U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number 0-9352
Gibbs Construction, Inc.
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(Exact name of small business issuer as specified in its charter)
Texas 75-2095676
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(State or other jurisdiction of incorporation (IRS EmployerIdentification No.)
or organization)
1855 Wall Street, Garland, TX 75041
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(Address of principal executive offices) (Zip Code)
(972) 278-3433
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(Registrant's telephone number)
-------------------------------------------- ----------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,060,000
<PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------------- ----------
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 475,729 $ 624,130
Temporary Investments 129 129
Note Receivable - Net of Allowance for Doubtful Accounts
of $139,300 in 2000 - 139,300
Accounts Receivable
Trade - Net of Allowance for Doubtful Accounts of
$1,442,751 and $1,233,393 in 2000 and 1999,
respectively 794,582 5,276,100
Costs and Estimated Earnings in Excess of Billings
on Uncompleted Contracts 45,340 310,085
Prepaid Expenses 8,628 104,866
----------- ---------
TOTAL CURRENT ASSETS 1,324,408 6,454,610
----------- ---------
LAND, BUILDINGS AND EQUIPMENT 624,316 1,489,686
Less Accumulated Depreciation (465,697) (782,717)
------------ ----------
NET LAND, BUILDINGS AND EQUIPMENT 158,619 706,969
------------ ----------
OTHER ASSETS
Receivables From Affiliates, Employees and Other - 26,779
Real Estate Investments 17,732 282,589
------------ ----------
TOTAL OTHER ASSETS 17,732 309,368
------------ ----------
TOTAL ASSETS $ 1,500,759 $ 7,470,947
=========== ==========
</TABLE>
(Continued)
F-1
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------------- -----------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Notes Payable $ - $ 219,309
Current Installments of Long-Term Debt 4,226,755 178,226
Current Installment of Capital Lease Obligation 29,054 15,472
Accounts Payable 4,080,701 8,442,710
Accrued Liabilities on Loss Jobs 912,013 2,163,809
Accrued Expenses 2,410,151 2,173,907
Billings in Excess of Costs and Estimated Earnings on
Uncompleted Contracts 11,241 331,303
Payable to Stockholders 78,539 79,325
------------ ------------
TOTAL CURRENT LIABILITIES 11,748,454 13,604,061
LONG-TERM DEBT - Excluding Current Installments - 326,976
CAPITAL LEASE OBLIGATION - Excluding Current
Installments - 13,582
------------- ------------
TOTAL LIABILITIES 11,748,454 13,944,619
------------- ------------
STOCKHOLDERS' DEFICIT
Common Stock of $.01 Par Value. Authorized 15,000,000
Shares; Issued and Outstanding 4,060,000 Shares 40,600 40,600
Additional Paid-In Capital 5,003,234 5,003,234
Retained Deficit (15,291,529) (11,517,506)
------------- ------------
TOTAL STOCKHOLDERS' DEFICIT (10,247,695) (6,473,672)
------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 1,500,759 $ 7,470,947
============= ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-2
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CONSTRUCTION REVENUES $ 608,178 $16,144,549 $ 6,042,047 $ 46,474,648
COST OF CONSTRUCTION 1,010,835 15,656,072 7,735,154 44,489,075
------------- ---------- ------------ -------------
GROSS (LOSS) PROFIT (402,657) 488,477 (1,693,107) 1,985,573
GENERAL AND
ADMINISTRATIVE EXPENSES 982,219 410,823 2,017,525 1,499,105
------------- ---------- ------------ -------------
(LOSS) INCOME BEFORE
OTHER INCOME (EXPENSE) (1,384,876) 77,654 (3,710,632) 486,468
OTHER INCOME (EXPENSE)
Gain on Disposal of Equipment 202,354 - 172,236 5,000
(Loss) Gain on Temporary
Investments Transactions - (17,966) - 48,376
(Loss) on Real Estate Held for
Resale (45,548) - (45,548) -
Interest Expense (63,096) (28,534) (196,488) (68,363)
Other - 64,147 6,410 37,524
------------- ---------- ------------ -------------
(LOSS) INCOME BEFORE
INCOME TAXES (1,291,166) 95,301 (3,774,022) 509,005
INCOME TAX (EXPENSE) - (56,102) - (197,102)
------------- ---------- ------------ -------------
NET (LOSS) INCOME $ (1,291,166) $ 39,199 $ (3,774,022) $ 311,903
============ ========== ============ =============
(LOSS) INCOME PER SHARE $ (.32) $ .01 $ (.93) $ .08
============ ========== ============ =============
WEIGHTED AVERAGE NUMBER
OF SHARES 4,060,000 4,030,000 4,060,000 4,021,000
============ ========== ============ =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
(Continued)
F-3
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------------
2000 1999
--------------- ------------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (Loss) Income $ (3,774,022) $ 311,903
Adjustments to Reconcile Net (Loss) Income to
Net Cash Flow Used in Operating Activities
Depreciation 86,290 135,974
Gain on Disposal of Equipment (172,236) (5,000)
Gain on Temporary Investments Transactions - (48,376)
Loss on Real Estate Held for Resale 45,548 -
Change in Allowance for Doubtful Accounts 348,664 -
Deferred Taxes - 173,900
Issuance of Common Stock for Service - 49,687
Changes in Current Assets and Liabilities
Accounts Receivable 4,298,932 (536,535)
Billings Related to Cost and Earnings on
Uncompleted Contracts (55,317) (580,389)
Prepaid Expenses 96,238 70,928
Accounts Payable (5,613,805) 1,120,586
Accrued Expenses 236,244 (105,141)
Purchase of Temporary Investments - (5,869,106)
Proceeds from Sale of Temporary Investments - 5,829,165
Purchase of Real Estate Held for Resale - (666,857)
Proceeds from Sale of Real Estate Held for Resale 219,309 -
------------ -----------
NET CASH FLOW (USED) IN
OPERATING ACTIVITIES (4,284,155) (119,261)
------------ -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment - (193,156)
Proceeds from Sale of Equipment 634,296 18,719
Change in Other Assets - 115,921
------------ -----------
NET CASH FLOW PROVIDED (USED)
BY INVESTING ACTIVITIES 634,296 (58,516)
------------ -----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Notes Borrowings 6,124,532 259,309
Repayments of Notes Borrowings (2,622,288) (241,447)
Changes in Stockholder Payables (786) (53,057)
------------ -----------
NET CASH FLOW PROVIDED (USED)
BY INVESTING ACTIVITIES 3,501,458 (35,195)
------------ -----------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
(Continued)
F-4
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------
2000 1999
--------------- ------------
<S> <C> <C>
NET (DECREASE) IN CASH $ (148,401) $ (212,972)
CASH AT THE BEGINNING OF THE PERIOD 624,130 1,066,665
----------- -----------
CASH AT THE END OF THE PERIOD $ 475,729 $ 853,693
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Year For:
Interest Expense $ 22,582 $ 68,363
=========== ===========
Income Tax Paid $ - $ 23,202
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-5
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulations S-X. They do not include all information and notes
required by generally accepted accounting principals for complete financial
statements. However, except as disclosed, there has been no material change
in the information disclosed in the notes to consolidated financial
statements included in the Annual Report on Form 10-K of Gibbs Construction,
Inc. for the year ended December 31, 1999. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
nine-month period ended September 30, 2000, are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000.
NOTE 2: SUBSEQUENT EVENTS
On April 20, 2000, Gibbs Construction, Inc. filed a Petition pursuant to
Chapter 11 of the United States Bankruptcy Code, and Tony G. Gibbs resigned
as Vice President and Director of the Company.
On July 28, 2000, Gibbs received permission from its Court of Jurisdiction
to solicit approval of its Plan of Reorganization. The Company has continued
to operate in its normal course of business pending approval of its Plan of
Reorganization.
Gibbs' Chapter 11 Bankruptcy contemplates a Plan of Reorganization that will
allow Gibbs to continue in business as a Public Company by consolidation
with a privately held company and re-negotiation of debt with its largest
creditor. Gibbs has entered into negotiations with a construction services
and asset management company that contemplates the combination of the
Company's resources and operations into Gibbs through stock issuance in
November 2000.
Tony Gibbs, brother of Company President, has resigned as an officer and
director to pursue other business interests. Mr. Gibbs owns 1,000,000 shares
of Gibbs' stock, which is pledged as collateral to secure the Company's debt
to its bonding surety.
NOTE 3: NOTE PAYABLE TO BONDING SURETY
In the fourth quarter 1999, the Company's bonding surety notified the
Company that it would no longer provide completion and payment bonds for the
Company's construction projects. Given these events, the Company began a
series of negotiations with its bonding surety in December 1999, which
resulted in a written agreement in January 2000, whereby the bonding surety
would provide funds to finish certain projects and required the Company to
terminate construction on other projects.
The amounts paid by the Company's bonding surety to subcontractors,
supplies, and other claimants are recorded as a note payable to the bonding
surety. As of September 30, 2000, the bonding surety had disbursed
$6,124,532 on those certain jobs. The surety applied $1,945,333 in billings
on those jobs.
F-6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Nine Months Ended September 30, 2000 compared to Nine Months Ended September
30,1999
On April 20, 2000, the Company filled for protection under Chapter 11 of the
United States Bankruptcy Act. During the first nine months of 2000, the
Company's increasing insolvency resulted in an increased inability to contract
for work. Accordingly, revenues decreased to $6,042,047 in the first nine months
of 2000 compared to $46,474,648 in the first nine months of 1999. The Company
incurred a gross loss in the first nine months of 2000 of $1,693,107 reflecting
earlier contracts that the Company was completing at a loss.
The Company incurred general and administrative expenses in the first nine
months of 2000, $2,017,525, compared to $1,499,105 in the first nine months of
1999, the expenses in the first nine months of 2000 principally reflecting legal
fees related to the Company's insolvency.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
The Company's revenues decreased to $608,178 in the second quarter of 2000,
declining from $16,144,549 for the same period of 1999. Revenues in the later
period reflect the winding down of contracts engaged in prior to the Company's
filing for protection under Chapter 11 of the United States Bankruptcy Act. See
Notes 2 and 3 to the accompanying financial statements.
Liquidity and capital resources
With respect to the Company's filing of Chapter 11 under the United States
Bankruptcy Code, see Notes 2 and 3 to the accompanying financial statements.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Index
Exhibit 27 - Financial Data Schedule
(b) None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Gibbs Construction, Inc.
November 13, 2000 /s/ Danny R. Gibbs
Danny R. Gibbs, President and
Principal Financial Officer
<PAGE>
