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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended SEPTEMBER 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 0-8301
GOLDEN TRIANGLE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
State of Colorado 25-1302097
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification #)
6314 Aspen Cove Court
Sugar Land, TX 77479
(Address of Principal Executive Offices)
(281) 565-7300
Registrant's Telephone Number Including Area Code
8504 Sonoma Valley N.E., Albuquerque, NM 87122
(Former address)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days [X] Yes [ ] NO
602,125 Shares, Common Stock, $.001 Par Value
Number of shares outstanding of each of the issuer's classes
of common stock, as of September 30, 1998
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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GOLDEN TRIANGLE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30 December 31
1998 1997
---------- ----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 233,425 $ 95,648
Accounts receivable - trade 1,280,443 741,380
Accounts receivable - other 75,101 87,805
Amounts receivable - officers 76,264 20,000
Inventory 218,947 199,627
Marketable securities 24,616 83,579
Prepaid expenses 13,500 24,969
---------- ----------
Total Current Assets 1,922,296 1,253,008
---------- ----------
PROPERTY AND EQUIPMENT 7,085,157 6,645,320
Accumulated depreciation, depletion
and amortization (2,006,657) (1,664,197)
---------- ----------
Net Property and Equipment 5,078,500 4,981,123
---------- ----------
OTHER ASSETS
Notes receivable - long term 268,557 275,129
Advances to related parties 54,900 79,091
Deferred tax assets 68,700 184,000
Other 21,599 24,501
---------- ----------
Total Other Assets 413,756 562,721
---------- ----------
TOTAL ASSETS $7,414,552 $6,796,852
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 48,766 $ 76,586
Accrued expenses 98,326 18,146
Line of credit 171,200 76,000
---------- ----------
Total Current Liabilities 318,292 170,732
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value
(1,000,000 authorized)
Class A (3,374 outstanding) 337 337
Class B (53,196 and 53,903 outstanding) 5,320 5,390
Common stock, $.001 par value
(100,000,000 shares authorized;
602,125 and 580,398 outstanding) 602 580
Additional paid-in capital 7,508,777 7,350,571
Unrealized (loss) on marketable
securities, net (20,082) (31,437)
Accumulated deficit (398,694) (699,321)
---------- ----------
Total Stockholders' Equity 7,096,260 6,626,120
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $7,414,552 $6,796,852
========== ==========
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
OPERATING REVENUES
Disposal & service fees $ 285,235 $ 301,053 $1,162,797 $1,501,522
Oil reclamation, sand and
water sales 204,967 - 572,478 -
Oil and gas production 34,991 90,928 198,443 351,954
Rental income 181,831 87,930 601,391 90,283
Gain on sale of operating assets - 185 - 26,047
Miscellaneous 7,824 374 8,229 2,226
---------- ---------- ---------- ----------
Total Operating Revenues 714,848 480,470 2,543,338 1,972,032
---------- ---------- ---------- ----------
COST OF REVENUES
Skim oil purchases 125,426 - 392,605 -
Australian marketing costs 13,694 30,373 68,143 103,591
Production expenses and taxes 407 3,844 3,029 6,328
Contract services 9,086 7,896 32,804 33,190
Direct materials and supplies 59,103 35,844 177,751 119,886
Lease costs 20,961 22,493 74,775 108,746
Utilities 7,141 16,476 23,676 41,370
Depreciation, depletion and
amortization 119,540 100,804 357,289 322,722
---------- ---------- ---------- ----------
Total Costs of Revenues 355,358 217,730 1,130,072 735,833
---------- ---------- ---------- ----------
GROSS PROFIT 359,490 262,740 1,413,266 1,236,199
OPERATING EXPENSES
Personnel costs 105,792 64,256 331,691 200,158
Advertising and public relations 25,802 10,220 115,392 112,944
Repairs and maintenance 49,225 37,117 154,911 95,524
Professional fees 15,935 10,352 104,258 46,679
Rent 2,400 4,343 6,962 14,830
Taxes 16,052 4,752 45,212 24,279
Other expenses 44,901 31,195 172,780 127,694
---------- ---------- ---------- ----------
Total Operating Expenses 260,107 162,235 931,206 622,108
---------- ---------- ---------- ----------
INCOME/(LOSS) FROM OPERATIONS 99,383 100,505 482,060 614,091
OTHER INCOME/(EXPENSES)
Interest and dividend income 7,221 6,297 24,461 27,749
Interest expense (4,506) - (8,974) (518)
Transfer fees 2,520 3,275 8,027 8,183
Gain/(loss) on sale of assets - 17,228 38,778 25,115
---------- ---------- ---------- ----------
INCOME/(LOSS) BEFORE INCOME TAXES 104,618 127,305 544,352 674,620
Australian income taxes 2,559 10,497 26,015 55,609
Income taxes - federal and state (42,835) (25,059) 68,214 288,306
Deferred income taxes 132,318 108,201 148,484 (71,252)
---------- ---------- ---------- ----------
NET INCOME/(LOSS) $ 12,576 $ 33,666 $ 301,639 $ 401,957
Other comprehensive income, net of tax:
Unrealized gains/(losses)
on securities 17,506 20,910 11,355 23,282
Dividends paid (1,012) (184,614) (1,012) (184,614)
---------- ---------- ---------- ----------
COMPREHENSIVE INCOME $ 29 070 $ (130,038) $ 311,982 $ 240,625
========== ========== ========== ==========
Earnings per Common Share:
Basic $ 0.02 $ (0.27) $ 0.51 $ 0.40
========== ========== ========== ==========
Diluted 0.02 (0.26) 0.48 0.38
========== ========== ========== ==========
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase/(Decrease) in Cash and Cash Equivalents
(Unaudited)
Nine Months Ended
September 30
------------------------
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 301,639 $ 401,957
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 357,289 322,722
(Gain) on sale of securities (38,778) (51,158)
Stock issued for services 187 2,534
Decrease in restricted cash - 1,576
(Increase) in receivables (519,787) (96,226)
(Increase) in inventory (19,320) (197,251)
Decrease in deferred taxes 115,300 -
Decrease in amounts due from/to related parties 15,350 16,934
Decrease in prepaid expenses and other 11,469 -
Increase in trade accounts payable (27,820) (6,560)
Increase in accrued expenses 89,374 144,328
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 284,903 538,856
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (441,181) (1,306,955)
Purchase of marketable securities (74,482) (51,108)
Purchase of treasury stock - (122,094)
Proceeds from sale of marketable securities
and other 174,796 757,506
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NET CASH USED IN INVESTING ACTIVITIES (340,867) (722,651)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing stock 146,976 178,524
Loan to related parties (113,839) (98,000)
Repayment from related parties 66,416 98,000
Borrowing under line of credit 171,200 -
Repayments on line of credit (76,000) -
Dividends paid (1,012) (41,193)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 193,741 137,331
---------- ----------
Increase/(Decrease) in Cash 137,777 (46,464)
Cash at Beginning of Year 95,648 298,521
---------- ----------
CASH AT END OF PERIOD $ 233,425 $ 252,057
========== ==========
Supplemental Disclosures - Non-cash Investing and Financing Transactions
Cash paid for interest $ 8,974 $ 518
Cash paid for income taxes 39,998 71,200
Stock issued for fixed assets 11,000 -
Stock issued for services 187 2,534
Stock issued from treasury as promotion - 4,397
Stock issued from treasury for Class B
preferred stock dividends - 143,421
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC.
SELECTED INFORMATION FOR CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1998
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-01 of Regulation
S- X. They do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there has been no material change in
the information included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. 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, 1998, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998.
NOTE 2: CHANGES IN EFFECTIVE INCOME TAX RATES
The Company's effective income tax rate varies between reporting periods
because of items currently deductible for tax purposes (primarily
depreciation and amortization) that are not currently expensed for financial
reporting purposes and the current deduction of items previously expensed for
financial reporting purposes but not deducted for tax purposes (related to
depletion of royalty interests). In addition, federal income taxes reflect a
reduction in taxes due to Alternative Minimum Tax credits that became
available in the current year.
NOTE 3: SALE OF PROPERTY AND ACQUISITION OF PROPERTY
During June 1997, the Company sold its Amando salt water disposal facility
and all related fixtures and equipment and purchased a 2,881.8 acre property
near Houston, Texas known as the Altair property. The Company has continued
to purchase additional equipment related to the business being carried on
based at this property.
These transactions have changed the mix of available revenue sources when
comparing the first two quarters of the two years. The Amando facility
contributed a significant amount of salt water disposal revenues during 1997.
During 1998, operations from the Altair property have generated oil field
service revenues, rental income, and income from the sale of fresh water and
reclaimed skim oil which have exceeded the Amando revenues of 1997.
During the first six months of 1998, the Company has acquired heavy equipment,
as well as trucks and trailers for use in operations based out of the Altair
property. The Company has also sold 282 acres out of the Apache Ranch in New
Mexico. However, the sale of the land did not convey grazing rights and the
Company continues to have full use of this acreage at the present time.
NOTE 4: STOCK TRANSACTIONS AND DIVIDENDS
The Company has issued 8,521 common shares under its Dividend Reinvestment
Plan during 1998 for proceeds of $ 89,665. The Company's warrants offering
to stockholders, discussed below, resulted in proceeds of $57,363 for the
issuance of 4,856 shares.
During March 1998, the Company registered 200,000 warrants (and underlying
common shares) for issuance to existing stockholders. This effort was
designed to offer existing stockholders the opportunity to increase their
holdings in the Company based on one warrant for each four shares held.
There was no market to sell these warrants. The warrants were to be
exchanged for registered, unissued common shares on a one for one basis.
The exercise price of the warrants was $11.8125. This offering has closed.
During the third quarter, the Company's directors voted to eliminate the
dividend features of the its Class B preferred stock primarily due to the
impact on earnings per share. In conjunction with this decision, the
directors also voted to allow holders of the this stock to convert up to 200
of their shares back into common on a one for ten basis, the same basis that
common was converted to preferred in 1996. This conversion option is open
for three years. In addition to this option to convert 200 shares, after the
first year, the directors are to vote on a percentage within the range of 3%
to 5% of shares held that may be converted into common. Pursuant to this
conversion option, 707 preferred shares have been converted into 7,070 common
shares. The effect of the redemption of Class B preferred shares on the
Company's earnings per share was calculated and deemed to be immaterial
through the period ended September 30, 1998.
During the third quarter, the Company paid dividends of $1,012 on its Class A
preferred shares.
In September 1998, the Company filed an S-8 registrationi statement with
the Securities and Exchange Commission whereby the Company registered up to
200,000 common shares underlying a Stock Compensation Plan adopted by the
directors of the Company. This plan allows the directors to issue common
stock as compensation for services provided by employees, officers,
directors, agents, consultants, and advisors. The plan will allow these
service providers and employees to acquire proprietary interests in the
Company in exchange for their services. These interests would then
participate in the growth and prosperity of the Company and, thereby,
provide incentives for high levels of service. No shares have been issued
under this plan.
NOTE 5: ACCOUNTS RECEIVABLE
During the second and third quarters of 1998, accounts receivable have
increased significantly. This increase is largely due to an increase in
receivables from TransTexas Gas Corporation, the Company's largest customer,
due to an internal policy at TransTexas and communication break downs
regarding invoices effected by this policy. At September 30, 1998,
TransTexas owed the Company $894,226. However, significant collections are
expected during the fourth quarter. Based on contacts with TransTexas, no
significant reserve for doubtful accounts is deemed necessary at September
30, 1998.
NOTE 6: GAIN ON SALES OF ASSETS
During the first quarter of 1998, the Company was a beneficiary of efforts
to revive a dormant publicly traded entity which the Company had invested in
during the early 1980s. The investment had been written off in the late
1980s as being worthless. This entity has been revived by third parties and
the Company was able to sell its holdings for $36,721.
During the second quarter of 1998, the Company sold 282 acres out of it
Apache Ranch in New Mexico, while retaining grazing rights, at a modest gain
of $1,799.
NOTE 7: EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per common share (EPS) for the three and nine months ended September 30 as
indicated.
Three Months Nine Months
1998 1997 1998 1997
--------- --------- --------- ---------
Numerator:
Net income $ 12,576 $ 33,666 $ 301,639 $ 401,957
Less preferred stock dividends (1,012) (184,614) (1,012) (184,614)
--------- --------- --------- ---------
Numerator for basic EPS 11,564 (150,948) 300,627 217,343
Effect of dilutive preferred
stock dividends - - - -
--------- --------- --------- ---------
Numerator for diluted EPS $ 11,564 $(150,948) $ 300,627 $ 217,343
========= ========= ========= =========
Denominator:
Basic weighted average shares
outstanding 594,494 547,022 587,167 543,266
Convertible preferred shares 33,740 33,740 33,740 33,740
--------- --------- --------- ---------
Denominator for diluted EPS 628,234 580,762 620,907 577,006
========= ========= ========= =========
Basic EPS $ 0.02 $ (0.27) $ 0.51 $ 0.40
========= ========= ========= =========
Diluted EPS 0.02 (0.26) 0.48 0.38
========= ========= ========= =========
NOTE 8: COMPREHENSIVE INCOME
Other comprehensive income is comprised of unrealized gains/losses on
marketable securities and dividends paid. Changes in unrealized gains/losses
on marketable securities for 1998 are as follows:
Balance at December 31, 1997 $ (31,437)
Change during 1998 11,355
---------
Current balance $ (20,082)
=========
Dividends paid on Class A Preferred Stock during the third quarter totaled
$1,012.
NOTE 9: NEW CONTRACTS
During the third quarter, the Company entered into a sand and gravel lease
under which the lessee will be allowed to remove all sand and gravel contained
in the stockpiles at the Altair property should they so desire. After
existing stockpiles have been depleted, the lessee also will be allowed to
mine sand and gravel from the land. The contract establishes minimum prices
and provides for price increases based on increased sales values for the
materials. The contract does not contain an ending date. Management believes
that this contract will yield significant revenues over the next three to four
years. Due to wet conditions, removal of materials under this contract has not
begun until Novermber 1998.
NOTE 10: RELATED PARTY TRANSACTIONS
During the third quarter of 1998, the Company decided to move its corporate
offices to Sugar Land, Texas. The Company had been leasing its offices in
Albuquerque, NM from its president. In making the move, the Company desired
to continue this relationship and the Company's president agreed to purchase
facilities which would serve adequately as the Company's offices. The
facilitiew were under construction and changes were made to allow for
telephone, fax, and Internet lines and some changes in electricity and
lighting. The Company intends to pay for its modifications. The Company
advance funds to its president for preliminary cash requirements which are to
be repaid when the facilites in Albuquerque have been sold. The Company's
president has repaid a portion of these advances. The amounts are presented
in the statement of cash flows.
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Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations.
During the first nine months of 1998, the Company has realized significant
revenues from the potential that was seen when the Altair property was
acquired in 1997. New business activity developed as a direct result of
having established a presence in the area includes rental of facilities and
heavy equipment, establishment of an oil reclamation facility, and the
development of a new salt water disposal facility near El Campo, Texas.
During the third quarter, the Company entered into a contract to sell sand
and gravel from the Altair property, including stockpiled sand and gravel,
as well as sand and gravel to be mined by the lessee. Management believes
that this contract will yield significant revenues over the next three to
four years.
With activities begun during the last half of 1997 having been fairly well
established and contributing to revenues, the addition of new equipment in
the first half of 1998, and the signing of a contract for the sale of sand
and gravel during the third quarter, management expects the Company to see
further improvements in revenues and net income by year end.
As discussed in Note 4 of Selected Information for Consolidate Financial
Statements, the Board of Directors voted to voted to eliminate the dividend
features of its Class B preferred stock and to allow holders of this stock
to convert up to 200 of their shares back into common on a one for ten basis,
the same basis that common was converted to preferred in 1996. As a result
of SEC guidance issued with respect to beneficial conversion features in
connection with convertible preferred stock, the Company was deemed to
recognize a noncash gain equivalent to the difference between the current
market value of the common shares issued in the conversion and the carrying
value of the preferred stock. This gain was determined to be insignificant
for shares converted during the third quarter and has not been presented in
the financial statements. Subsequent conversions may prove to yield deemed
dividends which would impact the Company's earnings per share should market
prices for common shares rise prior to conversion of additional preferred
shares.
LIQUIDITY AND CAPITAL RESOURCES
Management is pleased to report total assets of $7,414,552 for September 30,
1998, an increase of $617,700 over $6,796,852 on December 31, 1997. This
significant increase is shown in the rise in cash balances and accounts
receivable augmented by the addition of equipment. Equipment additions
consisted primarily of the purchase of trucks and trailers to further develop
the oil field services, skim oil purchasing, and trucking operations based
out of the Altair property.
Current assets were up when comparing September 30, 1998 to both December 31,
1997 and September 30, 1997. Current assets increased because of increased
cash generated by the new Altair operations. Accounts receivable has
increased due to the increased activities and due to a problem regarding a
TransTexas policy and with a payment slowdown as TransTexas moved its offices
during the third quarter. (The Company does a high percentage of this
business with TransTexas Gas Corporation, as discussed below.) Current
liabilities were reduced slightly when comparing the current balances to the
balances at the end of the same quarter in 1997, but were up when compared
to balances at December 31, 1997. The increase is due primarily to an
increase in accrued income taxes and utilization of a line of credit facility.
The borrowings under the existing lines of credit were made initially to
participate in an oil and gas lease project. When that project failed to
materialize, the funds were used to acquire vacuum trucks and trailers.
These loans are expected to be repaid before year end. It is important to
note that the Company has no long-term bank debt and that its property and
equipment are free from liens.
The Company's oil field services and rental revenues are derived largely
from TransTexas Gas Corporation. (Business with TransTexas represented 43%
of the Company's total revenues during the nine months ended September 30,
1998.) The Company has not experienced any significant problems ultimately
collecting its receivables from TransTexas and believes that these
obligations will continue to be paid as they have in the past. However,
during the third quarter, management has devoted substantial time and effort
to reconciling a policy problem within TransTexas regarding its approval and
payments of bills. It is believed that most, if not all, questions have been
resolved and that TransTexas will move to reduce its outstanding balance due
to the Company during the fourth quarter. It is expected that the volume of
activity and receivables from TransTexas will continue to be significant.
Should TransTexas become unable to pay its bills, the Company's related
assets and earnings would be adversely impacted. Subject to this
consideration, the Company is not aware of any trends or demands that would
be likely to reduce its ability to continue its relationship with TransTexas.
Management believes that the Company would be able to generate sufficient cash
flow to meet its obligations should such adversity occur.
During March 1998, the Company issued warrants to existing stockholders to
allow them to expand their holdings through the purchase of additional shares
of the Company's unissued common stock. Proceeds from the exercise of
warrants totaled $57,363. Additionally, proceeds from the Company's Dividend
Reinvestment Plan have totaled $89,892 during the first nine months of 1998.
These proceeds were utilized in further development of resources and
opportunities available from the Altair property.
RESULTS OF OPERATIONS
A large portion of the basic start-up operations were completed on the Altair
property during the last half of 1997 with a favorable impact on revenues
reflected in the first three quarters of 1998. Management reports total
operating revenues of $2,543,338 for the first nine months of 1998, which is
an increase of $571,306 over the first nine months of 1997. This increase is
primarily attributable to the Company's new leasing and oil reclamation
operations at the Altair property. The Company received income from trucking
and equipment services consisting of equipment moving, vacuum truck services,
oil transportation, and pad construction. In addition, portions of the
property were leased out as "lay-down yards" where drilling companies and
operators could store their equipment. When comparing the quarter ended
September 30, 1998 to the previous quarter (June 30, 1998) and to the same
quarter in 1997, oil and gas production revenues were down because of lower
oil prices and a reduced exchange rate from Australia to the United States.
In addition, skim oil purchases and sales at the oil reclamation plant were
not as high in the second and third quarters as previously anticipated due
to lower oil prices.
Costs of revenues increased when comparing the third quarter of 1998 to the
third quarter of 1997 primarily because of the skim oil purchases at the
Company's skim oil reclamation plant. Salt water for disposal contains
residual amounts of oil which can be skimmed and sold to refineries. In
addition to skimming the oil from the salt water brought to the Company's own
salt water disposal facilities, the Company has been purchasing oil generated
from operators of other salt water disposal facilities. Gross margin from oil
reclamation is approximately $4 per barrel, excluding transportation costs.
However, with the significant reduction in oil prices, less skim oil is
available due to the effort required in its collection versus its value.
Total operating expenses increased when comparing the third quarter of 1998
to the third quarter of 1997. The largest increase was in the category of
personnel costs. Personnel costs increased as additional employees were
hired for the expanding activities based out of the Altair property.
Repairs and maintenance costs increased because of the expansion of the
Altair operations with additional equipment to repair and maintain. The
categories of public relations and taxes also increased. Because of the
higher operating expenses, income from operations was lower for the quarter
and nine months ended September 30, 1998 than in comparable periods of 1997.
The Company showed a $.02 basic earnings per share for the third quarter, an
improvement over a $.27 loss per share for the same quarter in 1997, but a
decrease when comparing to the previous June 30 quarter of $.17 earnings per
share. The decrease in net income and earnings per share between the last
two quarters was primarily caused by an adjustment in taxes. Declines in net
income had also been anticipated during 1998 due to the change in the
Company's mix of revenues from primarily salt water disposal with relatively
low personnel and maintenance costs to the service and oil reclamation
businesses which require greater use of equipment and personnel. Management
concentrated its efforts in the first half of 1998 on adding to the Altair
operations through purchase of equipment when needed. This has resulted in
increased assets and increased revenues for the Company when comparing to
the first half of 1997. The contract for the sale of sand and gravel from
the Altair property described previously should further enhance revenues and
net income for the Company because it will not incur production costs related
to these sales. (Sales under this contract began in November 1998.)
Cash flows from operations decreased during the first nine months of 1998
from the first nine months of 1997 largely due to decreased net income and
increased accounts receivable as previously discussed. During June 1997,
the Company sold the Amando disposal facility and used those proceeds in the
purchase of the Altair property (which included the $200,000 increase in
inventory). The cash flows for property and equipment in 1998 is primarily
for equipment being utilized in the operations based at the Altair property.
The proceeds from issuing stock in 1997 and about $90,000 of the proceeds in
1998 are from the Company's Dividend Reinvestment Program. The other portion
of the 1998 stock proceeds was from the warrants offering discussed
previously.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Where this Form 10-Q includes "forward-looking" statements within the meaning
of Section 27A of the Securities Act, the Company desires to take advantage
of the "safe harbor" provisions thereof. Therefore, the Company is including
this statement for the express purpose of availing itself of the protections
of such safe harbor provisions with respect to all of such forward-looking
statements. The forward-looking statements in this Form 10-Q reflect the
Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ from those
anticipated. In this Form 10-Q, the words "anticipates," "believes,
"expects," "intends," "future" and similar expressions identify forward-
looking statements. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances that may
arise after the date hereof. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by this section.
YEAR 2000
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue. The
"Year 2000" problem is the result of computer programs being written using
two digits rather than four to define the applicable year. Any programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a major system failure or
miscalculations. The Company believes that all of its software and equipment
are "Year 2000" compliant and that this problem will have no affect on the
Company's internal operations. Should companies with which the Company does
business suffer significant problems within their systems, an adverse impact
could be incurred by the Company. However, the Company has no way of
anticipating or controlling such failure on the part of its customers.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130, "Reporting Comprehensive Income" which establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Among other disclosures, SFAS 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.
Also, in June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS 131 establishes standards for
the way that public companies report information about operating segments in
annual financial statements and requires reporting of selected information
about operating segments in interim financial statements issued to the public.
It also establishes standards for disclosure regarding products and services,
geographic areas and major customers.
Both SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated.
<PAGE>
- ------------------------------------------------------------------------------
<PAGE>
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN TRIANGLE INDUSTRIES, INC.
November 13, 1998 /s/ Shawna Owens
Shawna Owens, Treasurer
November 13, 1998 /s/ Robert B. Early
Robert B. Early, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Golden Triangle Industries, Inc. for the period
ended SEPTEMBER 30, 1998, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000042284
<NAME> GOLDEN TRIANGLE INDUSTRIES, INC.
<S> <C>
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