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FORM 10-Q Amended
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended JUNE 30, 2000
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 (Federal Employer
Incorporation or Organization) Identification #)
259 Plaza Drive, Suite D
Oviedo, FL 32765
(Address of Principal Executive Offices)
(formerly 6314 Aspen Cove Court Sugar Land, TX 77479)
(407) 366-9668
Registrant's Telephone Number Including Area Code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days [X] Yes [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
There were 7,134,043 shares of Common Stock, $.001 Par Value at
June 30, 2000, after adjustment for announced 2 for 1 split.
1
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INDEX
Page
Part I. Financial Information
Item 1. Financial Statements . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis . . . . 14
Part II: Other information
Item 4: Submission of Matters to a Vote of the
Security Holders . . . . . . . . . . . 17
Item 6: Exhibits and Reports on Form 8-K . . . . . . 18
Signatures . . . . . . . . . . . . . . . . . 18
2
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GOLDEN TRIANGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2000 1999
----------- -----------
ASSETS
Land and Home Inventory $ 8,123,243 $ 7,696,360
Cash 772,497 181,187
Accounts Receivable 454,545 182,820
Prepaid Expenses 368,951 290,583
Investment in unconsolidated subsidiary 1,234,939 -
Other Assets 198,027 136,937
----------- -----------
TOTAL ASSETS $11,152,202 $ 8,487,887
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes Payable $ 7,465,214 $ 6,722,484
Accounts Payable 667,501 875,944
Accrued Expenses 310,864 226,977
Loans from Stockholders 140,976 37,975
----------- -----------
Total Liabilities 8,584,555 7,863,380
----------- -----------
Stockholders' Equity
Common Stock 7,134 1,067
Additional paid in capital 1,803,508 98,429
Retained earnings 757,005 525,011
----------- -----------
Total Stockholders' Equity 2,567,647 624,507
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,152,202 $ 8,487,887
=========== ===========
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2000 and 1999
(Unaudited)
Three Months Six Months
2000 1999 2000 1999
---------- ---------- ---------- ----------
Sales $3,733,444 $3,488,354 $6,696,258 $5,434,200
Cost of Sales 2,942,345 2,864,636 5,435,164 4,462,564
---------- ---------- ---------- ----------
Gross Profit 791,099 623,718 1,261,094 971,636
Selling, General and
Administrative Expenses 357,906 338,875 612,962 561,822
---------- ---------- ---------- ----------
Income from Operations 433,193 284,843 648,132 409,814
Other (Expenses)
Equity in subsidiary's (loss) (52,309) - (52,309) -
Interest Expense (146,561) (159,458) (261,099) (262,927)
---------- ---------- ---------- ----------
Income before Income Taxes 234,323 125,385 334,724 146,887
Income Taxes 93,729 - 93,729 -
---------- ---------- ---------- ----------
Net Income $ 140,594 $ 125,385 $ 240,995 $ 146,887
========== ========== ========== ==========
Net income/(Loss)
per Common Share $ 0.05 $ 0.12 $ 0.12 $ 0.14
========== ========== ========== ==========
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from January 1, 1999 to June 30, 2000
(Unaudited)
Additional
Common Stock Paid In Retained
Shares Amount Capital Earnings Total
--------- ------- ---------- --------- ----------
Balances at January 1,
1999 1,067,520 $ 1,068 $ 98,429 $ 123,882 $ 223,379
Net Income - - - 401,129 401,129
--------- ------- ---------- --------- ----------
Balances at December
31, 1999 1,067,520 $ 1,068 98,429 525,011 624,508
Stock issued and reorgan-
ization to effect the
merger transaction 1,559,031 1,559 1,296,732 - 1,298,291
Stock issued under DRP
program 7,492 7 12,847 - 12,854
Restricted stock issued
for property 4,500,000 4,500 395,500 - 400,000
S-Corporation dividends - - - (9,001) (9,001)
Net Income - - - 240,995 240,995
--------- ------- ---------- --------- ----------
Balances at June 30,
2000 7,134,043 $ 7,134 $1,803,508 $ 757,005 $2,567,647
========= ======= ========== ========= ==========
See accompanying selected information.
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GOLDEN TRIANGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increases/(Decreases) in Cash Flows
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
Cash Flows from Operating Activities:
Net income $ 240,995 $ 146,887
Adjustments to reconcile net income to
net cash flows from operating activities:
Equity in subsidiary's loss 52,309 -
Cash flows from changes in operating assets
and liabilities:
Land and home inventory (26,883) (367,531)
Accounts receivable (269,749) 52,094
Prepaid expenses (63,368) 170,875
Other assets (163,066) (41,086)
Accounts payable (208,443) (36,792)
Accrued expenses 76,762 (212,096)
----------- -----------
Net cash flows from operating activities (361,443) (287,649)
----------- -----------
Cash Flows from Investing Activities:
Cash received in merger 3,168 -
----------- -----------
Net cash flows from investing activities 3,168 -
----------- -----------
Cash Flows from Financing Activities:
Proceeds from notes payable 5,177,912 4,124,928
Loans from stockholders 103,001 (85,421)
Repayment of notes payable (4,335,181) (3,809,180)
Proceeds from stock issuance 12,854 -
S-Corporation distributions (9,001) (32,374)
----------- -----------
Net cash flows from financing activities 949,585 197,953
----------- -----------
Net Increase/(Decrease) in Cash 591,310 (89,696)
Cash at Beginning of Period 181,187 352,362
----------- -----------
Cash at End of Period $ 772,497 $ 262,666
=========== ===========
Supplemental Disclosures:
Cash paid for interest $ 241,111 $ 278,940
Cash paid for income taxes - -
Stock issued for property $ 400,000 $ -
Stock issued in merger transaction 1,298,291 -
See accompanying selected information.
6
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GOLDEN TRIANGLE INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED INFORMATION FOR CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
NOTE 1: BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the three
and six month periods ended June 30, 2000 and 1999 include the accounts of
Golden Triangle Industries, Inc. (the "Company") and all subsidiaries in
which a controlling interest is held. The Company's investments in entities
in which a less than controlling interest is held are accounted for by the
equity method. All significant intercompany transactions and balances have
been eliminated.
These financial statements have been prepared by the Company without audit.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) necessary for fair presentation of the accompanying
condensed consolidated financial statements have been made. The condensed
consolidated balance sheet of the Company as of December 31, 1999 has been
derived from the audited balance sheet of Whitemark Homes Group as of that
date. As discussed below, the Company acquired Whitemark Homes, Inc.
("Whitemark") effective April 1, 2000, in a transaction that has been
accounted for as a reverse acquisition. Under reverse acquisition
accounting, the acquired entity (in this case, Whitemark) becomes the
acquirer for accounting purposes. Accordingly, the accompanying comparative
financial statements as of December 31, 1999, and for the three and six
months ended June 30, 1999 reflect the financial position, results of
operations and cash flows of Whitemark rather than the previously reported
financial information of Golden Triangle Industries, Inc.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with a
reading of the financial statements and accompanying notes included in
Whitemark's audited financial statements for 1999 which were filed with the
Securities and Exchange Commission on a Form 8-K dated May 5, 2000. This
Form 8-K is available through the Internet in the SEC's EDGAR database at
www.sec.gov or from the Company upon request.
The Company historically has experienced, and expects to continue to
experience, variability in quarterly results. The consolidated condensed
statements of earnings for the three and six months ended June 30, 2000, are
not necessarily indicative of the results to be expected for the year ended
December 31, 2000.
SIGNIFICANT TRANSACTIONS
Disposition of Oil and Gas, Salt Water Disposal, Sand and Gravel Businesses
and Other Activities
In a measure approved by stockholders at the Registrant's annual meeting on
June 17, 2000 and made effective April 1, 2000, the Registrant entered into
an exchange with Kenneth Owens, its President, for all of his 79,832 shares
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(798,320 common shares equivalent) of Series B Preferred stock. Mr. Owens
controlled approximately 40% of the allowable votes of the Registrant. In
this transaction, all of the oil and gas, the remaining salt water disposal,
and all of the sand and gravel assets along with the Altair property were
transferred to Mr. Owens along with the County Line SWD, Inc. and Jim Wells
SWD, Inc. subsidiaries. The remaining financial assets, cash, marketable
securities, receivables, administrative fixed assets, and administrative
accounts payable were transferred to a newly created subsidiary, Golden
Square Industries, Inc. of which Mr. Owens received 60% ownership and the
Registrant retained 40%.
Acquisition of Whitemark Homes, Inc.
Simultaneously, as approved by the stockholders, the Registrant acquired
Whitemark Homes Inc. In this transaction, Whitemark Homes' stockholders
received a total of 1,067,520 shares of the Company's common stock in
exchange for 100% of Whitemark Home's outstanding shares. Whitemark Homes
is a real estate residential developer and home builder, with operations in
Orlando and the surrounding central Florida area. Whitemark Homes had total
revenues of $13.4 million, net income of $.4 million, and delivered 134
homes during 1999. On June 30, 2000, the Board of Directors approved the
acquisition of development land inventories with a projected revenue
potential of $34,000,000 from entities controlled by Larry White, the new
president of the Company, in exchange for 4,500,000 common shares.
Due to the control that transferred to the stockholders of Whitemark Homes
in the merger and subsequent stock issuance to Larry White, coupled with the
discontinuance of the Registrant's previous business, this acquisition has
been accounted for as a reverse acquisition using the purchase method of
accounting. In connection with the transaction, the Company acquired assets
with an estimated fair value of $35 million and assumed liabilities with a
fair value of $7 million. However, due to the change in control and the
reverse acquisition accounting treatment, the basis in assets and
liabilities are being reported on the Company's books at their basis on the
books of Whitemark rather than at fair value. Additionally, as mentioned
above because of the reverse acquisition accounting, the historical
financial statements of Whitemark have become the historical and continuing
financial statements of the Registrant. The remaining assets of Golden
Triangle are treated as being the acquired assets and are recorded at fair
value.
As a result of this acquisition, the Company consolidates the financial
statements of Whitemark Homes, Inc., (which is wholly owned by the Company)
and Home Funding, Inc. (which is wholly owned by Whitemark Homes, Inc.)
Additionally, Whitemark Homes, Inc. owns controlling general partnership
interests in Fox Glen Limited Partnership and Sheeler Hills Limited
Partnership.
Business Segments
Following the significant transactions of the second quarter of 2000, the
Company has three business segments: Home building, Financial Services, and
Other Assets. Home building is by far the most significant of these
segments as the others function primarily as supporting and facilitating
operations.
Home building operations include the sale and construction of single-family
attached and detached homes in the Orlando, Florida area by Whitemark Homes,
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Inc. These activities also include the purchase, development, and sale of
residential land by the Company. Sales of the Company's homes are generally
made pursuant to a standard contract which requires a down payment of up to
10% of the sales price. The contract includes a financing contingency which
permits the customer to cancel in the event mortgage financing at prevailing
interest rates (including financing arrangements by the Company) is
unobtainable within a specified period, typically four to six weeks. The
Company reports an undelivered home sale as part of its backlog upon
execution of the sales contracts and receipt of the down payment. Revenue
is recognized only upon the closing and delivery of a home. The Company
estimates that the average period between the execution of a purchase
agreement for a home and delivery is approximately six months. The
Company's backlog at June 30, 2000 and 1999 was $7,400,000 (74 units) and
$11,800,000 (118 units), respectively.
Financial Services activities are conducted primarily through the Company's
subsidiary, Home Funding, Inc., which provides mortgage financing, title
insurance, and closing services for Whitemark Homes' home buyers. This
subsidiary packages and resells residential mortgage loans and provides
mortgage loan servicing activities.
Other assets consists primarily of the Company's equity in its 40% of Golden
Square Industries, Inc. which is carried on the equity basis. This
subsidiary's primary assets are marketable securities, receivables, and cash
as presented in the following summarized financial statements.
Summarized Balance Sheet
As of June 30, 2000
Cash and cash equivalents $ 540,703
Marketable securities (net) 270,422
Accounts receivable 1,287,134
Accounts receivable-related parties 431,263
Fixed assets 591,793
Accounts and accrued payables (33,967)
-----------
Net Equity $ 3,087,348
===========
SIGNIFICANT ACCOUNTING POLICIES
Land and Home Inventory -- Land and home inventory is stated at the lower of
cost or market value, with cost determined using the specific identification
method. Costs include land purchases, direct project development costs,
direct home construction costs, and indirect development and construction
costs. Indirect costs are allocated to each residential property based on
relative sales value of the home and lot. Direct costs include construction
period interest.
Equity method investees -- The equity method of accounting is used when the
Company has a 20% to 50% interest in other entities. Under the equity
method, original investments are recorded at cost and adjusted by the
Company's share of undistributed earnings or losses of these entities.
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Income taxes -- The Company recognizes a liability or asset for the deferred
tax consequences of temporary differences between the tax bases of assets or
liabilities and their reported amounts in the financial statements, if such
differences are significant.
Prior to April 1, 2000, Whitemark Homes, Inc. was an S Corporation for
federal and state income tax purposes. An S Corporation's income is taxable
to its stockholders rather than to the company. Accordingly, no provision
was necessary for tax on earnings for 1999 or for the period from January 1
through March 31, 2000.
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 revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2: LAND AND HOME INVENTORY
Land and home inventory consists the following at June 30, 2000 and December
31, 1999:
June 30 December 31
----------- -----------
Project development costs $ 1,989,604 $ 2,381,885
Home construction costs 6,133,639 5,314,475
----------- -----------
$ 8,123,243 $ 7,696,360
=========== ===========
NOTE 3: NOTES PAYABLE
Notes payable consists of the following at June 30, 2000 and December 31,
1999:
June 30 December 31
----------- -----------
Construction lines of credit with
banks - interest of 9.5% to
10% due monthly, principal due as
homes are sold, secured by real estate $ 4,747,142 $ 4,271,106
Obligations to participation mortgage
lender - payments, including principal
and interest at LIBOR rate plus 4%, due
based on cash flows of Fox Glen and Sheeler
Hills projects, secured by real estate and
partnership interests 2,226,482 2,208,500
Other loans 491,590 242,878
----------- ------------
$ 7,465,214 $ 6,722,484
=========== ============
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NOTE 4: INCOME TAXES
The provision for income taxes/(benefits) consists of the following at June
30, 2000 and 1999.
2000 1999
----------- ----------
Current income taxes:
Federal $ 80,678 $ -
State 13,051 -
----------- ----------
93,729 -
Deferred income taxes:
Federal - -
State - -
----------- ----------
Total $ 93,729 $ -
=========== ==========
Due to the fact that Whitemark Homes, Inc. was an S-Corporation prior to
April 1, 2000, the Company did not incur any income taxes during 1999 or for
the first quarter of 2000. There is no provision for deferred income taxes
at this time because the differences between the book bases of assets and
liabilities and their tax bases are not significant.
The provision for income taxes is different from the result reached by
applying the U.S. statutory tax rate to profit/ (loss) before taxes for the
reasons set forth in the following reconciliation:
2000 1999
----------- ----------
Taxes computed using the federal rate $ 113,806 $ 49,942
S-Corporation revenues not taxable to
the Company (34,136) (49,942)
State taxes 13,051 -
Other 1,008 -
----------- ----------
Taxes reported on financial statement $ 93,729 $ -
=========== ==========
NOTE 5: STOCK TRANSACTIONS
The Board of Directors approved a 2 for 1 forward stock split with a record
date of August 25, 2000. All historical share amounts and per share amounts
in the financial statements and these notes have been adjusted to reflect
this split, including the transactions described in this Note.
The Company has issued 7,492 common shares under its Dividend Reinvestment
Plan since April 1, 2000, for proceeds of $12,854.
At the annual stockholders' meeting in June 2000, the stockholders approved
an amendment to the Registrant's Articles of Incorporation which eliminated
the authorization for preferred stock. As a result of this measure,an
additional 21,860 common shares (on the basis of ten common shares for each
preferred share) are being reported as outstanding in place of the preferred
shares that have not been converted. The Company is in the process of
having the preferred share certificates converted.
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As discussed in Note 1, Kenneth Owens (the Company's former president)
returned a controlling block of 79,832 Series B Preferred shares in exchange
for certain assets and liabilities of the Company.
Also, as discussed in Note 1, the Registrant issued 1,067,520 common shares
for the acquisition of Whitemark Homes, Inc. However, because the
historical financial statements are those of Whitemark Homes with the
reverse acquisition accounting, the Statement of Stockholders Equity
presents the number of shares issued in the merger transaction as 1,559,031
which are the shares presented is as though Whitemark were issuing shares to
the Golden Triangle stockholders.
In June 2000, developmental land inventories with a cost basis of $400,000
were acquired from related parties for 4,500,000 common shares. Cost basis
of the related parties is carried over to the books of the Company because
of the fact that the related parties retained a significant interest in
these properties through their ownership interests in the Company.
NOTE 6: EARNINGS PER SHARE
The following table sets forth the computation of basic earnings per common
share (EPS) for the three and six months ended June 30, 2000 and 1999.
Partially due to actions taken at the stockholders' meeting, there are no
common stock equivalents outstanding during these periods that are not being
treated as common stock.
Three Months Six Months
2000 1999 2000 1999
---------- ---------- ---------- ----------
Numerator:
Net income $ 140,594 $ 125,385 $ 240,995 $ 146,887
========== ========== ========== ==========
Denominator:
Weighted average shares
outstanding (1) 2,620,790 1,067,520 2,086,067 1,067,520
========== ========== ========== ==========
Earnings per share:
Basic:
Net income $ 0.05 $ 0.12 $ 0.12 $ 0.14
========== ========== ========== ==========
(1) The outstanding shares of Whitemark for 1999 have been restated to show
the effective split indicated by the number of shares that the stockholders
of White mark received in the merger with Golden Triangle Industries.
NOTE 7: RELATED PARTY TRANSACTIONS
As discussed in Notes 1 and 5, the Company transferred significant assets to
Kenneth Owens, its former president, in exchange for his preferred stock.
In connection with that transaction, the Company issued common stock to the
stockholders of Whitemark Homes, Inc. to acquire that entity. Larry White,
the primary owner of Whitemark Homes, was then elected president of the
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Company. This effectively resulted in a transfer of control of the Company
from Kenneth Owens to Larry White. Subsequent to this transfer, the Board
of Directors approved the acquisition of development properties from Larry
White and other entities within his control in exchange for the issuance of
4,500,000 common shares. (4,200,000 shares were issued to Mr. White.)
As presented in the balance sheet and statement of cash flows, the Company
has borrowed funds from Bill Rigsby for development projects. These loans
are non- interest bearing, are due on demand, and are intended to be short
term in nature.
NOTE 8: SUBSEQUENT EVENTS
During August 2000, the Company issued 238,500 common shares valued at
$125,213 under its existing S-8 registration and 580,500 restricted common
shares valued $203,175 to employees and consultants for services rendered
historically and during the process of the merger negotiations. The Company
also privately placed 10,800 restricted shares for cash of $16,200.
NOTE 9: PRO FORMA COMBINED FINANCIAL STATEMENTS
Due to the facts that Whitemark is being treated as the acquirer for
accounting purposes and that the approved transactions removed essentially
all of Golden Triangle's former business activities, the pro forma combined
presentation of financial information normally required by generally
accepted accounting principles has not been presented. This presentation,
based on an assumption of having combined the two entities at the beginning
of the year, would not be materially different from the actual financial
statements presented above.
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Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General Overview
In May 2000, the Company finalized an agreement consisting of two
simultaneous transactions. One was the exchange of assets (which have
created audit and reporting problems for the Company) for preferred stock
held by the Company's President. The other was the acquisition of Whitemark
Homes, Inc. in a stock for stock transaction. The agreements called for the
issuance of stock to Larry White of Whitemark and the relinquishment of
stock by the Company's President, Kenneth Owens. These stock transactions
caused a change in control of the Company as Kenneth Owens agreed to resign
his position. Larry White was to be elected President. The Company filed a
Form 8-K which contained pro forma combined financial information, other
required disclosures, and audited financial statements of the Whitemark
Homes Group. These transactions are described in more detail below. The pro
forma combined financial information required by generally accepted
accounting principles to be included in the notes to the financial
statements has been omitted because the information that would be presented
would not be significantly different from the actual financial statements.
Effective April 1, 2000 the Company changed its direction from energy
services to real estate development and home building. The Company disposed
of its energy related assets by exchanging the control position voting stock
of Kenneth Owens, its former President, for the assets. In addition, the
Company issued 1,067,520 common shares to Larry White, the owner of
Whitemark Homes, Inc. for 100% of Whitemark Homes, Inc. The business
operations were changed along with the majority-controlling shareholder.
These transactions were approved by the stockholders at the Company's annual
meeting held on June 17, 2000.
Subsequent to the changes described above, the Registrant is in the business
of developing real estate and building homes through its wholly owned
subsidiary, Whitemark Homes, Inc.. These efforts are concentrated in
under-served market areas with entry-level home buyers and first-time
move-up buyers. In late June 2000, the Board of Directors approved the
acquisition of projects and assets owned or con trolled by Larry White
through the issuance of 4,500,000 additional common shares of which
4,200,000 were issued to Larry White.
On a national level, housing construction appears to be strong going into
2001. The Company's management is very optimistic about operations for the
rest of this year and into next year. Interest rates and consumer
confidence are driving the housing industry. Statistics indicate that the
Company's target market is fully employed and interest rates are relatively
low.
In June 2000, stockholders of the Company approved the simultaneous
transactions to dispose of the energy related historical business and the
acquisition of Whitemark Homes, Inc., as stated above. The resulting
complete change in business and effective management control requires that
the transaction be treated as a reverse acquisition. That is, the
historical financial statements become those of Whitemark Homes and Golden
Triangle is treated as the entity being acquired on April 1, 2000. This
allows the comparative presentation to reflect the new business direction
that the Company has taken and presents more meaningful information to the
reader.
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This presentation as a reverse acquisition results in significantly
different financial statements from those historically filed by the Company
and from the financial statements filed for the quarter ended March 31,
2000. This treatment is the result of reviewing the facts of the merger and
subsequent issuance of shares to Larry White in light of the pertinent
accounting literature. The Company is also amending the Form 8-K dated May
5, that was filed to report the merger agreement to reflect the reverse
acquisition treatment of this merger in the pro forma financial statements.
Liquidity and Capital Resources
The Company's financing needs are provided by cash flows from operations,
bank borrowings, and private and public debt and equity markets.
Cash flow from operations has improved as a result of increased revenue.
The Company anticipates that cash flow from operations will continue to
increase in calendar year 2000 as a result of increased revenues from new
home deliveries.
On June 30,2000, the Company had outstanding borrowings of $7,465,214. The
Company believes that funds generated from operations and expected borrowing
availability from the private and public market will be sufficient to fund
the Company's working capital requirements during the remainder of calendar
year 2000.
The Company is continually exploring opportunities to purchase parcels of
land for its home-building operations and is, at any given time, in various
stages of proposing, making offers for, and negotiating the acquisition of
various parcels, whether outright or through options. The Company continues
to increase its land development and construction activities in response to
current and anticipated demand and expects to pursue additional land
acquisition and development opportunities in the future.
Results of Operations
Three Months Ended June 30, 2000 compared to June 30,1999
The Company's revenues from home sales for the quarter ended June 30,2000
increased $245,090 compared to the same period in 1999. The number of homes
delivered was the same at thirty-five but the average selling price of homes
delivered increased 7% (to $106,700 from $99,700). The increase of revenues
and homes delivered is primarily attributable to an increased level of
backlog at the beginning of the current quarter compared with the prior year
period. Management believes that changes in the average selling price of
homes delivered from period to period are attributable to discrete factors
at each of its subdivision, including product mix and premium lot availability
and cannot be predicted for future periods with any degree of certainty.
Cost of home sales increased $77,709 in 2000 when compared to the same
quarter ended June 30, 1999 primarily due to the related increase in home
sale revenues. Cost of home sales as a percentage of home sales revenue
decreased to 79% from 82% as a result of the product mix of homes delivered.
The Company's selling and administrative expenses increased approximately
$19,000 during the three months ended June 30, 2000, as compared to the
corresponding 1999 period. Selling and marketing expenses increased during
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the period as a result of the increased number of homes delivered and an
increase in selling expenditures related to an increase in the number of
residential subdivisions. Selling, general, and administrative expenses as
a percentage of total revenues for the three months ended June 30, 2000
remained approximately the same at 9.7% when compared to the prior year.
Primarily as a result of an increase in revenues and decrease of cost of
home sales as a percentage of home sales revenue, income before income taxes
increased by $108,938 in the three months ended June 30, 2000 over the
comparable period in 1999. Again, as mentioned above, the Company did not
incur income taxes during 1999 or during the first quarter of 2000.
Six Months Ended June 30, 2000 Compared to June 30, 1999
The Company's revenues from home sales for the six months ended June
30,2000, increased $1,262,058 when compared to the same period in 1999. The
number of homes delivered increased to 55 from 49 while the average selling
price of homes delivered increased 10% (to $121,700 from $110,900). The
increase of revenues and homes delivered during 2000 is primarily
attributable to an increased level of backlog at the beginning of the
current year compared with the prior year period. Changes in the average
selling price of homes delivered from period to period are attributable to
discrete factors such as product mix and the availability of premium lots at
each of its subdivision and cannot be predicted with any degree of certainty
for future periods.
Cost of home sales for 2000 increased by $972,600 when compared to the six
months ended June 30, 1999, primarily due to the related increase in home
sale revenues. Cost of home sales as a percentage of home sales revenue
decreased to 81% from 82% as a result of the product mix of homes delivered.
The Company's selling and administrative expenses increased approximately
$51,000 during the six months ended June 30, 2000, as compared to the
corresponding period in 1999. The significant components of the increase
was increased sales commissions. Selling, general, and administrative
expenses as a percentage of total revenues for the six months ended June 30,
2000 decreased to 9% compared to 10% for 1999 primarily due to the increases
in sales revenues as compared to the prior year.
Income before income taxes increase $187,837 for the six months of 2000 over
the same period of 1999. This result is primarily due to the increase
profit margin on homes sold during 2000.
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
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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.
PART II: OTHER INFORMATION
Item 4: Submission of Matters to a Vote of the Security Holders
The Registrant held its annual meeting on June 17, 2000. There was a
total of 1,180,153 possible votes for this meeting. The number of
shares voting at this meeting was 1,083,898.
Votes Cast
----------------------------
For Against Abstain
-------- ---------- --------
1. At this meeting, the following directors
were elected to hold office until the next
annual meeting to be held in 2001. All
directors are elected for one year terms.
Scott D. Clark 1,042,012 22,194 19,692
Hugh W. Harling, Jr. 1,042,157 22,049 19,692
Andrea M. Williams O'Neal 1,040,696 23,510 19,692
Larry K. White 1,042,184 22,022 19,692
Karen Lee 1,041,527 22,679 19,692
2. Selection of Pricher and Company to be
the auditor for fiscal 2000: 1,045,594 34,796 3,509
3. Amendment to the Articles of
Incorporation to remove the
authorization for preferred stock: 753,431 9,821 2,914
4. Approval of the disposition of energy
related assets to Kenneth Owens in exchange
for his preferred stock (representing
approximately 38% of the outstanding voting
power before cancellation) and the
acquisition of Whitemark Homes, Inc. for
539,760 common shares issued to Larry White
(representing approximately 41% of the
outstanding voting power after issuance). 710,522 51,883 3,760
Note: Fewer votes were cast for the last two items because ADP has the
right to vote FOR directors and the auditor on behalf of street name
holders even if they do not return their ballots, but ADP does not have
the right to vote on any other proposals.
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Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 3. Amended Articles of Incorporation
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
In May 2000, the Company filed a Form 8-K to report both the
disposition of significant assets to it president in exchange for
his preferred stock and the acquisition of Whitemark Homes, Inc.
of Florida for stock.
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 28, 2000 /s/Larry White
Larry White, President and
Chairman of the Board
November 28, 2000 /s/ Robert B. Early
Robert B. Early, Chief Financial Officer
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