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, 2012

 

 

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨    NO  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    YES  ¨    NO  x

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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     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

As of December 31, 2012, the Registrant had 1,283,068 issued and 1,081,327 outstanding shares of common stock, par value of $0.10 per share, and as of December 31, 2012, 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 $4,096,620.

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		2012				2011				2010				2009
Real Estate		$	—			$	—			$	—			$	—
Business and Miscellaneous		$	.00			$	00			$	28,520				27,673
Total:		$	.00			$	00			$	28,520			$	27,673

Of the Registrant’s aggregate loan portfolio as of December 31, 2012 100% was secured.

 

1

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Index to Financial Statements

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

 

		2012				2011				2010
Interest Income		$	65,391			$	70,935			$	66,052
Net Interest Income		$	65,391			$	70,935			$	66,052

The Registrant utilizes the interest (accrual) 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%.

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 2012 and 2011 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.

On February 7, 2011, Jack C. Bridges, Executive Vice-President of the Registrant, passed away. In a called meeting by the Board of Directors of the Registrant on December 30, 2011 the directors elected Shirley B. Whitaker as Vice-President of the Company.

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 May 17, 2012 . 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.

 

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Index to Financial Statements

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).

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, 2012 there were 1,609 holders of record of the outstanding Common Stock of the Registrant, and 935 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, 2012, 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 2012 and 2011, 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.

 

		2012				2011				2010				2009
Revenues		$	170,651			$	112,550			$	104,913			$	123,631
Net Income (Loss)		$	37,064			$	15,787			$	10,486			$	(47,490	)
Earnings (Loss) per Common Share:
Net Income (Loss)		$	.01			$	(.01	)		$	(.07	)		$	(.07	)
Total Assets		$	4,553,074			$	4,057,826			$	4,558,969			$	3,393,252
Dividends Declared:
Common Stock		$	0			$	0			$	0			$	0
Preferred Stock		$	24,822	1		$	27,856	2		$	27,188	3		$	35,357	4
Total		$	24,822			$	27,856			$	27,188			$	35,357
Book Value Per Common Share Outstanding		$	3.80			$	2.88			$	2.53			$	2.66

 

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Index to Financial Statements

 

1	Reflects dividend respecting Preferred Stock declared on February 28, 2012.

2	Reflects dividend respecting Preferred Stock declared on February 28, 2011.

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

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

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

Liquidity and Capital Resources. During 2012 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 income of $37,064 in 2012 as compared to a net income of $15,787 in 2011. General and administrative expenses increased from $126,737 in 2011 to $133,587 in 2012.

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.

Fair Value Measurements

Accounting Principles emphasize 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, Accounting Principles establish 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 1 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.

						Fair Value Measurements at Reporting Date Using
Description		12/31/2012				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		$	4,440,300			$	3,038,650				1,401,650				—
Total		$	4,440,300			$	3,038,650				1,401,650				—

 

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 Principal Executive Officer (“PEO”) who is also the 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. 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 Principal Executive Officer, who is also the Chief Financial Officer, the effectiveness of the design and operation

 

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Index to Financial Statements

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 Principal Executive Officer (“PEO”) who is also Chief Financial Officer has 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 Principal Executive Officer (“PEO”) who is also the Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2012 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, 2012. There were no changes in our internal controls over financial reporting during the year ended December 31, 2012 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.

 

10.	RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

ASU 2011-04 changes the wording used to describe requirements for fair value measurements to include (i) those that clarify the Board’s intent about the application of existing fair value measurements, (ii) Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. ASU 2011-04 further improves consistency between disclosure requirements of U.S. GAAP and IFRS by changing certain wording. Also, ASU 2011-04 updates the requirements for measuring fair value or disclosing information about measuring fair value including (i) measuring the fair value of financial instruments that are managed by a portfolio, (ii) application of premiums and discounts in fair value measurement, and (iii) amendments to expand the disclosures about fair value measurements. The amendments will become effective during annual periods for the Company after December 15, 2011.

In June 2011, the FASB issued an ASU that expands the disclosure requirements related to other comprehensive income (loss). A reporting entity is now required to present the total of comprehensive income (loss), the components of net income, and the components of other comprehensive income (loss) either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements. Under both choices, the reporting entity is required to present each component of net income along with total net income, each component of other comprehensive income (loss) along with a total for other comprehensive income (loss) and a total amount for comprehensive income (loss). This ASU became effective for interim and annual periods beginning after December 15, 2011. We adopted this ASU on January 1, 2012.

 

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Index to Financial Statements

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 Principal Executive Officer (“PEO”) who is also the 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.

As required by applicable regulatory pronouncements, the Principal Executive Officer (“PEO”) who is also the Chief Financial Officer (“CFO”) reviews and makes 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 December 31, 2012.

 

Names and Positions with the Registrant		Age		Material Occupations And Positions During The last five (5) years
David J. Noble Chairman of the Board		81		Director and Chairman of the Board of Directors of 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; Executive 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		70		Director, Chairman of Audit Committee 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.

 

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Index to Financial Statements

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 type described in Item 3(f) of the Regulations S-K of the Securities Exchange Act of 1934.

 

13.	EXECUTIVE COMPENSATION

Current Remuneration. During 2012 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, 2012.

 

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			$	7,200

REMUNERATION IN THE FUTURE. As of December 31, 2012 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.

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.

 

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Index to Financial Statements

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 28, 2013, 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 28, 2013, 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 2012 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.

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.

EXHIBITS:

 

31.1		SECTION 302 CEO CERTIFICATION
31.2		SECTION 302 VP CERTIFICATION
32.1		SECTION 906 CEO CERTIFICATION
32.2		SECTION 906 VP CERTIFICATION
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

(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 15, 2013

 

SIGNATURE		CAPACITY		DATE
/s/ David J. Noble David J. Noble		Chairman and Director and Principal Executive Officer of The Registrant		March 15, 2013
/s/ Dr. A. J. Strickland, III Dr. A. J. Strickland, III		Vice-Chairman and Director of Twenty Services, Inc. (The Registrant)		March 15, 2013

 

8

---

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, 2012. 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, 2012 the Company’s internal control over financial reporting is effective based on these criteria.

 

Date: March 15, 2013				By		/S/    DAVID J. NOBLE
						David J. Noble Chairman/Director And Principal Executive Officer
				By		/S/    SHIRLEY B. WHITAKER
						Shirley B. Whitaker Vice-President

 

9

---

Index to Financial Statements

TWENTY SERVICES, INC.

Financial Statements

and

Financial Statement Schedule

For the Years Ended

December 31, 2012, 2011 and 2010

 

10

---

Index to Financial Statements

TWENTY SERVICES, INC.

Index to Financial Statements and Financial Statement Schedule

For the Year Ended December 31, 2012

 

Index to Financial Statements and Financial Statement Schedule		F-1
Independent Auditors’ Report		F-2
Balance Sheets		F-3
Statements of Income and Comprehensive Income		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 – 2012		F-13
Schedule I - Marketable Securities – 2011		F-14

 

F-1

---

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, 2012, 2011 and 2010 and the related statements of income and comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2012. 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, 2012, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, 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, 2012 and 2011 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.

 

Borland Benefield, P.C.

Birmingham, Alabama

February 22, 2013

 

F-2

---

Index to Financial Statements

TWENTY SERVICES, INC.

Balance Sheets

 

 

		December 31,
		2012				2011
Assets
Cash and cash equivalents		$	90,221			$	104,672
Marketable securities			4,440,300				3,930,601
Other assets			22,553				22,553
Total Assets		$	4,553,074			$	4,057,826
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable and accrued liabilities		$	48,648			$	69,961
Deferred tax liability			375,138				237,759
Total Liabilities			423,786				307,720
Stockholders’ Equity
Preferred stock, $.10 par value, 7% cumulative, 2,500,000 shares authorized, 505,110 shares issued			50,511				50,511
Common stock, $.10 par value, 25,000,000 shares authorized, 1,283,068 issued			128,307				128,307
Additional paid-in capital			1,716,074				1,716,074
Retained earnings			1,126,837				1,114,595
Accumulated other comprehensive income			1,497,626				1,125,306
Less: Investment in Twenty Services Holding, Inc.			(60,000	)			(60,000	)
Preferred treasury stock, at $.25 per share; 70,941 and 69,741 in 2012 and 2011 respectively			(17,843	)			(17,543	)
Common treasury stock, at $2.50 per share; 201,741 and 199,709 in 2012 and 2011 respectively			(312,224	)			(307,144	)
Net Stockholders’ Equity			4,129,288				3,750,106
Total Liabilities and Stockholders’ Equity		$	4,553,074			$	4,057,826

See accompanying notes to financial statements.

 

F-3

---

Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Income and Comprehensive Income

 

 

		For the Years Ended December 31,
		2012				2011				2010
Revenue
Interest		$	65,391			$	70,935			$	66,051
Dividends			53,422				39,129				38,788
Other			51,310				2,486				73
Total Revenue			170,123				112,550				104,912
Operating Expenses
General and administrative			133,587				126,737				117,006
Other Income (Loss)
Gain (loss) on sale of marketable securities			528				6,205				13,500
Income (Loss) Before Income Taxes			37,064				(7,982	)			1,406
Income Tax Benefits (Expense)			—				23,769				9,080
Net Income		$	37,064			$	15,787			$	10,486
Other Comprehensive Income (net of tax)
Unrealized gains on marketable securities:
Change in unrealized gains (losses)			510,227				(427,918	)			1,220,889
Less: reclassification adjustment for net gains included in net income			(528	)			(6,205	)			(13,500	)
Other comprehensive income			509,699				(434,123	)			1,207,389
Income tax related to other comprehensive income			(137,379	)			136,713				(394,213	)
Other comprehensive income - after tax			372,320				(297,410	)			813,176
Comprehensive Income		$	409,384			$	(281,623	)		$	823,662
Earnings (Loss) Per Common Share		$	0.01			$	(0.01	)		$	(0.02	)

See accompanying notes to financial statements.

 

F-4

---

Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2012, 2011 and 2010

 

 

		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, 2009		$	50,511			$	128,307			$	1,716,074			$	1,143,366			$	609,540			$	(60,000	)		$	(16,415	)		$	(278,514	)		$	3,292,869
Net Income			—				—				—				10,486				—				—				—				—				10,486
Other Comprehensive Income			—				—				—				—				813,176				—				—				—				813,176
Purchase of Treasury Stock			—				—				—				—				—				—				(271	)			(2,665	)			(2,936	)
Dividends on Preferred Stock, ($.07 Per Share)			—				—				—				(27,188	)			—				—				—				—				(27,188	)
Balance - December 31, 2010		$	50,511			$	128,307			$	1,716,074			$	1,126,664			$	1,422,716			$	(60,000	)		$	(16,686	)		$	(281,179	)		$	4,086,407
Net Income			—				—				—				15,787				—				—				—				—				15,787
Other Comprehensive Income (Loss)																			(297,410	)															(297,410	)
Purchase of Treasury Stock																											(857	)			(25,965	)			(26,822	)
Dividends on Preferred Stock, ($.07 Per Share)			—				—				—				(27,856	)			—				—				—				—				(27,856	)
Balance - December 31, 2011		$	50,511			$	128,307			$	1,716,074			$	1,114,595			$	1,125,306			$	(60,000	)		$	(17,543	)		$	(307,144	)		$	3,750,106
Net Income			—				—				—				37,064				—				—				—				—				37,064
Other Comprehensive Income																			372,320																372,320
Purchase of Treasury Stock																											(300	)			(5,080	)			(5,380	)
Dividends on Preferred Stock, ($.07 Per Share)			—				—				—				(24,822	)			—				—				—				—				(24,822	)
Balance - December 31, 2012		$	50,511			$	128,307			$	1,716,074			$	1,126,837			$	1,497,626			$	(60,000	)		$	(17,843	)		$	(312,224	)		$	4,129,288

 

F-5

---

Index to Financial Statements

TWENTY SERVICES, INC.

Statements of Cash Flows

 

 

		For the Years Ended December 31,
		2012				2011				2010
Cash Flows From Operating Activities
Interest and dividends received		$	118,813			$	110,064			$	103,993
Other income			—				2,486				73
Cash paid to suppliers and employees			(129,623	)			(133,863	)			(129,923	)
Net Cash Flows Used by Operating Activities			(10,810	)			(21,313	)			(25,857	)
Cash Flows From Investing Activities
Principal collected on loans			—				28,520				—
Principal collected on held-to-maturity securities			—				421				516
Proceeds from sale of available-for-sale securities			26,561				112,064				74,744
Purchases of available-for-sale securities			—				(51,116	)			(199,717	)
Net Cash Flows Provided (Used) by Investing Activities			26,561				89,889				(124,457	)
Cash Flows From Financing Activities
Preferred stock dividends paid			(24,822	)			(31,288	)			(34,556	)
Purchase of treasury stock			(5,380	)			(26,822	)			(2,935	)
Net Cash Flows Used by Financing Activities			(30,202	)			(58,110	)			(37,491	)
Net Increase (Decrease) in Cash and Cash Equivalents			(14,451	)			10,466				(187,805	)
Cash and Cash Equivalents, Beginning of Year			104,672				94,206				282,011
Cash and Cash Equivalents, End of Year		$	90,221			$	104,672			$	94,206
Reconciliation of Operating Income (Loss) to Net Cash From Operating Activities
Net income (loss)		$	37,064			$	15,787			$	10,486
Adjustments to reconcile net income to net operating activities
Noncash other income			(51,310	)			—				—
Realized (gain) loss on sale of marketable securities			(528	)			(6,205	)			(13,500	)
Net change in deferred income taxes			—				(24,840	)			(6,578	)
Increase (decrease) in accrued interest receivable			—				—				(847	)
Increase (decrease) in accounts payable and accrued liabilities			3,964				(6,055	)			(15,418	)
Net Cash Flows Used by Operating Activities		$	(10,810	)		$	(21,313	)		$	(25,857	)

 

F-6

---

Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements

For the Years Ended December 31, 2012, 2011 and 2010

 

Note 1 – Nature of Operations, Risks and Uncertainties

Twenty Services, Inc. (the Company) is primarily engaged in the general finance business with its main source of revenue generated from earnings on loans made and investments in marketable securities. The Company grants commercial and personal real estate, general business, and personal loans to customers located primarily in Alabama. The Company seeks to secure its loan portfolio with 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 2 – Accounting Policies

Income Recognition – Interest income and dividends on securities are recognized in income on an accrual basis. 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 fixed income and equity securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company’s securities are classified as available-for-sale and accounted for as follows:

 

•

Securities Available-for-Sale – Corporate and municipal bonds, mutual funds, preferred stocks, and common stocks are reported at fair value.

Declines in the fair value of 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 other comprehensive income items and shown at their net amount in a separate component of stockholders’ equity until realized.

Realized gains and losses on the sale of available-for-sale securities 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.

 

F-7

---

Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2012, 2011 and 2010

 

 

Note 2 – Accounting Policies (continued)

 

The Company implemented the provisions of FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes, as of January 1, 2010. As of December 31, 2012, the Company had no uncertain tax positions that qualify for disclosure in the financial statements. The Company files an annual income tax return with the Internal Revenue Service, and its tax returns for the year 2009 and subsequent years remain subject to examination by tax authorities.

Comprehensive Income – Changes in unrealized gain and loss on available-for-sale securities is the only component of accumulated other comprehensive income for the Company.

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, 2012, 2011 and 2010 was 1,081,327, 1,083,359 and 1,093,745 respectively.

Note 3 – Fair Value Measurements

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

 

Level 1		Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2		Inputs to the valuation methodology include   •      quoted prices for similar assets or liabilities in active markets;   •      quoted prices for identical or similar assets or liabilities in inactive markets;   •      inputs other than quoted prices that are observable for the asset or liability;   •      inputs that are derived principally from or corroborated by observable market data by correlation or other means.   If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3		Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

F-8

---

Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2012, 2011 and 2010

 

 

Note 3 – Fair Value Measurements (continued)

 

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2012 and 2011.

Common & preferred stocks: Valued at the closing price reported on the active market on which the individual securities are traded.

Corporate & municipal bonds: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings.

Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Company are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily NAV and to transact at that price. The mutual funds held by the Company are deemed to be actively traded.

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:

 

						Fair Value Measurements at Reporting Date Using
Description		12/31/2012				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Common stock		$	2,893,770			$	2,893,770			$	—			$	—
Preferred stock			92,200				92,200
Mutual funds			52,680				52,680				—				—
Fixed income			1,401,650				—				1,401,650				—
Total Available-for-sale Securities		$	4,440,300			$	3,038,650			$	1,401,650			$	—
		12/31/2011
Common stock		$	2,464,800			$	2,464,800			$	—			$	—
Preferred stock			63,170				63,170
Mutual funds			50,430				50,430				—				—
Fixed income			1,352,201				—				1,352,201				—
Total Available-for-sale Securities		$	3,930,601			$	2,578,400			$	1,352,201			$	—

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 and other receivables.

 

F-9

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Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2012, 2011 and 2010

 

 

Note 3 – Fair Value Measurements (continued)

 

		2012								2011
		Carrying Value				Fair Value				Carrying Value				Fair Value
Cash and Cash Equivalents		$	90,221			$	90,221			$	104,672			$	104,672

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, 2012
Common stock		$	790,000			$	2,103,770			$	—			$	2,893,770
Preferred stock			95,875				1,405				(5,080	)			92,200
Mutual funds			139,331								(86,651	)			52,680
Fixed income			1,219,448				183,629				(1,427	)			1,401,650
Total Available-for-sale Securities		$	2,244,654			$	2,288,804			$	(93,158	)		$	4,440,300
December 31, 2011
Common stock		$	790,000			$	1,674,800			$	—			$	2,464,800
Preferred stock			100,000								(36,830	)			63,170
Mutual funds			139,331				—				(88,901	)			50,430
Fixed income			1,246,395				109,045				(3,239	)			1,352,201
Total Available-for-sale securities		$	2,275,726			$	1,783,845			$	(128,970	)		$	3,930,601

The amortized cost and aggregate fair value of fixed income securities at December 31, 2012 and 2011, 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
		Amortized Cost				Market Value
December 31, 2012
Corporate due after 10 years		$	608,980			$	727,394
Corporate and Municipal Holdings Due In
6-10 Years			—				—
After 10 Years			610,468				674,256
Total		$	1,219,448			$	1,401,650
December 31, 2011
Corporate due after 10 years		$	608,752			$	681,357
U.S. Government Corporations and Agencies Due In
6-10 Years			—				—
After 10 Years			637,643				670,844
Total		$	1,246,395			$	1,352,201

 

F-10

---

Index to Financial Statements

TWENTY SERVICES, INC.

Notes to Financial Statements (continued)

For the Years Ended December 31, 2012, 2011 and 2010

 

 

Note 4 – Marketable Securities (continued)

 

Proceeds from the sale of available-for-sale securities were $26,561 for the year ended December 31, 2012. A net gain of $528 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2012.

Proceeds from the sale of available-for-sale securities were $112,064 for the year ended December 31, 2011. A net gain of $6,205 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2011.

Note 5 – Finance Receivables and Allowance for Credit Losses

All contractual maturities of finance receivables were paid in the year ended December 31, 2011.

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:

 

		2012				2011				2010
Current
Deferred Tax Benefits		$	—			$	23,769			$	9,079

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

 

		2012				2011
Deferred Tax Assets
Net operating and capital loss carryforwards		$	283,555			$	291,800
Deferred Tax Liability
Net unrealized gain on available-for-sale securities			(658,693	)			(529,559	)
Net Deferred Tax Asset (Liability)		$	(375,138	)		$	(237,759	)

The Company has available at December 31, 2012, approximately $900,000 of unused operating and capital loss carryforwards that may be applied against future taxable income and that expire in various years from 2013 to 2033.

Note 7 – Preferred Dividends

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 dividend record date is February and dividends are paid in March of each year.

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 67% 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, 2012, 2011 and 2010

 

 

Note 9 – Concentration of Credit Risk

The Company maintains its cash and investments with various financial institutions which, at times, may exceed federally insured limits. Management has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.

Note 10 – Treasury Stock

The Company purchased 2,032 shares of common stock for an aggregate purchase price of $5,080, or $2.50 per share, and 1,200 shares of its preferred stock for an aggregate purchase price of $300 or $0.25 per share, during the year ended December 31, 2012.

The Company purchased 10,693 shares of common stock for an aggregate purchase price of $26,732.50, or $2.50 per share, and 3,431 shares of its preferred stock for an aggregate purchase price of $857.75 or $0.25 per share, during the year ended December 31, 2011.

The Company purchased 1,066 shares of common stock for an aggregate purchase price of $2,665, or $2.50 per share, and 1,084 shares of its preferred stock for an aggregate purchase price of $271, or $0.25 per share, during the year ended December 31, 2010.

The shares are held as common treasury stock and preferred treasury stock.

Note 11 – Recently Adopted Accounting Principles

ASU 2011-04 changes the wording used to describe requirements for fair value measurements to include (i) those that clarify the Board’s intent about the application of existing fair value measurements, (ii) Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. ASU 2011-04 further improves consistency between disclosure requirements of U.S. GAAP and IFRS by changing certain wording. Also, ASU 2011-04 updates the requirements for measuring fair value or disclosing information about measuring fair value including (i) measuring the fair value of financial instruments that are managed by a portfolio, (ii) application of premiums and discounts in fair value measurement, and (iii) amendments to expand the disclosures about fair value measurements. The amendments will become effective during annual periods for the Company after December 15, 2011.

In June 2011, the FASB issued an ASU that expands the disclosure requirements related to other comprehensive income (loss). A reporting entity is now required to present the total of comprehensive income (loss), the components of net income, and the components of other comprehensive income (loss) either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements. Under both choices, the reporting entity is required to present each component of net income along with total net income, each component of other comprehensive income (loss) along with a total for other comprehensive income (loss) and a total amount for comprehensive income (loss). This ASU became effective for interim and annual periods beginning after December 15, 2011. We adopted this ASU on January 1, 2012.

Note 12 – Subsequent Events

Management has evaluated subsequent events through February 22, 2013, the date the financial statements were available to be issued.

 

F-12

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Index to Financial Statements

TWENTY SERVICES, INC.

Schedule I - Marketable Securities

For the Year Ended December 31, 2012

 

 

Name of issuer and title of each issue		Number of shares or units - principal amount of bonds and notes				Cost of each issue				Fair Market value of  each issue at balance sheet date
Common Stock:
American Equity Investment Life Holding Company (AEL)			237,000			$	790,000			$	2,893,770
Total Common Stock							790,000				2,893,770
Mutual Funds:
Alpine Total Dynamic Dividend Fund SBI			2,500				50,000				10,080
Blackrock Preferred & Equity Advantage Trust			2,000				49,424				27,460
Wells Fargo Advantage Global D			2,000				39,907				15,140
Total Mutual Funds							139,331				52,680
Preferred Stock:
NorthStar Realty 8.25% Cum. Per. Pref. Ser. Callable 2/7/12			2,000				45,875				47,280
Royal Bank of Scotland 6.125% Ser R Callable 12/30/11			2,000				50,000				44,920
Total Preferred Stock							95,875				92,200
Fixed Income:
Municipal Holdings
New York New York Ser A1 G/O UNLTD 5%			25,000				26,198				29,175
Northwest TX INDPT Sch Dist Sch BLDG G/O 5%			25,000				26,324				29,061
Travis Co. TX Road G/O 4% Due 3/1/23			50,000				50,003				56,232
State Univ IA Univ Rev Rec FACS Ser S Cpn 4.25% Due 7/1/24			50,000				50,000				55,601
Mobile, AL Rfdg War Ser A Cpn 5% de 2/15/27			25,000				26,260				28,177
University VT & St Agric Cllg Ser B GO 4.375% Due 10/1/27			25,000				25,390				27,533
Iowa St Univ Sci & Tech Acad Bldg Cpn 4.0% 7/1/28			25,000				25,190				27,052
Minnesota St Sere 2009B G/O Cpn 4.0% Due 8/1/28			25,000				25,004				27,890
Miami-Dade Cnty Fl Bldg Ser B-1 G/O Cpn 5.375% Due 7/1/29			25,000				26,290				28,562
Olathe KS SR 215 G/O UNLTD B/E OID cpn 4.125% Due 10/1/29			25,000				25,194				27,394
Omaha Neb Ser A G/O Cpn 6.5% Due 12/1/30			25,000				32,150				40,050
West Fargo ND PUB Sch Cpn 4.000% Due 5/1/12			25,000				25,416				27,080
Hartford Cnty CT MET Dist Ser B G/O Unltd Cpn 4.25 Due 7/15/32			25,000				25,482				27,090
Keller Tx Indpt Sch Dist Sch Bldg Cpn 4.75% Due 8/15/32			50,000				50,911				56,177
Columbus, OH City Sch District Cpn 4.625% Due 12/1/33			25,000				25,545				27,388
Tacoma WA Recovery Zone G/O Cpn 4.625% Due 12/1/34			25,000				25,067				27,033
Texas St Trans Comm Mobility G/O Cpn 4.50% Due 4/1/35			25,000				25,274				26,951
State Univ IA Univ Rev Ath Facs Ser S Cpn 4.35% Due 7/1/35			25,000				25,004				27,122
Saratoga Cnty NY PUB Imp Ser A G/O Cpn 4.75% Due 7/15/38			25,000				25,295				27,337
Hoover AL Brd Ed Cap Outlay Wts Cpn 4.25% Due 2/15/39			20,000				19,028				21,341
Metropolitan Transn Auth NY Rev Tx cpn 6.587% Due 11/15/30			25,000				25,443				30,010
Total Municipal Holdings							610,468				674,256
Corporate Holdings
Morgan Stanley Med Term Notes Ser F Cpn 6.25% Due 8/28/17			25,000				24,758				28,696
Bank of America Corp Senior Notes Cpn 6.00% Due 9/1/17			25,000				23,997				29,302
JP Morgan Chase Co Senior Notes Cpn 6.00% Due 1/15/18			50,000				49,954				59,731
Allstate Corp Debentures Noncall Life Cpn 6.75% Due 5/15/18			50,000				51,601				63,299
Caterpillar Financial Med Term Notes Cpn 7.150% Due 2/15/19			50,000				53,665				65,480
Goldman Sachs Med Term Notes Cpn 6.75% Due 5/5/19			50,000				51,003				59,274
Aetna, Inc. Notes Cpn. 7.625% Due 8/15/26			150,000				156,147				195,368
Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28			100,000				98,927				97,500
General Elec Cap Corp Medium Term Notes Cpn 6.75% Due			50,000				47,040				65,003
Loews Corp Notes Cpn 6% Due 2/1/2035			25,000				24,724				29,283
Wachovia Corp Senior Notes Cpn 5.5% due 8/1/2035			30,000				27,164				34,458
Total Corporate Holdings							608,980				727,394
Total Fixed Income							1,219,448				1,401,650
Total Marketable Securities - Available for Sale						$	2,244,654			$	4,440,300

 

F-13

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Index to Financial Statements

TWENTY SERVICES, INC.

Schedule I - Marketable Securities

For the Year Ended December 31, 2011

 

 

Name of issuer and title of each issue		Number of shares or units - principal amount of bonds and notes				Cost of each issue				Fair Market value of  each issue at balance sheet date
Common Stock:
American Equity Investment Life Holding Company (AEL)			237,000			$	790,000			$	2,464,800
Total Common Stock							790,000				2,464,800
Mutual Funds:
Alpine Total Dynamic Dividend Fund SBI			2,500				50,000				10,950
Blackrock Preferred & Equity Advantage Trust			2,000				49,424				24,300
Wells Fargo Advantage Global D			2,000				39,907				15,180
Total Mutual Funds							139,331				50,430
Preferred Stock:
NorthStar Realty 8.25% Cum. Per. Pref. Ser. Callable 2/7/12			2,000				50,000				40,750
Royal Bank of Scotland 6.125% Ser R Callable 12/30/11			2,000				50,000				22,420
Total Preferred Stock							100,000				63,170
Fixed Income:
Municipal Holdings
New York New York Ser A1 G/O UNLTD 5%			25,000				26,434				29,106
Northwest TX INDPT Sch Dist Sch BLDG G/O 5%			25,000				26,554				29,015
Travis Co. TX Road G/O 4% Due 3/1/23			50,000				50,004				55,886
State Univ IA Univ Rev Rec FACS Ser S Cpn 4.25% Due 7/1/24			50,000				50,000				54,681
Mobile, AL Rfdg War Ser A Cpn 5% de 2/15/27			25,000				26,438				27,296
University VT & St Agric Cllg Ser B GO 4.375% Due 10/1/27			25,000				25,432				26,289
Minnesota St Sere 2009B G/O Cpn 4.0% Due 8/1/28			25,000				25,004				26,217
Omaha Neb Ser A G/O Cpn 6.5% Due 12/1/30			25,000				32,413				34,819
Washington St. Var PURP Ser F G/O Cpn 4.5% Due 7/1/32			25,000				25,553				25,687
Keller Tx Indpt Sch Dist Sch Bldg Cpn 4.75% Due 8/15/32			50,000				51,086				52,772
Hartford Cnty CT MET Dist Ser B G/O Unltd Cpn 4.25 Due 7/15/32			25,000				25,546				25,649
Saratoga Cnty NY PUB Imp Ser A G/O Cpn 4.75% Due 7/15/38			25,000				25,341				26,408
Iowa St Univ Sci & Tech Acad Bldg Cpn 4.0% 7/1/28			25,000				25,212				25,922
State Univ IA Univ Rev Ath Facs Ser S Cpn 4.35% Due 7/1/35			25,000			$	25,004			$	25,506
Miami-Dade Cnty Fl Bldg Ser B-1 G/O Cpn 5.375% Due 7/1/29			25,000				26,493				26,981
West Fargo ND PUB Sch Cpn 4.000% Due 5/1/12			25,000				25,458				25,369
Olathe KS SR 215 G/O UNLTD B/E OID cpn 4.125% Due 10/1/29			25,000				25,219				26,104
Tacoma WA Recovery Zone G/O Cpn 4.625% Due 12/1/34			25,000				25,075				25,422
Texas St Trans Comm Mobility G/O Cpn 4.50% Due 4/1/35			25,000				25,332				25,801
Columbus, OH City Sch District Cpn 4.625% Due 12/1/33			25,000				25,595				25,445
Hoover AL Brd Ed Cap Outlay Wts Cpn 4.25% Due 2/15/39			20,000				19,009				20,246
Metropolitan Transn Auth NY Rev Tx cpn 6.587% Due 11/15/30			25,000				25,441				30,223
Total Municipal Holdings							637,643				670,844
Corporate Holdings
Morgan Stanley Med Term Notes Ser F Cpn 6.25% Due 8/28/17			25,000				24,758				24,497
Bank of America Corp Senior Notes Cpn 6.00% Due 9/1/17			25,000				23,824				24,435
JP Morgan Chase Co Senior Notes Cpn 6.00% Due 1/15/18			50,000				49,957				56,064
Allstate Corp Debentures Noncall Life Cpn 6.75% Due 5/15/18			50,000				51,601				59,589
Caterpillar Financial Med Term Notes Cpn 7.150% Due 2/15/19			50,000				53,665				64,257
Goldman Sachs Med Term Notes Cpn 6.75% Due 5/5/19			50,000				51,003				53,743
Aetna, Inc. Notes Cpn. 7.625% Due 8/15/26			150,000				156,147				189,053
Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28			100,000				98,927				95,926
General Elec Cap Corp Medium Term Notes Cpn 6.75% Due			50,000				47,040				57,465
Loews Corp Notes Cpn 6% Due 2/1/2035			25,000				24,724				27,138
Wachovia Corp Senior Notes Cpn 5.5% due 8/1/2035			30,000				27,106				29,190
Total Corporate Holdings							608,752				681,357
Total Fixed Income							1,246,395				1,352,201
Total Marketable Securities - Available for Sale						$	2,275,726			$	3,930,601

 

F-14