UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 5, 2000
Date of Report (Date of earliest event reported)
Golden Triangle Industries, Inc.
(Exact name of registrant as specified in its charter)
0-8301
(Commission File No.)
Colorado 25-302097
State or other jurisdiction (IRS Employer
of incorporation) Id. No.)
6314 Aspen Cove Court Sugar Land, TX 77479
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (281) 565-7300;
fax (281) 565-7301
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
GTII has entered into an agreement for simultaneous transactions, subject
to approval by the stockholders of GTII: the acquisition of the Whitemark
Homes, Inc., a privately held entity, and the disposition of essentially
all of the operating assets of GTII. The disposition and acquisition
will be accomplished as follows:
1. Kenneth Owens, President of GTII, will relinquish all of his preferred
shares of GTII to the Company (39,916 preferred shares convertible to
399,160 common shares, representing 34% ownership of GTII). He will retain
ownership of his common shares (about 3% of the Company). In return for
relinquishing 70% of his GTII preferred shares, Kenneth Owens will receive
a portion of GTII's assets and liabilities valued at a net book value of
approximately $4,190,229 determined by the December 31, 1999 financial
statements. The assets include the oil and gas properties and the Altair
property. In addition, for the other 30% of his preferred shares being
relinquished he will receive 60% ownership of a GTII subsidiary Company
(GTII will own 40% of the subsidiary Company).
2. Larry White will undertake the process of consolidating all of his
holdings in the Whitemark Homes Group into Whitemark Homes, Inc. The
Company will then issue 533,760 restricted common shares of GTII to Larry
White for total ownership of Whitemark Homes, Inc., an entity with an
estimated fair market value of $6,500,000. The number of shares to be
issued to Larry White is based on the book value of Whitemark. At the end
of 1999, Whitemark reported assets of $8,487,887, revenues of $13,395,922
and net income of $401,129. (Combined unaudited financial statements for
Whitemark Homes Group, along with a discussion by Whitemark's management
of those financial statements, selected financial data for the last five
years, and other pro forma combined financial information are presented
below as part of this proxy material.) The two parts of this transaction,
i.e., the transaction with Kenneth Owens and the transaction with Larry
White, are each conditional upon completion of the other. One will not be
consummated without the other.
This transaction will result in a change in control in GTII. Larry White
will own approximately 41% of the Company after the change in control (see
resume of Larry White under Election of Directors). The accounting
treatment of this transaction will be as a purchase.
There will be no material differences in the rights of security holders as
a result of this purchase, and no tax consequences will be realized to
current shareholders because of this purchase. Shareholders' stock
positions will not change as a result of this transaction.
Description of Whitemark Homes, Inc.
Whitemark Homes, Inc. is based in Orlando, Florida, and has been in the
business of high quality residential developments and construction for the
past eighteen years. Whitemark uses the latest technology and proven
construction methods to insure their homes are of the highest quality.
This is evidenced by: (1) a Customer Service Award issued by the Bonded
Builders Home Warranty Association stating "Bonded Builders is proud to
recognize Whitemark Homes as one of Florida's finest builders for the
distinction of being claims free for 1998"; (2) Member in Good Standing
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issued by the National Association of Home Builders; and (3) Homeowner
Evaluation forms and letters showing the satisfaction of customers. Due to
the Company's in-depth construction expertise, a range of construction
methods are utilized, given the desires of the customer and the building
plan requirements. Besides being one of Orlando's premier home builders,
for both custom and affordable homes, Whitemark also develops many of its
own residential communities. As a developer/builder, great care and
attention is given to preserving the natural setting of the land during
the land planning and construction stages. Each lot is carefully cleared
in order to keep as many trees and natural vegetation as possible.
Whitemark's attention to detail and fine craftsmanship has garnered them
many national, regional, and local awards including: East and Pacific
Builders "Gold Nugget Awards," Southeast Builders' Conference "Aurora
Award," Home Builders' Association of Mid-Florida "Parade of Homes
Winners," and Orlando's "Choice Awards Winners." Whitemark's short-term
plans include expansion into the Texas and North Carolina markets, with
long-term plans including expansion nationwide.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit A. Acquisition and disposition agreement.
Exhibit B. Pro forma combined financial statements.
Exhibit C. Financial statements of assets to be disposed of in
this transaction.
Exhibit D. Selected financial data for Whitemark Homes Group.
Exhibit E. Audited financial statements of Whitemark Homes Group
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.
May 22, 2000 /s/ Robert B. Early
Robert B. Early
Chief Financial Officer
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EXHIBIT A
REORGANIZATION AND ACQUISITION AGREEMENT
This reorganization agreement entered into this 1st day of April 2000, by,
between and among Golden Triangle Industries, Inc. (GTII), a Colorado
corporation and Whitemark Homes, Inc. (WHI), a Florida corporation.
RECITALS
Whereas, GTII seeks a business entity with which to merge.
Whereas, WHI seeks to merge with a company subject to section 12g of the
Securities Exchange Act of 1934.
Whereas, GTII and WHI desire to merge with WHI becoming a wholly owned
subsidiary of GTII.
AGREEMENT
Now, therefore, in consideration of the mutual consideration, covenants,
agreements, representations and warranties the parties hereby agree as
follows:
1. Merger and Exchange of Shares: GTII agrees to issue 533,760 shares of
GTII's common stock to Larry White the sole stockholder of WHI in
exchange for all of the issued and outstanding capital stock of WHI. WHI
will retain its corporate identity and become a wholly owned subsidiary of
GTII.
2. It is the intent of this Reorganization Agreement for GTII to become a
home builder by exchanging certain assets and liabilities to Kenneth Owens
for his preferred stock ownership. The Altair assets and liabilities plus
all oil and gas assets and applicable liabilities will be exchanged
effective April 1, 2000. Other assets and liabilities not desired or
needed by Whitemark Homes, Inc. will be exchanged as soon as possible and
shall be completed no later than December 31, 2000. The other remaining
assets and liabilities not exchanged at April 1, 2000 will be maintained
in subsidiary companies of GTII controlled by Kenneth Owens who will own
60% of the subsidiaries and GTII will own 40%. A separate Board of
Directors and officers will be appointed by Kenneth Owens to manage and
operate these companies.
3. Exemption from Registration: The Parties hereto intend that the
exchange of shares shall be exempt from the registration requirements of
the Securities Act of 1933, as amended pursuant to Section 4(2) of the
1933 Act and the rules and regulation promulgated thereunder and exempt
from the registration requirements of the applicable states.. As of the
date hereof, Larry White is the sole owner of 100% of the WHI Common
Stock and all such securities are free and clear of all liens,
encumbrances and restrictions of any nature whatsoever.
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4. Expenses: Each of the Parties shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
consummation of this Agreement, including without limiting the generality
of the foregoing fees and expenses of financial consultants accountants
and legal counsel and the cost of any documentary stamps, sales and excise
taxes which may be imposed upon or be payable in respect to the
transaction.
5. Closing: The Closing of the Transactions contemplated by this
Agreement shall take place at 1:00 p.m. on the day after all Parties have
supplied the required documents and obtained the required approvals as
discussed herein. Closing shall take place at such place, as the Parties
hereto shall agree upon or by FAX and Federal Express.
6. Exhibits: All Exhibits attached hereto are incorporated herein by
this reference as if they were set forth in entirety
7. Governing Law: This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Colorado.
8. Notices: All notices requests instruction or other documents to be
give hereunder shall be in writing and sent by registered mail to the
Parties at addresses first appearing herein.
9. Counterparts: This Agreement may be executed in duplicate facsimile
counterparts each of which shall be deemed any original and together shall
constitute on and the same binding Agreement with one counterpart being
delivered to each party hereto.
In witness whereof the foregoing Reorganization Agreement having been duly
approved and adopted by the Board of Directors and duly approved and
adopted by the stockholders of the constituent corporations as required in
the manner provided by the laws of the state of Colorado, the Chairman of
the Board, the President of said corporation and the Shareholders of WHI
do now execute this Reorganization Agreement under the respective seals of
said corporation by the authority of the directors and stockholders of
each as required as the act, deed and agreement of each of said
corporation.
Golden Triangle Industries, Inc. Whitemark Homes, Inc.
/s/ KENNETH OWENS /s/ LARRY WHITE
Kenneth Owens, President and Larry White, President and
Chairman of the Board Chairman of the Board
Date: May 5, 2000 Date: May 5, 2000
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EXHIBIT B
PRO FORMA FINANCIAL DATA REGARDING ACQUISITION OF WHITEMARK HOMES, INC.
The following tables set forth summarized historical financial statements
as of December 31, 1999, adjustments to reflect the effects of the
proposed acquisition of Whitemark Homes and exchange of assets to Kenneth
Owens. Pro forma adjustments include the removal of the Company's oil and
gas properties, the Altair property, and all of the Company's oil and gas
service business. Adjustments also include estimated income taxes
adjustments to reflect estimated income taxes on Whitemark Homes' earnings
and anticipated reduced benefit from tax loss carry-forwards due the
change in control.
Pro Forma Balance Sheets
As of December 31, 1999
Historical Pro Forma Pro Forma
GTII Whitemark Adjustments Combined
----------- ----------- ----------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 66,199 $ 181,187 $ - $ 247,386
Marketable securities 270,587 - - 270,587
Accounts & notes receivable 1,376,824 182,820 (1,372,800) 186,844
Allowance for uncollectible
accounts (985,836) - 985,836 -
Inventories 238,930 7,696,360 (238,930) 7,696,360
Related party receivables 213,636 - (213,636) -
Other current assets 572,288 393,691 - 965,979
----------- ----------- ----------- -----------
Total Current Assets 1,752,628 8,454,058 (839,530) 9,367,156
----------- ----------- ----------- -----------
FIXED ASSETS:
Property & equipment 2,677,531 60,682 (2,482,548) 255,665
Oil & Gas properties 2,466,479 - (2,466,479) -
Accumulated depreciation &
depletion (1,287,649) (26,853) 1,286,284 (28,218)
----------- ----------- ----------- -----------
Net Fixed Assets 3,856,361 33,829 (3,662,743) 227,447
----------- ----------- ----------- -----------
OTHER ASSETS:
Related party receivables 302,295 - (302,295) -
Accounts & notes receivable-
Long-term 328,024 - (196,814) 131,210
Other assets 142,458 - (16,152) 126,306
----------- ----------- ----------- -----------
Total Other Assets 772,777 - (515,261) 257,516
----------- ----------- ----------- -----------
TOTAL ASSETS $ 6,381,766 $ 8,487,887 $(5,017,534) $ 9,852,119
=========== =========== =========== ===========
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Historical Pro Forma Pro Forma
GTII Whitemark Adjustments Combined
----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts & notes payable $ 334,027 $ 7,598,428 $ (334,027) $ 7,598,428
Other current liabilities 11,050 226,977 - 238,027
Related party debt - 37,975 - 37,975
----------- ----------- ----------- -----------
Total Current Liabilities 345,077 7,863,380 (334,027) 7,874,430
----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock:
Class A 106 - - 106
Class B 4,044 - (3,992) 52
Common stock 761 100 434 1,295
Other stockholders' equity 7,603,238 99,684 (4,155,226) 3,547,696
Retained earnings (1,571,460) 524,723 (524,723) (1,571,460)
----------- ----------- ----------- -----------
Total Stockholders' Equity 6,036,689 624,507 (4,683,507) 1,977,689
----------- ----------- ----------- -----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 6,381,766 $ 8,487,887 $(5,017,534) $ 9,852,119
=========== =========== =========== ===========
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Pro Forma Income Statements
For the Year Ended December 31, 1999
Historical Pro Forma Pro Forma
GTII Whitemark Adjustments Combined
----------- ----------- ----------- -----------
Net sales & revenue $ 2,337,162 $13,395,922 $(2,337,162) $13,395,922
Cost of goods sold 1,757,934 11,070,753 (1,757,934) 11,070,753
----------- ----------- ----------- -----------
Gross profit 579,228 2,325,169 (579,228) 2,325,169
Selling, general &
administrative expenses 1,016,389 1,355,793 (1,016,389) 1,355,793
----------- ----------- ----------- -----------
Income/(loss) from
operations (437,161) 969,376 437,161 969,376
Other income/(expense) (481,863) (568,246) 502,465 (547,644)
----------- ----------- ----------- -----------
Income/(loss) before
income taxes (919,024) 401,130 939,626 421,732
Income tax expense/(benefit) (362,809) - 527,383 164,574
----------- ----------- ----------- -----------
Net income/loss $ (556,215) $ 401,130 $ 412,243 $ 257,158
=========== =========== =========== ===========
Earnings per share:
Basic $ (0.89) $ 4,011.30 $ 0.22
Diluted (0.89) 4,011.30 0.22
Weighted average shares
outstanding:
Basic 627,366 100 1,161,126
Diluted 627,366 100 1,161,126
- ------------------------------------------------------------------------------
Pro Forma Income Statement
Three Months Ended March 31, 2000
Historical Pro Forma Pro Forma
GTII Whitemark Adjustments Combined
----------- ---------- ----------- ----------
Net sales & revenue $ 369,548 $2,962,814 $ (369,548) $2,962,814
Cost of goods sold 264,527 2,492,819 (264,527) 2,492,819
----------- ---------- ----------- ----------
Gross profit 105,021 469,995 (105,021) 469,995
Selling, general &
administrative expenses 197,903 255,056 (197,903) 255,056
----------- ---------- ----------- ----------
Income from operations (92,882) 214,939 92,882 214,939
Other income and expenses 1,319,327 (114,538) (1,319,327) (114,538)
----------- ---------- ----------- ----------
Income/(loss) before
income taxes 1,226,445 100,401 (1,226,445) 100,401
Income tax expense 325,803 - (359,939) (34,136)
----------- ---------- ----------- ----------
Net income $ 900,642 $ 100,401 $ (866,506) $ 134,537
=========== ========== =========== ==========
Earnings per share:
Basic $ 1.18 $ 1,004.01 $ 0.10
Diluted 1.18 1,004.01 0.10
Weighted average shares
outstanding:
Basic 764,504 100 1,298,264
Diluted 764,504 100 1,298,264
B4
Note 1: Adjustments as noted above include the removal of assets and
business activities being exchanged with Kenneth Owens for his preferred
stock. These business activities consist of the Company's oil and gas
services, oil and gas producing properties, and the Altair property which
contains the sand and gravel sales. The following unaudited financial
statements for these activities were extracted from the financial
statements of the Company as of the dates indicated.
Note 2: The financial statements of the Whitemark Homes Group did not
include a provision for income taxes due to the nature and makeup of the
entities that are to be combined into Whitemark Homes, Inc. prior to this
acquisition. Adjustments include the estimation of income tax at
corporate rates on the net income reported in the underlying financial
statements.
B5
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EXHIBIT C
These financial statements present the assets, liabilities, and results of
operations of the business to be disposed of as part of the acquisition of
Whitemark Homes.
Balance Sheets of Assets to be Disposed of
December 31,
1999 1998
---------- ----------
ASSETS
Cash $ - $ -
Accounts & notes receivable 1,366,764 1,332,875
Allowance for doubtful accounts (985,836) -
Inventories 238,930 199,296
Related party receivables 213,636 27,247
Other current assets - 13,500
---------- ----------
Total Current Assets 833,494 1,572,918
---------- ----------
FIXED ASSETS:
Property & equipment 2,190,073 2,986,174
Oil & Gas properties 2,466,479 2,436,089
Accum. depreciation & depletion (1,284,237) (1,688,279)
---------- ----------
Net Fixed Assets 3,372,315 3,733,984
---------- ----------
OTHER ASSETS:
Related party receivables 302,295 185,209
Other assets 16,152 20,632
---------- ----------
Total Other Assets 318,447 205,841
---------- ----------
TOTAL ASSETS $4,524,256 $5,512,743
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURENT LIABILITIES:
Accounts & notes payable $ 334,027 $ 294,974
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock:
Class A - -
Class B 2,794 2,794
Common stock - -
Other stockholders' equity 4,187,435 5,214,975
---------- ----------
Total Stockholders' Equity 4,190,229 5,217,769
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $4,524,256 $5,512,743
========== ==========
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Statements of Operations of Business to be Disposed of
Year Ended December 31
1999 1998 1997
---------- ---------- ----------
Net sales & revenue $2,337,162 $3,104,192 $2,452,352
Cost of goods sold 1,757,934 1,607,921 964,104
---------- ---------- ----------
Gross profit 579,228 1,496,271 1,488,248
Selling, general & administrative
expenses 1,016,389 1,083,502 803,936
---------- ---------- ----------
Income/(loss) from operations (437,161) 412,769 684,312
Other income and expenses (502,465) 15,093 28,845
---------- ---------- ----------
Income/(loss) before income taxes (939,626) 427,862 713,157
Income tax expense/(benefit) (370,942) 168,910 281,538
---------- ---------- ----------
Net income/(loss) $ (568,684) $ 258,952 $ 431,619
========== ========== ==========
Earnings/(loss) per share
Basic $ (0.91) $ 0.44 $ 0.78
Diluted (0.91) 0.41 0.78
Weighted average shares outstanding:
Basic 627,366 591,392 552,896
Diluted 627,366 625,102 552,896
C2
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EXHIBIT D
Selected Financial Data for Whitemark Homes Group
Fiscal Years Ended December 31
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- ----------
Operating revenues $13,395,922 $6,751,948 $6,910,254 $3,995,941 $5,583,647
Net income/(loss) $ 401,129 $ 121,072 $ 152,296 $ 89,064 $ (5,754)
Net income/(loss)
per share-basic $ 4,011.29 $ 1,210.72 $ 1,522.96 $ 890.64 $ (57.54)
Total assets $ 8,487,887 $9,534,188 $6,461,276 $3,917,212 $2,474,151
Long-term debt $ - $ - $ - $ - $ -
Book Value per
share $ 6,245.07 $ 2,881.27 $ 2,008.80 $ 1,920.37 $ 1,245.63
Cash Dividends
per share $ 647.00 $ 358.00 $ 1,535.00 $ 87.00 $ 100.00
Pro forma selected financial data for the combination of GTII and
Whitemark is expected to be very similar to that of Whitemark with the
exception that no income taxes have been deducted on Whitemark's income
in arriving at Net Income. The Net Income numbers should be adjusted by
approximately 39% to arrive at Net Income after taxes.
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EXHIBIT E
WHITEMARK HOMES GROUP
COMBINED FINANCIAL STATEMENTS
Years Ended December 31, 1999 and 1998
CONTENTS
Page
Independent Auditors' Report 1
Combined Balance Sheets 2
Combined Statements of Income 3
Combined Statements of Owners' Equity 4
Combined Statements of Cash Flows 5
Notes to Combined Financial Statements 6
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Whitemark Homes Group
Oviedo, Florida
We have audited the accompanying combined balance sheets of
Whitemark Homes Group as of December 31, 1999 and 1998, and the
related combined statements of income, owners' equity, and cash
flows for the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the Group's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. 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 Whitemark Homes Group as of December 31, 1999 and 1998, and
the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1999 in conformity
with generally accepted accounting principles.
/s/ Michael Galloway And Company
MICHAEL GALLOWAY AND COMPANY
March 3, 2000
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WHITEMARK HOMES GROUP
COMBINED BALANCE SHEETS
December 31,
1999 1998
---------- ----------
ASSETS
Land and Home Inventory $7,696,360 $8,513,814
Cash 181,187 352,362
Accounts Receivable 182,820 214,201
Prepaid Expenses 290,583 378,729
Other Assets 136,937 75,082
---------- ----------
$8,487,887 $9,534,188
========== ==========
LIABILITIES AND OWNERS' EQUITY
Liabilities:
Notes Payable $6,722,484 $7,858,335
Accounts Payable 875,944 737,141
Accrued Expenses 226,977 410,558
Loans from Stockholders 37,975 240,027
---------- ----------
Total Liabilities 7,863,380 9,246,061
Owners' Equity 624,507 288,127
---------- ----------
$8,487,887 $9,534,188
========== ==========
See accompanying notes to combined financial statements.
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WHITEMARK HOMES GROUP
COMBINED STATEMENTS OF INCOME
Year Ended December 31,
1999 1998 1997
----------- ----------- -----------
Sales $13,395,922 $ 6,751,948 $ 6,910,254
Cost of Sales 11,001,118 6,012,866 (6,160,747)
----------- ----------- -----------
Gross Profit 2,394,804 739,082 749,507
Selling, General and Administrative
Expenses 1,355,793 428,088 425,311
----------- ----------- -----------
Income From Operations 1,039,011 310,994 324,196
Interest Expense 637,882 189,922 171,900
----------- ----------- -----------
Net Income $ 401,129 $ 121,072 $ 152,296
=========== =========== ===========
See accompanying notes to combined financial statements.
- -------------------------------------------------------------------------------
WHITEMARK HOMES GROUP
COMBINED STATEMENTS OF OWNERS' EQUITY
Year Ended December 31,
1999 1998 1997
--------- --------- ---------
Balance at Beginning of Year $ 288,127 $ 200,880 $ 135,657
Issuance of common stock - - 11
Contributions of Capital - 2,000 66,382
Net Income 401,129 121,072 152,296
Distributions (64,749) (35,825) (153,466)
--------- --------- ----------
Balance at End of Year $ 624,507 $ 288,127 $ 200,880
========= ========= =========
See accompanying notes to combined financial statements.
E4
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WHITEMARK HOMES GROUP
COMBINED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1999 1998 1997
----------- ---------- ----------
Cash Flows from Operating Activities:
Net income $ 401,129 $ 121,072 $ 152,296
Adjustments to reconcile net income to net
cash flows from operating activities:
Cash flows from changes in operating
assets and liabilities:
Land and home inventory 486,647 (2,753,733) (2,024,948)
Accounts receivable 31,381 (17,361) (48,297)
Prepaid expenses 88,146 (121,336) (107,581)
Other assets (61,855) 50,860 (94,891)
Accounts payable 138,803 239,773 345,926
Accrued expenses (183,581) 227,223 (41,403)
----------- ----------- ----------
Net cash flows from operating
activities 900,670 (2,253,502) (1,818,898)
----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from notes payable 9,152,801 7,393,615 8.732,442
Loans from stockholders - 145,127 -
Repayment of notes payable (9,957,845) (5,278,876) (6,687,558)
Repayment of loans from stockholders (202,052) - -
Capital contributions - 2,000 66,393
Distributions (64,749) (35,825) (153,466)
----------- ---------- ----------
Net cash flows from financing activities (1,071,845) 2,226,041 1,957,811
----------- ---------- ----------
Net Increase (Decrease) in Cash (171,175) (27,461) 138,913
Cash at Beginning of Year 352,362 379,823 240,910
----------- ---------- ----------
Cash at End of Year $ 181,187 $ 352,362 $ 379,823
=========== ========== ==========
Supplemental Disclosure of Cash Flows Information:
Interest paid $ 560,156 $ 351,954 $ 314,793
Non-Cash Investing and Financing Activity:
Interest on notes payable accrued and
capitalized in inventory $ 216,574 $ 258,803 $ 129,434
Reduction of note payable for participation
mortgage lender's share of project costs 547,381 - -
See accompanying notes to combined financial statements.
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WHITEMARK HOMES GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
Years Ended December 31, 1999, 1998 and 1997
Note 1 - Description of Business and Summary of Significant Accounting
Policies:
Industry:
The Whitemark Homes Group (the Group) is engaged in residential
development and home construction in the Central Florida area.
Principles of Combination:
The Group consists of the following entities: Whitemark Homes,
Inc., Whitemark, Inc., Riverwalk General Partnership, Whitemark
at Woodbury, Inc., Whitemark at Oak Park, Inc., Home Funding,
Inc., Fox Glen Limited Partnership, and Sheeler Hills Limited
Partnership. The entities have been combined due to the similar
nature of their businesses and common majority ownership. All
significant intercompany accounts and transactions have been
eliminated.
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, other 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.
Revenue Recognition:
Revenue is recognized when the closing occurs for the sale of each
home and lot.
Income Tax Status:
Each of the entities in the Group is an S corporation or a
partnership under the provisions under the Internal Revenue Code.
Under these provisions, the income of the Group is taxable to the
individual stockholders and partners rather than the Group.
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.
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Note 2 - Land and Home Inventory:
Land and home inventory consists of the following:
December 31,
1999 1998
---------- ----------
Project development costs $2,381,885 $3,220,970
Home construction costs 5,314,475 5,067,824
Land held for development - 225,020
---------- ----------
$7,696,360 $8,513,814
========== ==========
Note 3 - Notes Payable:
Notes payable consist of the following:
December 31,
1999 1998
---------- ----------
Construction lines of credit with banks -
interest of 9.5% to 10.0% due monthly,
principal due as homes are sold,
secured by real estate $4,271,106 $5,046,399
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 2,208,500 2,273,551
Other loans 242,878 538,385
---------- ----------
$6,722,484 $7,858,335
========== ==========
The obligations to participation mortgage lender consist of $2,127,609
of mortgage principal and accrued interest and $80,891 of additional
participation liability at December 31, 1999.
Interest costs incurred totaled $967,949 in 1999, $665,483 in 1998, and
$455,391 in 1997, including capitalized interest of $330,067 in 1999,
$475,561 in 1998, and $283,491 in 1997.
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Note 4 - Owners' Equity:
Owners' equity consists of the following:
December 31,
1999 1998
---------- ----------
Common stock:
Whitemark Homes, Inc. $ 1 $ 1
Whitemark, Inc. 133 133
Whitemark at Woodbury, Inc. 10 10
Whitemark at Oak Park, Inc. 1 1
Home Funding, Inc. 1 1
---------- ----------
Total common stock 146 146
---------- ----------
Paid-in capital:
Home Funding, Inc. 66,382 66,382
River Walk General Partnership 30,968 30,968
Fox Glen Ltd. Partnership 1,000 1,000
Sheeler Hills Ltd. Partnership 1,000 1,000
Total paid-in capital 99,350 99,350
---------- ----------
Retained earnings 525,011 188,631
---------- ----------
Total $ 624,507 $ 288,127
========== ==========
Common stock par values and shares authorized, issued, and outstanding
consist of the following:
Shares
Shares Issued and
Par Value Authorized Outstanding
--------- ---------- -----------
Whitemark Homes, Inc. $ 0.01 10,000 100
Whitemark, Inc. 1.00 7,500 133
Whitemark at Woodbury, Inc. 0.01 10,000 1,000
Whitemark at Oak Park, Inc. 0.01 10,000 100
Home Funding, Inc. 0.01 10,000 100
Note 5 - Subsequent Event:
The owners of Whitemark Homes Group have entered into a letter of intent
to merge with Golden Triangle Industries, Inc., a NASDAQ exchange Company
which deals primarily in oil services in the southwestern United States.
The stock for stock transaction is expected to be effective in the second
quarter of 2000.
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