Holding, Inc. owns 725,267 shares or approximately 57% of the outstanding shares of common stock.

As of February 26, 2010, all officers and directors of the Registrant as a group beneficially owned, based upon their ownership of the outstanding common stock of Twenty Services Holding, Inc. (“Holding”), and excluding adjustment for the shares of common stock of Holding, held by the Registrant, 717,821 shares of common stock of the Registrant, or approximately 56% of the outstanding common stock of the Registrant as of such date.

(c) Changes in Control. There are no arrangements known to the Registrant which subsequently could result in a change of control of the Registrant.

 

15.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

There were no transactions during 2009 nor are there any currently proposed transactions between any pension, retirement, savings or similar plan of the Registrant and its affiliates, on the other hand, and the Registrant and its affiliates, any officer, director or principal stockholder of the Registrant, or any person who has been nominated as a director of the Registrant, on the other hand.

 

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PART IV

 

16.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) (l) - (a) (2) - Financial Statements and Financial Statement Schedules. The financial statements and the financial statement schedules required to be filed as part of this report are listed in the accompanying Index to Financial Statements and Financial Statement Schedules, and are set forth at the pages shown in such Index.

(a) (d) - Exhibits. The Certificate of Incorporation of the Registrant, as amended, the By Laws of the Registrant, as amended, and Resolutions of the Board of Directors of the Registrant creating the 7% Cumulative Series A-1980 Preference Stock, the 7% Cumulative Series A-1981 Preference Stock, the 7% Cumulative Series A-1982 Preference Stock, the 7% Cumulative Series A-1985 Preference Stock, which were filed as exhibits to the Registrant’s Annual Report on Form 10-K for the years ended December 31, 1980, December 31, 1981, December 31, 1982 and 1985, and the Registrant’s report on Form 8-K dated as of April 10 1984, are incorporated by reference.

(b) Reports on Form 8-K. No report on Form 8-K was filed during the year.

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, there unto duly authorized.

 

Dated:  March 31, 2010

 

SIGNATURE				CAPACITY		DATE
/s/    David J. Noble				Chairman and Director and Principal Executive Officer of The Registrant		March 31, 2010
David J. Noble
/s/    Dr. A. J. Strickland, III				Vice-Chairman and Director of Twenty Services, Inc. Chairman-Audit Committee (The Registrant)		March 31, 2010
Dr. A. J. Strickland, III

 

9

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Index to Financial Statements

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We, as members of the Management of Twenty Services, Inc. (The “Company”), are responsible for establishing and maintaining effective internal control over financial reporting. Twenty’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements in the Company’s financial statements, including the possibility of circumvention or overriding of controls. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Twenty Services, Inc. assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009. In making this assessment, we used the criteria set forth by the Commission of Sponsoring Organizations of the Treadway Commission (COSO) in its Internal Control Over Financial Reporting—Guidance For Small Public Companies.

Based upon our assessment, we believe and assert that, as of December 31, 2009, the Company’s internal control over financial reporting is effective based on these criteria.

 

Date:    March 31, 2010		By		/S/    DAVID J. NOBLE
				David J. Noble Chairman/Director And Principal Executive Officer
Date:    March 31, 2010		By		/S/    JACK C. BRIDGES
				Jack C. Bridges Executive Vice-President

 

10

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Index to Financial Statements

TWENTY SERVICES, INC.

Financial Statements

and

Financial Statement Schedule

For the Years Ended

December 31, 2009, 2008 and 2007

---

Index to Financial Statements

TWENTY SERVICES, INC.

Index to Financial Statements and Financial Statement Schedule

December 31, 2009, 2008 and 2007

 

 

Index to Financial Statements and Financial Statement Schedule		F-1
Independent Auditors’ Report		F-2
Balance Sheets		F-3
Statements of Operations		F-4
Statements of Changes in Stockholders’ Equity		F-5
Statements of Cash Flows		F-6
Notes to Financial Statements		F-7 - F-12
Financial Statement Schedule:
Schedule I - Marketable Securities – 2009		F-13 - F-14
Schedule I - Marketable Securities – 2008		F-15

 

F-1

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Index to Financial Statements

Independent Auditors’ Report

The Shareholders and the Board of Directors

Twenty Services, Inc.

We have audited the accompanying balance sheets of Twenty Services, Inc. (the Company) as of December 31, 2009 and 2008, and the related statements of operations, comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 Twenty Services, Inc. at December 31, 2009 and 2008 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules of marketable securities for the years ended December 31, 2009 and 2008 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

/s/    Borland Benefield, P.C.

Borland Benefield, P.C.

Birmingham, Alabama

March 12, 2010

 

F-2

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Index to Financial Statements

TWENTY SERVICES, INC.

Balance Sheets

 

 

		December 31,
		2009				2008
Assets
Cash and cash equivalents		$	282,011			$	53,461
Marketable securities			3,054,844				3,101,128
Notes receivable, related party			27,673				26,822
Deferred tax asset			6,171				61,410
Other assets			22,553				22,280
Total Assets		$	3,393,252			$	3,265,101
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable and accrued liabilities		$	100,383			$	95,954
Stockholders’ Equity
Preferred stock, $.10 par value, 7% cumulative, 2,500,000 shares authorized, 505,110 shares issued and outstanding			50,511				50,511
Common stock, $.10 par value, 25,000,000 shares authorized, 1,283,068 issued and outstanding			128,307				128,307
Additional paid-in capital			1,716,074				1,716,074
Retained earnings			1,143,366				1,219,440
Accumulated other comprehensive income			609,540				407,303
Less: Investment in Twenty Services Holding, Inc.			(60,000	)			(60,000	)
Preferred treasury stock, at $.25 per share; 65,660 and 63,136 shares at
December 31, 2009 and 2008, respectively			(16,415	)			(15,784	)
Common treasury stock, at $2.50 per share; 111,406 and 110,682 shares December 31, 2009 and 2008, respectively			(278,514	)			(276,704	)
Net stockholders’ equity			3,292,869				3,169,147
Total Liabilities and Stockholders’ Equity		$	3,393,252			$	3,265,101

See accompanying notes to financial statements.

 

F-3

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Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Operations

 

 

		For the Years Ended December 31,
		2009				2008				2007
Revenue
Interest		$	71,733			$	78,187			$	90,810
Dividends			51,298				58,928				47,448
Other			600				8,434				26
Total revenue			123,631				145,549				138,284
Operating Expenses			145,046				148,349				143,691
General and administrative
Other Income (Loss)
Gain (loss) on sale of marketable securities			(41,178	)			(42,405	)			3,416
Loss Before Income Taxes			(62,593	)			(45,205	)			(1,991	)
Income Tax Benefits (Expense)			15,102				(13,390	)			11,426
Net Income (Loss)		$	(47,491	)		$	(58,595	)		$	9,435
Loss Per Common Share		$	(0.06	)		$	(0.07	)		$	(0.01	)

See accompanying notes to financial statements.

 

F-4

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Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2009, 2008 and 2007

 

 

		Preferred Stock $.10			Common Stock $.10			Additional Paid-In Capital			Retained Earnings				Accumulated Other Comprehensive Income				Investment in Twenty Services Holding, Inc.				Preferred Treasury Stock				Common Treasury Stock				Total
Balance - December 31, 2006		$	50,511		$	128,307		$	1,716,074		$	1,323,892			$	1,640,288			$	(60,000	)		$	(14,798	)		$	(265,424	)		$	4,518,850
Comprehensive Income
Net Loss			—			—			—			9,435				—				—				—				—				9,435
Change in Unrealized Cumulative Gains/Losses on Available-for-Sale Securities, Net of Deferred Income Tax of $362,271			—			—			—			—				(856,378	)			—				—				—				(856,378	)
Total Comprehensive Income																																(846,943	)
Purchase of Treasury Stock			—			—			—			—				—				—				(560	)			(3,145	)			(3,705	)
Dividends on Preferred Stock, ($.07 Per Share)			—			—			—			(27,855	)			—				—				—				—				(27,855	)
Balance - December 31, 2007			50,511			128,307			1,716,074			1,305,472				783,910				(60,000	)			(15,358	)			(268,569	)			3,640,347
Comprehensive Income
Net Income			—			—			—			(58,595	)			—				—				—				—				(58,595	)
Change in Unrealized Gains on Available-for-Sale Securities, Net of Deferred Income Tax of $166,152			—			—			—			—				(376,607	)			—				—				—				(376,607	)
Total Comprehensive Income																																(435,202	)
Purchase of Treasury Stock			—			—			—			—				—				—				(426	)			(8,135	)			(8,561	)
Dividends on Preferred Stock, ($.07 Per Share)			—			—			—			(27,437	)			—				—				—				—				(27,437	)
Balance - December 31, 2008			50,511			128,307			1,716,074			1,219,440				407,303				(60,000	)			(15,784	)			(276,704	)			3,169,147
Comprehensive Income
Net Loss			—			—			—			(47,491	)			—				—				—				—				(47,491	)
Change in Unrealized Gains on Available-for-Sale Securities, Net of Deferred Income Tax of $252,358			—			—			—			—				202,237				—				—				—				202,237
Total Comprehensive Income			—			—			—			—				—				—				—				—				154,746
Purchase of Treasury Stock			—			—			—			—				—				—				(631	)			(1,810	)			(2,441	)
Dividends on Preferred Stock ($.07 Per Share)			—			—			—			(28,583	)			—				—				—				—				(28,583	)
Balance - December 31, 2009		$	50,511		$	128,307		$	1,716,074		$	1,143,366			$	609,540			$	(60,000	)		$	(16,415	)		$	(278,514	)		$	3,292,869

See accompanying notes to financial statements.

 

F-5

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Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Cash Flows

 

 

		For the Years Ended December 31,
		2009				2008				2007
Cash Flows From Operating Activities
Interest and dividends received		$	123,031			$	137,115			$	138,276
Other income			600				8,434				1,514
Cash paid to suppliers and employees			(151,995	)			(164,666	)			(129,282	)
Net Cash Flows From Operating Activities			(28,364	)			(19,117	)			10,508
Cash Flows From Investing Activities
Principal collected on loans			—				2,258				4,542
Loans made to customers			—				—				(4,300	)
Principal collected on held-to-maturity securities			515				407				474
Proceeds from sale of available-for-sale securities			1,081,555				354,617				125,330
Purchases of available-for-sale securities			(797,779	)			(317,000	)			(240,000	)
Net Cash Flows From Investing Activities			284,291				40,282				(113,954	)
Cash Flows From Financing Activities
Preferred stock dividends paid			(24,936	)			(25,511	)			(36,902	)
Purchase of treasury stock			(2,441	)			(8,562	)			(3,705	)
Net Cash Flows From Financing Activities			(27,377	)			(34,073	)			(40,607	)
Net Increase (Decrease) in Cash and Cash Equivalents			228,550				(12,908	)			(144,053	)
Cash and Cash Equivalents - Beginning of Year			53,461				66,369				210,422
Cash and Cash Equivalents - End of Year		$	282,011			$	53,461			$	66,369
Reconciliation of Operating Income (Loss) to Net Cash From Operating Activities
Net income (loss)		$	(47,491	)		$	(58,595	)		$	9,435
Adjustments to reconcile net income to net operating activities
Realized (gain) loss on sale of marketable securities			41,178				42,405				(3,416	)
Net change in deferred income taxes			(22,834	)			24,469				(13,030	)
Increase (decrease) in accounts payable and accrued liabilities			783				(27,396	)			17,519
Net Cash Flows From Operating Activities		$	(28,364	)		$	(19,117	)		$	10,508

See accompanying notes to financial statements.

 

F-6

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements

For the Years Ended December 31, 2009, 2008 and 2007

 

Note 1 – Accounting Policies

Income Recognition – Interest income from finance receivables is recognized by Twenty Services, Inc. (the Company) using the interest (accrual) method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.

Estimates – The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Credit Losses – Provisions for credit losses are charged to income in amounts sufficient to maintain the allowance at a level considered adequate to cover the losses of principal and interest in the existing portfolio. The Company’s charge-off policy is based on a loan-by-loan review for all receivables that are charged off when they are deemed uncollectible.

Cash Equivalents – Holdings of highly liquid investments with original maturities of three months or less and investments in money market funds are considered to be cash equivalents.

Marketable Securities – Management determines the appropriate classification of its investment in debt and equity securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company’s securities are classified in two categories and accounted for as follows:

 

•

Securities Held-to-Maturity. Bonds, notes, certain preferred stocks and other debt securities for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income using methods which approximate level yields over the period to maturity.

 

•

Securities Available-for-Sale. Bonds, notes and certain preferred stocks not classified as held-to-maturity and common stocks are reported at fair value.

Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The write-downs are included in earnings as realized losses.

Unrealized holding gains and losses, net of deferred income taxes, on securities available-for-sale are reported as a net amount in a separate component of stockholders’ equity until realized.

Realized gains and losses on the sale of securities available-for-sale are determined using the specific-identification method.

Income Taxes – Deferred income taxes are recognized for the effects of temporary differences between financial statement and tax reporting.

Earnings Per Common Share – Earnings per common share are determined by dividing net income (loss), after giving effect to preferred stock dividends, by the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding for each of the years ended December 31, 2009, 2008 and 2007 was 1,283,068.

Subsequent Events – Management has evaluated subsequent events through March 12, 2010.

 

F-7

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2009, 2008 and 2007

 

 

Note 1 – Accounting Policies (continued)

Recent Accounting Pronouncement and Accounting Changes – In June 2009, the Financial Accounting Standards Board (FASB) issued an update to ASC 105-10, “Generally Accepted Accounting Principles”. This standard establishes the ASC as the source of authoritative U.S. GAAP recognized by the FASB for nongovernmental entities. The ASC is effective for interim and annual periods ending after September 15, 2009. The ASC is a reorganization of existing U.S. GAAP and does not change existing U.S. GAAP. The Company adopted this standard during the third quarter of 2009. The adoption had no impact on the Company’s financial position, results of operations, and EPS.

Note 2 – Nature of Operations, Risks, and Uncertainties

The Company is primarily engaged in the general finance business. The Company grants commercial and personal real estate loans and general business and personal loans to customers located primarily in Alabama. The majority of the loan portfolio is secured by various types of collateral including mortgages and security interests in equipment and other property with a significant concentration in loans collateralized by residential real estate.

Note 3 – Fair Values of Financial Instruments

FASB ASC 820-10-50 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

 

•

Level 1 valuations, where the valuation is based on quoted market prices for identical assets or liabilities traded in active markets (which include exchanges and over-the-counter markets with sufficient volume),

 

•

Level 2 valuations, where the valuation is based on quoted market prices for similar instruments traded in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market,

and

 

•

Level 3 valuations, where the valuation is generated from model-based techniques that use significant assumptions not observable in the market, but observable based on Company-specific data. These unobservable assumptions reflect the Company’s own estimates for assumptions that market participants would use in pricing the asset or liability. Valuation techniques typically include option pricing models, discounted cash flow models and similar techniques, but may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability.

Items Measured at Fair Value on a Recurring Basis

The following table presents financial assets measured at fair value on a reoccurring basis as of December 31, 2009:

 

					Fair Value Measurements at Reporting Date Using
Description		12/31/2009			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Available-for-sale securities		$	3,053,898		$	3,053,898		$	—		$	—

 

F-8

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2009, 2008 and 2007

 

 

Note 3 – Fair Value of Financial Instruments (Continued)

The following methods and assumptions were used by the Company in estimating the fair values of financial instruments as disclosed herein:

 

•

Short-term financial instruments are carried at their carrying amounts reported in the balance sheet that are reasonable estimates of fair values due to the relatively short period to maturity of the instruments. This approach applies to cash and temporary investments, notes receivable from related parties and other receivables.

 

•

Marketable securities held to maturity are valued at quoted market values.

 

		2009						2008
		Carrying Value			Fair Value			Carrying Value			Fair Value
Cash and temporary investments		$	282,011		$	282,011		$	53,461		$	53,461
Marketable securities - Held to Maturity			946			946			1,461			1,461
Notes receivable, net			27,673			27,673			26,822			26,822

Note 4 – Marketable Securities

The amortized cost and aggregate fair values of investments in securities are as follows:

 

		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
December 31, 2009
Available-for-sale securities
Equity securities		$	1,140,000		$	989,360		$	137,710		$	1,991,650
Debt securities			1,052,003			33,214			22,969			1,062,248
Total available-for-sale securities		$	2,192,003		$	1,022,574		$	160,679		$	3,053,898
Held-to-maturity securities
Obligations of U.S. Government Corporation and Agencies		$	946		$	—		$	—		$	946
December 31, 2008
Available-for-sale securities
Equity securities		$	1,246,231		$	881,000		$	245,648		$	1,881,583
Debt securities			1,271,574			2,617			56,108			1,218,083
Total available-for-sale securities		$	2,517,805		$	883,617		$	301,756		$	3,099,666
Held-to-maturity securities
Obligations of U.S. Government Corporation and Agencies		$	1,461		$	—		$	—		$	1,461

 

F-9

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2009, 2008 and 2007

 

 

Note 4 – Marketable Securities (continued)

The amortized cost and aggregate fair value of debt securities at December 31, 2009 and 2008, by contractual maturity, are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call prepayment penalties.

 

		Available-for-Sale						Held-to-Maturity
		Amortized Cost			Market Value			Amortized Cost			Market Value
December 31, 2009
Corporate Due In
After 10 Years		$	609,995		$	619,409		$	—		$	—
Corporate and Municipal Holdings Due In
6-10 Years			—			—			946			946
After 10 Years			442,008			442,839			—			—
Total		$	1,052,003		$	1,062,248		$	946		$	946
December 31, 2008
Corporate Due In
After 10 Years		$	255,074		$	198,966		$	—		$	—
U.S. Government Corporations and Agencies Due In
6-10 Years			—			—			1,461			1,461
After 10 Years			1,016,500			1,019,117			—			—
Total		$	1,271,574		$	1,218,083		$	1,461		$	1,461

Proceeds from the sale of available-for-sale securities were $1,081,555 for the year ended December 31, 2009. A net loss of $41,178 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2009.

Proceeds from the sale of available-for-sale securities were $354,617 for the year ended December 31, 2008. A net loss of $42,405 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2008.

Note 5 – Finance Receivables and Allowance for Credit Losses

Finance receivables consisted of the following at December 31:

 

		2009			2008
Finance Receivables		$	27,673		$	26,822

All contractual maturities of finance receivables are due in the year ended December 31, 2009.

 

F-10

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2009, 2008 and 2007

 

 

Note 6 – Income Taxes

Temporary differences giving rise to the deferred tax liability (benefit) consist primarily of gains and losses on investments recognized for financial reporting purposes that are not recognized for tax purposes and of unused operating and capital loss carryforwards that may be applied against future taxable income.

The provision for income taxes was as follows for the years ended December 31:

 

		2009			2008				2007
Current
Deferred Tax Benefits (Expense)		$	15,102		$	(13,390	)		$	11,426

Deferred tax assets and liabilities at December 31 consisted of the following:

 

		2009				2008
Deferred Tax Assets
Net operating and capital loss carryforwards		$	264,740			$	235,968
			264,740				235,968
Deferred Tax Liability
Net unrealized gain on available-for-sale securities			(258,569	)			(174,558	)
Net Deferred Tax Asset (Liability)		$	6,171			$	61,410

The Company has available at December 31, 2009, approximately $853,000 of unused operating and capital loss carryforwards that may be applied against future taxable income and that expire in various years from 2010 to 2026.

Note 7 – Stockholders Equity

The preferred stock has a cumulative dividend of $.07 per share and is redeemable at the Company’s option of $1.05 per share. In the event of liquidation, the preferred stockholders receive $1.05 per share before any distributions are made to common stockholders. The 2006 dividend (approximately $28,000) was declared February 2007 and paid in March 2007. The 2007 dividend (approximately $28,000) was declared February 2008 and paid in March 2008. The 2008 dividend (approximately $28,000) was declared February 2009 and paid in March 2009.

Note 8 – Investment in Twenty Services Holding, Inc.

The Company owns 6,000 shares of common stock of Twenty Services Holding, Inc. (the Holding Company), a holding company that owns approximately 54% of the Company’s outstanding common stock. The amount paid for the Holding Company’s common stock of $60,000 has been deducted from stockholders’ equity in the accompanying balance sheet.

 

F-11

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2009, 2008 and 2007

 

 

Note 9 – Concentration of Credit Risk

The Company maintains an investment account with a brokerage firm. Balances are insured up to $500,000 (with a limit of $100,000 for cash) by the Securities Investor Protection Corporation with excess protection coverage provided by the Customer Asset Protection Company. At December 31, 2009, the Company had $2,554,844 in cash and securities that were above insured amounts.

Note 10 – Related Party Transactions

At December 31, 2009 and 2008, the Company had notes receivable from an officer totaling $27,673 and $26,822, respectively.

Note 11 – Treasury Stock

The Company purchased 724 shares of common stock for an aggregate purchase price of $1,810, or $2.50 per share, and 2,524 shares of its preferred stock for an aggregate purchase price of $631, or $0.25 per share, during the year ended December 31, 2009. The shares are held as common treasury stock and preferred treasury stock.

The Company purchased 3,254 shares of common stock for an aggregate purchase price of $8,135, or $2.50 per share, and 1,704 shares of its preferred stock for an aggregate purchase price of $426 or $0.25 per share, during the year ended December 31, 2008. The shares are held as common treasury stock and preferred treasury stock.

The Company purchased 1,258 shares of common stock for an aggregate purchase price of $3,145, or $2.50 per share, and 2,240 shares of its preferred stock for an aggregate purchase price of $560 or $0.25 per share, during the year ended December 31, 2007. The shares are held as common treasury stock and preferred treasury stock.

 

F-12

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Index to Financial Statements

TWENTY SERVICES, INC.

Schedule I - Marketable Securities

For the Year Ended December 31, 2009

 

 

Name of issuer and title of each issue		Number of shares or units - principal amount of bonds and notes			Cost of each issue			Market value of each issue at balance sheet date			Amount at which each portfolio of equity security issues and each other security issue is carried in the balance sheet
Equity Securities Available-for-Sale:
American Equity Investment Life Holding Company (AEL)		$	237,000		$	790,000		$	1,763,280		$	1,763,280
Royal Bank of Scotland 6.125% Ser R Callable 12/30/11			2,000			50,000			20,320			20,320
Gramercy Capital 8.125% Cum. Per. Pref. Callable 4/18/12			1,000			25,000			10,700			10,700
Evergreen Global Dividend Opportunity Fund			2,000			40,000			20,480			20,480
Blackrock Preferred & Equity Advantage Trust			2,000			50,000			22,760			22,760
Public Storage $2.45 Dep. Shs. Repstg 1/1000 A Sh. Of Eq.			3,000			60,000			76,080			76,080
Barclay Bank PLC 7.75% Non-Cum. Per. Pref. Callable 3/15/13			1,000			25,000			23,830			23,830
NorthStar Realty 8.25% Cum. Per. Pref. Ser. Callable 2/7/12			2,000			50,000			31,900			31,900
Alpine Total Dynamic Dividend Fund SBI			2,500			50,000			22,300			22,300
Total Equity Securities Available-for-Sale						1,140,000			1,991,650			1,991,650
Debt Securities Available-for-Sale:
New York New York Ser Al G/O UNLTD 5%			25,000			26,878			26,880			26,880
Northwest TX INDPT Sch Dist Sch BLDG G/O 5%			25,000			26,987			26,975			26,975
Travis Co. TX Road G/O 4%			50,000			50,005			50,949			50,949
State Univ IA Univ Rev Rec FACS Ser S			50,000			50,000			51,700			51,700
Minnesota St Sere 2009B G/O Cpn 4.0% Due 8/1/28			25,000			25,005			25,238			25,238
Omaha Neb Ser A G/O Cpn 6.5% Due 12/1/30			25,000			32,907			34,305			34,305
Washington St. Var PURP Ser F G/O Cpn 4.5% Due 7/1/32			25,000			25,725			25,068			25,068
Keller Tx lndpt Sch Dist Sch Bldg Cpn 4.75% Due 8/15/32			50,000			51,412			51,414			51,414

 

F-13

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Index to Financial Statements

TWENTY SERVICES, INC.

Schedule I - Marketable Securities (continued)

For the Year Ended December 31, 2009

 

 

Name of issuer and title of each issue		Number of shares or units - principal amount of bonds and notes			Cost of each issue			Market value of each issue at balance sheet date			Amount at which each portfolio of equity security issues and each other security issue is carried in the balance sheet
Debt Securities Available-for-Sale: (continued)
Saratoga Cnty NY PUB Imp Ser A G/O Cpn 4.75% Due 7/15/38		$	25,000		$	25,427		$	25,297		$	25,297
Iowa St Univ Sci & Tech Acad Bldg Cpn 4.0% 7/1/28			25,000			25,252			24,710			24,710
State Univ IA Univ Rev Ath Facs Ser S Cpn 4.35% Due 7/1/35			25,000			25,005			25,147			25,147
Miami-Dade Cnty Fl Bldg Ser B-1 G/O Cpn 5.375% Due 7/1/29			25,000			26,873			26,441			26,441
Tacoma WA Recovery Zone G/O Cpn 4.625% Due 12/1/34			25,000			25,090			24,051			24,051
Texas St Trans Comm Mobility G/O Cpn 4.50% Due 4/1/35			25,000			25,439			24,664			24,664
Morgan Stanley Med Term Notes Ser F Cpn			25,000			24,758			26,429			26,429
Bank of America Corp Senior Notes			25,000			23,508			26,041			26,041
JP Morgan Chase Co Senior Notes			50,000			49,954			54,067			54,067
Allstate Corp Debentures Noncall Life Cpn 6.75%			50,000			51,601			54,562			54,562
Caterpillar Financial Med Term Notes			50,000			53,665			57,955			57,955
Goldman Sachs Med Term Notes Cpn 6.75%			50,000			51,003			55,965			55,965
AFLAC Senior Notes			50,000			53,395			57,502			57,502
Aetna, Inc. Notes Cpn. 7.625%			150,000			156,147			147,695			147,695
Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28			100,000			98,927			88,000			88,000
General Elec Cap Corp Medium Term Notes			50,000			47,040			51,193			51,193
Total Debt Securities Available-for-Sale						1,052,003			1,062,248			1,062,248
Debt Securities Held-to-Maturity –
GNMA Mortgage Backed Certificates, Due 2012						—			—			946
Total					$	2,192,003		$	3,053,898		$	3,054,844

 

F-14

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Index to Financial Statements

TWENTY SERVICES, INC.

Schedule I - Marketable Securities

For the Year Ended December 31, 2008

 

 

Name of issuer and title of each issue		Number of shares or units - principal amount of bonds and notes			Cost of each issue			Market value of each issue at balance sheet date			Amount at which each portfolio of equity security issues and each other security issue is carried in the balance sheet
Equity Securities Available-for-Sale:
American Equity Investment Life Holding Company (AEL)		$	237,000		$	790,000		$	1,659,000		$	1,659,000
AMF Bowling Worldwide, Ser A Warrants - exp 3/9/09			524			3,668			—			—
AMF Bowling Worldwide, Ser B Warrants - exp 3/9/09			512			2,560			—			—
Royal Bank of Scotland 6.125% Ser R Callable 12/30/11			4,000			100,000			31,880			31,880
Gramercy Capital 8.125% Cum. Per. Pref. Callable 4/18/12			1,000			25,000			4,200			4,200
Evergreen Global Dividend Opportunity Fund			2,000			40,000			19,080			19,080
Blackrock Preferred & Equity Advantage Trust			2,000			50,000			16,700			16,700
Public Storage $2.45 Dep. Shs. Repstg 1/1000 A Sh. Of Eq.			3,000			60,000			72,000			72,000
Barclay Bank PLC 7.75% Non-Cum. Per. Pref. Callable 3/15/13			1,000			25,000			14,850			14,850
Citigroup 8.5% Ser. F Pref. Non. Cum. 6/15/13			2,000			50,000			31,660			31,660
Lehman Bros Hldg. 7.95%			1			3			4			4
NorthStar Realty 8.25% Cum. Per. Pref. Ser. Callable 2/7/12			2,000			50,000			16,760			16,760
Alpine Total Dynamic Dividend Fund SBI			2,500			50,000			15,450			15,450
Total Equity Securities Available-for-Sale						1,246,231			1,881,584			1,881,584
Debt Securities Available-for-Sale:
Fedl. Natl. Mtg. Assn. Notes Callable Cpn. 6.375%			400,000			399,500			400,504			400,504
Aetna, Inc. Notes Cpn. 7.625%			150,000			156,147			141,480			141,480
Fedl. Natl. Mtg. Assn. Notes Callable Cpn. 5.75%			400,000			400,000			400,664			400,664
Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28			100,000			98,927			57,486			57,486
Fannie Mae Notes Callable Cpn. 6.3%			217,000			217,000			217,949			217,949
Total Debt Securities Available-for-Sale						1,271,574			1,218,083			1,218,083
Debt Securities Held-to-Maturity –
GNMA Mortgage Backed Certificates, Due 2012						—			—			1,461
Total					$	2,517,805		$	3,099,667		$	3,101,128

 

F-15