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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission file number: 0-7765
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CROWELL & CO., INC.
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(Name of small business issuer in its charter)
Georgia 58-1021933
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
432 South Belair Road, Augusta, GA 30907
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(Address of Principal executive offices) Zip Code
Issuer's telephone number including area code: (706) 855-1099
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Securities registered pursuant to Section 12 (b) of the Act: None
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Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, Without Par Value
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(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months and (2) has been subject to such filing requirements for the past
90 days. Yes X No _____
---
Check if there is no disclosure of delinquent filers under Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
---
Issuer's revenues for its most recent fiscal year: $6,985,400.
The aggregate market value of the voting stock held by non-affiliates is unknown
to registrant. Registrant is unaware of any sales or purchases of its stock
during the 60 day period ending March 31, 1997.
The number of shares outstanding of issuer's common equity as of March 3, 1997,
is 2,520,835.
The Index of Exhibits is on page 37.
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TABLE OF CONTENTS
PART 1 PAGE
ITEM 1 Description of Business ..................................... 3
ITEM 2 Description of Properties ................................... 5
ITEM 3 Legal Proceedings ........................................... 8
ITEM 4 Submission of Matters to a Vote of Security Holder ........... 8
PART II
ITEM 5 Market for Common Equity and Related Stockholder Matters ..... 9
ITEM 6 Management's Discussion and Analysis or Plan of Operation ... 9
ITEM 7 Financial Statements ........................................ 12
ITEM 8 Changes and Disagreements With Accountants on Accounting and
Financial Disclosure ......................................... 25
PART III
ITEM 9 Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act ............ 26
ITEM 10 Executive Compensation ...................................... 27
ITEM 11 Security Ownership of Certain Beneficial Owners and Management 27
ITEM 12 Certain Relationships and Related Transactions .............. 29
ITEM 13 Exhibits List and Reports on Form 8-K ....................... 30
Signatures .................................................. 32
Index of Exhibits ............................................ 33
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ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Crowell & Co., Inc., is a Georgia corporation ("Crowell") which was
incorporated in 1968. The offices of Crowell are located at 432 South Belair
Road, Augusta, Georgia 30907. The telephone number is (706) 855-1099.
The principal business of Crowell and its subsidiaries, Keystone Homes,
Inc. and Ivey Homes, Inc., (together, the "Company") is home-building and
the development of residential properties for resale. Crowell primarily
develops residential properties. Additionally, Crowell owns and operates
Petersburg Racquet Club, a tennis and swimming facility located in Crowell's
largest development. Crowell also provides property appraisal services.
Crowell's business plan is to acquire new properties for development in
profitable markets based on current and expected demand. Analysis and
acquisition of new properties are ongoing. On June 1, 1995, Crowell sold its
residential real estate brokerage division to Meybohm Realty, Inc.
("Meybohm"). (See Dispositions of Assets on page 4.) Crowell retained its
commercial brokerage division in the sale. Crowell sold its computer
division, United Data Systems ("UDS") to Chin Yu on December 16, 1996.
Crowell acquires and develops land for home-building primarily in
Columbia County, Georgia. Columbia County is in east central Georgia and is
included in the Augusta Metropolitan Statistical Area ("MSA"). This MSA
contains Richmond, Columbia, and McDuffie Counties in Georgia and Aiken and
Edgefield Counties in South Carolina. The population of this MSA was
approximately 480,000 in 1996. Columbia County had a population of
approximately 85,000 in 1996. While Columbia County is primarily a suburban
and rural community, the industrial base is growing as local political and
business leaders have made intensive efforts to lure new industries. Crowell
believes Columbia County is highly desirable for homebuyers for many reasons,
including the county's high quality school system and accessibility to
employment, shopping, and entertainment.
The operations of Crowell's Ivey Homes, Inc. ("Ivey") and Keystone
Homes, Inc. ("Keystone") subsidiaries were combined during 1996. The
consolidated operations will be referred to as Keystone. Keystone (a wholly
owned subsidiary of Crowell) builds single family homes on a presold and
speculative basis. Keystone builds in all of Crowell's developments and in
one of Home Sites, Ltd.'s (a Georgia limited partnership of which Otis L.
Crowell, President and Chairman of the Board, and majority shareholder of
Crowell, is the general partner) developments. Generally, Keystone does not
build outside of Crowell or Home Sites developments. The revenues of
Keystone constituted 90% of the total revenues of the Company for the fiscal
year ended December 31, 1996.
Keystone purchases developed lots for home construction from Home Sites,
Ltd. ("Home Sites"). For the years ended December 31, 1996 and 1995, such
purchases amounted to $79,500 and $292,700, respectively. Crowell also
provides management services to Home Sites. For the years ended December 31,
1996 and 1995,
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management fees earned by the Company amounted to $5,430 and $35,522,
respectively.
Currently, Keystone's home prices (which includes lot costs) range from
approximately $90,000 to $200,000. Square footage in these homes ranges from
1,400 to 3,000 square feet. Keystone builds single family detached homes.
Keystone uses either concrete slabs or flooring systems in the construction
of its homes and exterior materials may be brick or vinyl siding.
Keystone's backlog at December 31, 1996, was approximately $857,000.
Backlog represents the dollar amount of sales pending on signed contracts
where Keystone has not completed construction of the homes under contract.
Construction was approximately 67% complete on these contracts at December
31, 1996. Management believes all backlog at December 31, 1996, will be
completed during 1997.
All operations of the Company are domestic.
DISPOSITIONS OF ASSETS
On June 1, 1995, Crowell sold its residential real estate brokerage
division ("Division") to Meybohm. Crowell sold the Division in order to
concentrate managerial and financial resources on development and home-
building. The sales price of the Division was $100,000 in cash, plus
payments based on various percentages of former Crowell agent earnings,
listings, and pending sale contracts transferred from Crowell to Meybohm for
one year from the date of sale. In addition, the sales price included
payments not to exceed $60,000 per year for the right to exclusively market
Crowell and related entities' developments for a period of two years. The
net book value of the division was approximately $21,000 at the time of the
sale. This amount is included as cost in the $79,000 gain on the disposal of
the Division. All other payments received under the sales agreement are
reflected in the loss from discontinued operations. There was no material
relationship between Crowell and Meybohm at the time of the sale. No income
tax was generated from the sale of the Division because of the operating loss
incurred by Crowell for 1995. Total revenue from the residential brokerage
division for the years ended December 31, 1995 and 1994, was $528,473 and
$1,760,149, respectively.
On December 16, 1996 Crowell sold United Data Systems, Inc., ("UDS"), a
computer software company that developed software for use in the real estate
industry. The sales price of UDS was $200,000 which was received in the form
of $80,000 in cash and a note receivable of $120,000 which is secured by all
sold and future assets of UDS. The net book value of UDS was approximately
$40,000. Therefore, Crowell recognized a gain of approximately $160,000 on
the sale. The purchaser of UDS was Chin U. Yu ("Chin"). There was no
substantial material relationship between Crowell and Chin at the time of the
sale. No income tax was generated from the sale of UDS because of the
operating loss incurred by Crowell for 1996. Total revenue for UDS for the
years ended December 31, 1996 and 1995 was $421,199 and $562,713,
respectively.
COMPETITION
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The Company competes with other individuals and entities involved in
real estate development and residential real estate construction, many of
which have greater capital resources than Crowell. Such competitors may have
greater diversity in terms of both the types of properties under development
and geographic locations of properties, and therefore, are better able to
avoid adverse developments in the single family residential development and
construction business in the MSA.
Crowell competes with several other developers in Columbia County. Lot
prices are determined by market conditions because Crowell does not have
sufficient market share to dictate price. Crowell competes by strategically
analyzing housing availability and demand throughout the MSA and acquiring
properties based on this analysis.
Because Keystone is the primary builder in several subdivisions
developed by Crowell and Home Sites, Keystone is not subject to the lot
acquisition problems that some of its competitors face. Therefore, Keystone
is able to concentrate on building efficiencies and customer needs.
Keystone's home prices are determined by market conditions and are affected
by demand, land acquisition costs, and the cost of labor and materials.
SOURCES AND AVAILABILITY OF RAW MATERIALS
There is an adequate supply of building materials available in the
Augusta, Georgia area. Major suppliers of the Company are Howard Lumber
Company, Maner Builders Supply Company, Hutto Plumbing, Inc., Looper Cabinet
Company, Inc., Claussen Concrete, Wickes Lumber Company, American Carpet One,
Augusta Lighting and Design Center, Smith's Landscape Nursery, and D'Antignac
& Merritt.
EMPLOYEES
As of December 31, 1996, the Company and its subsidiaries had
approximately 18 employees, 11 of which were full time employees. The
Company has one commercial real estate agent and one appraisal agent.
The Company leases its executive office space from the President of
Crowell. The leases are further described in Item 12.
ITEM 2. DESCRIPTION OF PROPERTIES
At December 31, 1996, the principal properties held by the Company, all
of which are located in Columbia County, Georgia, unless otherwise noted,
included:
<TABLE>
<CAPTION>
Project/
Mortgage Subdivision Existing Mortgage
Description Name Location Use Planned Use Balance
------------ ----------- ---------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C>
29.72 acres undeveloped land None Fury's Ferry Rd None Residential $ *
9.4 acres undeveloped land None Fury's Ferry Rd None Commercial/ *
Shopping Ctr
1.41 acres undeveloped land None The Pass Rd None Commercial *
</TABLE>
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<TABLE>
<CAPTION>
Project/
Mortgage Subdivision Existing Mortgage
Description Name Location Use Planned Use Balance
------------ ----------- ---------- ------- ----------- ----------
<S> <C> <C> <C> <C> <C>
50.57 acres land under Chaparral Clark Pointe Rd None Residential 224,181
development
31 developed lots Chaparral The Pass Rd Residential 64,908
28 developed lots Bakers Ferry The Pass Rd Residential 0
12 developed lots The Boulders The Pass Rd Residential 7,000
20.23 acres undeveloped land None The Pass Rd None Residential *
at Petersburg Racquet Club
Petersburg Racquet Club Petersburg The Pass Rd Recreation 541,461
Racquet Club facility
Homes under construction Bakers Ferry The Pass Rd Sales 1,062,618
inventory
Homes under construction The Boulders The Pass Rd Sales 500,445
inventory
Homes under construction Bridlewood Fury's Ferry Rd Sales 98,950
inventory
Homes under construction Asbury Hill Richmond County Sales 296,191
inventory
Homes under construction Chaparral Clark Pointe Rd Sales 231,187
inventory
Rental Homes None Various Sales 69,828
inventory __________
Total mortgage debt $3,566,459
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</TABLE>
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* Aggregate mortgage debt was $469,690 at December 31, 1996.
The Company holds title on the above properties in fee simple. All land
is properly zoned for its listed potential use. Management believes that
Crowell and Keystone are in compliance with all wetlands, setback, and zoning
regulations. Management believes that all properties are adequately insured.
The interest expense for the year ended December 31, 1996, on the
mortgage debt was $324,005 (including capitalized interest). A similar
payment for 1997 can be expected although the amount will vary depending on
several factors including lot sales and interest rate changes. The principal
outstanding is reduced by a certain agreed-upon amount as each property is
sold in order for the lender to release its secured interest in the property
being sold. The interest rates on the mortgages range from 8.5% to 10.0%.
The development loans are renewed on an annual basis. The mortgage on
Petersburg Racquet Club is amortized monthly and will be fully amortized in
2009. (For additional information on the Company's mortgage debt, see Item
6. Management's Discussion and Analysis or Plan of Operation.)
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The Company's investment in different types of real estate is not
restricted except where restricted by the Company's ability to obtain
financing. See Item 1 for a description of the Company's real estate
development activities.
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
The following is a discussion of investment policies, financing policies
and policies with respect to certain other activities of the Company.
Although the Company has no formal written policies with respect to such
activities, the following discussion outlines the Company's objectives and
informal policies with respect to these activities, which have been
determined by the Board of Directors of the Company and may be changed from
time to time at the discretion of the Board of Directors without a vote of
the shareholders of the Company.
Investment Policies. The Company's primary objective with regard to
real estate is to acquire raw land in the Augusta, Georgia area for the
purpose of developing the land into separate homesites and home-building,
which homes are built on a presold or speculative basis. (See Description of
Properties.) However, future development or investment activities may not be
limited to this specific geographic area or to residential real estate. The
Company's policy is to develop or acquire raw land or developed residential
lots where management believes that opportunities exist for acceptable
investment returns. The Company may expand or develop existing properties or
sell such properties in whole or in part as determined by management.
The Company may also participate with other entities in property
ownership, through joint ventures or other types of co-ownership. The
Company's equity investments in such properties may be subject to existing
mortgage financing and other indebtedness which would have priority over the
equity of the Company. The Company may issue securities to persons in
exchange for properties. The Company also may invest in securities of
entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities, although
it has not done so in the past several years. The Company may acquire all or
substantially all of the securities or assets of other entities where such
investments would be consistent with the Company's investment policies.
Financing Policies. The Company uses internally generated and borrowed
funds to purchase real estate. In reaching such financing decisions,
management considers traditional conventional mortgage debt-to-asset ratios.
Borrowings may be in the form of bank borrowings, publicly and privately
placed debt instruments, or purchase money obligations to the sellers of
properties, any of which indebtedness may be unsecured or may be secured by
any or all of the assets of the Company and may have full or limited recourse
to all or any portion of the assets of the Company. The Company has not
established any limit on the number of mortgages that may be placed on any
single property or on its portfolio as a whole, but mortgage financing
instruments usually limit additional indebtedness on such properties. To the
extent that the Board of Directors of the Company determines to sell
additional capital, the Company may raise such capital through equity
offerings, debt financings or any other method.
Policies with Respect to Other Activities. The Company has authority to
offer and sell shares of its capital stock or other securities and to
repurchase or otherwise
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reacquire its shares or any other securities and may engage in such
activities in the future, although it has no present intention of offering or
selling any securities or repurchasing any of the shares of Crowell Common
Stock. The Company has no material outstanding loans to other entities or
persons, including officers and directors. The Company may in the future make
loans to joint ventures in which it participates in order to meet working
capital needs of the venture. The Company has not engaged and does not intend
to engage in the future in trading, underwriting or agency distribution or
sale of securities of other issuers. Additionally, the Company has not
invested in the securities of other issuers for the purpose of exercising
control in the past three years; however, the Company may make such
investments in the future. The Company intends to make investments in such a
way that it will not be treated as an investment company under the Investment
Company Act of 1940.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings except routine
litigation that is incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the quarter ended December 31, 1996.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no public trading market for the securities of Crowell. As of
December 31, 1996, there were approximately 740 holders of record of
Crowell's Common Stock, without par value. No dividends have been paid on
Crowell's Common Stock for more than two years and it is anticipated that
Crowell will not pay dividends in the foreseeable future.
Crowell did not issue or sell any shares of Common Stock during 1996
that were not registered under the Securities Act of 1933, as amended.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
OVERVIEW
The primary objective of the Company's management is to maximize
shareholder wealth. The Company attempts to accomplish this objective by
increasing total revenues and controlling expenses. Management believes that
existing corporate structure is adequate to support increased sales. In
addition, management believes revenues can be increased most rapidly by
increasing home-building efforts.
The statements in this report regarding future sales, expenses, and
other items relating to the future of the Company constitute Forward Looking
Statements under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from the Company's expectations as a
result of a number of factors, including the national and local economy,
market conditions, competition, real estate demand, availability of
financing, interest rates, and weather conditions.
RESULTS OF OPERATION
Management continually monitors inventory levels in relation to customer
demand in order to build the needed number of homes. Management believes
that housing inventory needs are dynamic and that a specific inventory level
must be matched with anticipated consumer demand. Therefore, there is no
specific amount of inventory which will always be the optimum.
Home sales decreased by $155,759, or 2.5%, and commercial brokerage
commissions increased by $68,905, or 50.2% for the year ended December 31,
1996, as compared to the year ended December 31, 1995. The slight decrease
in home sales primarily resulted from selling fewer homes in 1996 than in
1995. The increase in commercial brokerage commissions resulted from the
brokerage of more property sales in 1996.
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Gross profit percent on home sales increased to 9% in 1996 from 5% in
1995. The increase in gross profit percentage on home sales resulted
primarily from lower lot acquisition costs in 1996 as compared to 1995.
Gross profit percent on commercial brokerage commissions increased from
30% in 1995 to 31% in 1996.
Gross profit on lot sales increased from 36% in 1995 to 49% in 1996.
The increase in gross profit percentage on lot sales resulted primarily from
lower lot costs in 1996 as compared to 1995.
Salaries decreased in 1996 as compared to 1995 by $5,143, or 1%,
because of employee attrition. Management believes salary expense will be
less in 1996 than in 1997 because of the loss of several employees during
1996. The Company does not plan to replace employees lost through attrition.
Depreciation expense decreased by $10,920 or 17% in 1996 as compared to
1995 because several assets have been fully depreciated. Management believes
depreciation expense will increase in 1997 based on projected increased
depreciation caused by additions at Petersburg Racquet Club ("PRC").
Taxes and licenses decreased by $29,951, or 46%, in 1996 as compared to
1995. The decrease in taxes and licenses resulted primarily from the
decrease in properties held in 1996 as compared to 1995 and a timing
difference in recording property taxes expensed.
Building occupancy decreased by $1,685 in 1996 as compared to 1995.
Office expense decreased in 1996 by $31,735 or 23% as compared to 1995.
The decrease in office expenses in 1996 as compared to 1995 resulted
primarily from the decrease in the number of employees and the decrease in
number of Company operations.
Advertising and promotion decreased by $1,982, or 10%, in 1996 as
compared to 1995.
Legal and accounting expenses decreased by $17,155, or 40%, in 1996 as
compared to 1995. The decrease in legal and accounting fees resulted
primarily from the reduction in audit fees and smaller use of attorneys in
1996 as compared to 1995.
Communications expenses decreased by $1,281, or 6%, in 1996 as compared
to 1995 because of lower long distance rates.
Overall operating expenses decreased by $99,852 for 1996 as compared to
1995. The overall decreases in 1996 as compared to 1995 resulted primarily
from decreases in taxes and licenses, office expenses, and legal and
accounting expenses.
Interest income decreased by $44,768 in 1996 as compared to 1995 because
a note receivable in the amount of approximately $260,000 was collected in
1995.
Interest expense from continuing operations decreased by $151,639 in
1996 as compared to 1995 because of the decrease in housing inventory carried
throughout the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to sell land it presently owns to meet liquidity
needs as it has done in the past. Together with revenues from other sources,
such sales would be expected to generate sufficient cash to meet the
Company's liquidity requirements. At
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December 31, 1996, available cash and proceeds from land, lot, and home sales
were expected to be sufficient to meet the Company's requirements until
spring of 1996 when home sales typically improve and provide cash for
operations.
The Company has obtained financing historically by borrowing from
conventional lending sources using land acquired for development as security
for loans.
Current and future liquidity needs are expected to be met by use of the
proceeds from lot and land sales and the proceeds from loans, using lands
purchased for development as collateral. Existing development loans and
commitments available to the Company have been made by various financial
institutions and are secured by the improved lots held for resale. (See Item
2. Description of Properties.) The interest rates on the development loans
are the prime rates of the lenders (8.0% in December 1996) plus 1.0 to 1.5%.
Payments of interest are due monthly or quarterly and a portion of the
principal is repaid as each lot is sold. The existing loans terminate in the
years ending December 31, 1997 and 1998, at which time all principal and
accrued interest are payable. There are no penalties for prepayment.
Management expects to renew the development loans at that time.
Residential home construction costs are financed through the use of
additional commitments using the improved lots as collateral. Lot
acquisition costs and home construction costs are financed by construction
loans from a number of conventional lending sources, generally lending 90 to
95% of the costs of the home, secured by the lot and improvements, at rates
of 9.25% to 9.75% as of December 31, 1996. These loans are paid upon the
sale of the home. These loans are negotiated and closed on a project-by-
project and lot-by-lot basis.
In addition to the development loans, the Company has a loan agreement
with an Augusta, Georgia savings and loan institution for a currently
outstanding amount of approximately $541,461 at a rate of one percent over
the institution's base lending rate (8.5% at December 31, 1996).
Financing arrangements for long-term needs have not been made because
such arrangements in the land development business are generally made on a
project-by-project basis. Debt service on existing loans (loan balances
totaled $3,566,459 as of December 31, 1996) and funds for operations are
expected to be met from the proceeds of lot sales, land sales, home sales and
real estate brokerage commissions. Notes maturing in 1997 total $2,483,111.
The Company historically has renewed these notes annually although there are
no assurances that such loans will be renewed by the financial institution.
The notes will eventually be repaid from proceeds of land, lot, and home
sales. (See Item 7. Financial Statements for additional details regarding
notes payable.)
The Company's financial condition at December 31, 1996, is substantially
equivalent to that of December 31, 1995. Stockholders' equity as of December
31, 1995, was $755,024 as compared to $741,869 at December 31, 1996.
Properties held for resale decreased from $3,929,197 at December 31,
1995 to $3,493,117 at December 31, 1996, a decrease of $436,080, or 11%,
which reflects the decrease in inventory to adjust to decreased sales.
Properties held for resale will increase and decrease as management
determines and builds the level of inventory needed to satisfy customer
demand.
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Cash decreased by $206,070, or 77%, at December 31, 1966, from December
31, 1995. (See Item 7 Financial Statements - Consolidated Statements of Cash
Flows.)
Receivables increased from $127,076 at December 31, 1995, to $161,907 at
December 31, 1996, an increase of $34,831, or 27%, because of the addition of
a note receivable in connection with the sale of UDS.
Other assets decreased from $53,516 at December 31, 1995, to $43,332 at
December 31, 1996, a decrease of $10,184, or 19%.
Notes payable decreased from $3,808,908 at December 31, 1995, to
$3,566,459 at December 31, 1996, a decrease of $242,449, or 6%, because of a
decrease in inventory levels. Notes payable will increase and decrease in
direct proportion to the level of housing inventory maintained by the
Company.
Accounts payable and accrued liabilities decreased from $198,327 at
December 31, 1995, to $71,544 at December 31, 1996, a decrease of $126,783 or
64%, because proceeds from home sales and collections on asset sales were
used to pay liabilities.
The Company has net operating loss carryforwards available of
approximately $2,060,000 to offset against future federal taxable income.
The current value of these carryforwards computed at maximum federal and
state income tax rates is approximately $800,000. This amount is not
reflected in the financial statements.
IMPACT OF INFLATION
Although inflationary pressures were moderate in 1996 and 1995, the
Company continues to seek ways to reduce the impact of inflation. To the
extent permitted by competition, the Company passes increased costs on to
customers by increasing sales prices of residential lots and homes.
SEASONALITY
The Company typically sells more homes during the second and third
quarters of the year than during the remainder of the year.
ITEM 7. FINANCIAL STATEMENTS
The following consolidated financial statements of Crowell & Co., Inc., and
subsidiaries are included herein:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Operations - Years ended December 31, 1996 and
1995
Consolidated Statements of Changes in Stockholders' Equity - Years ended
December 31, 1996 and 1995
Consolidated Statements of Cash Flows - Years ended December 31, 1996 and
1995
Notes to Consolidated Financial Statements - Years ended December 31, 1996
and 1995
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Crowell & Co., Inc., and Subsidiaries
Augusta, Georgia
We have audited the accompanying consolidated balance sheets of Crowell
& Co., Inc., and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, changes in stockholders'
equity and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Crowell &
Co., Inc., and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
CHERRY, BEKAERT & HOLLAND, L. L. P.
Augusta, Georgia
March 21, 1997
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CROWELL & CO., INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
PROPERTIES HELD FOR RESALE
Homes under construction and for sale $2,276,944 $2,445,971
Developed residential land 1,016,939 1,103,676
Land held for future development 199,234 379,550
---------- ----------
3,493,117 3,929,197
---------- ----------
CASH, including escrow funds of $6,434 and $25,689
in 1996 and 1995, respectively 62,494 268,564
---------- ----------
RECEIVABLES
Notes 126,316 30,766
Accounts and other 35,591 96,310
---------- ----------
161,907 127,076
---------- ----------
PROPERTY AND EQUIPMENT
Rental homes 90,000 124,000
Petersburg Racquet Club 1,059,993 706,547
Computer equipment and software 0 153,269
Furniture, fixtures and equipment 146,903 206,268
---------- ----------
1,296,896 1,190,084
Less accumulated depreciation 677,874 806,178
---------- ----------
619,022 383,906
---------- ----------
OTHER ASSETS 43,332 53,516
---------- ----------
$4,379,872 $4,762,259
========== ==========
</TABLE>
See notes to consolidated financial statements.
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LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
NOTES PAYABLE TO BANKS $3,566,459 $3,808,908
---------- ----------
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable 21,155 78,083
Accrued expenses 42,905 89,874
Customer deposits 7,484 30,370
---------- ----------
71,544 198,327
---------- ----------
TOTAL LIABILITIES 3,638,003 4,007,235
---------- ----------
COMMITMENTS
STOCKHOLDERS' EQUITY
Capital stock:
Preferred, voting and non-participating,
without par value; 10,000,000 shares
authorized, 1,011,899 designated to
Series A and Series B
Series A preferred, 8% cumulative, stated
value $1 per share; callable at $1 per
share plus accumulated dividends,
convertible into common stock at the rate
of 1 share for 4 preferred shares;
authorized 2,000,000 shares; issued and
outstanding 525,000 shares; accumulated
dividends $105,000 ($0.20 per share) 525,000 525,000
Series B preferred, 8% cumulative, stated value
$1 per share; callable at $1 per share plus
accumulated dividends, convertible into common
stock at the rate of 1 share for 4 preferred
shares; authorized 486,899 shares; issued and
outstanding 486,899 shares; accumulated dividends
$116,856 ($0.24 per share) 486,899 486,899
Common, without par value; 50,000,000 shares
authorized; 2,520,835 shares issued and
outstanding at December 31, 1996 and 1995. 696,774 696,776
Additional paid-in capital Preferred stock - Series A 33,648 33,648
Accumulated deficit (1,000,452) (987,299)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 741,869 755,024
---------- ----------
$4,379,872 $4,762,259
========== ==========
</TABLE>
<PAGE>
Page 16
CROWELL & CO., INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1996 1995
------------ -----------
<S> <C> <C>
REVENUES
Home sales $6,253,268 $6,409,027
Brokerage commissions 206,255 137,350
Other income 270,977 277,344
Lot sales 254,900 71,600
---------- ----------
6,985,400 6,895,321
---------- ----------
COST OF REVENUES
Homes 5,721,184 6,073,514
Agent commissions 142,395 95,778
Other 31,617 37,477
Lots 129,408 45,700
---------- ----------
6,024,604 6,252,469
---------- ----------
OPERATING EXPENSES
Salaries 597,184 602,327
Depreciation 54,388 65,308
Taxes and license 35,836 65,787
Building occupancy 105,530 107,215
Advertising and promotion 17,798 19,780
Office expense 105,223 136,958
Legal and accounting 25,992 43,147
Communications 19,488 20,769
---------- ----------
961,439 1,061,291
---------- ----------
OPERATING LOSS (643) (418,439)
---------- ----------
FINANCIAL INCOME (EXPENSE)
Interest income 941 45,709
Interest expense (246,370) (398,009)
---------- ----------
(245,429) (352,300)
---------- ----------
LOSS FROM CONTINUING OPERATIONS (246,072) (770,739)
---------- ----------
DISCONTINUED OPERATIONS
Income (loss) from residential brokerage division 69,686 (76,450)
Gain on disposal of residential brokerage division 0 79,000
Income from computer division 3,306 64,709
Gain on disposal of computer division 159,927 0
---------- ----------
232,919 67,259
---------- ----------
NET LOSS (13,153) (703,480)
========== ==========
EARNINGS PER COMMON SHARE:
Weighted average number of common shares
outstanding 2,520,835 2,520,835
Primary earnings per share
Loss from continuing operations $ ( .13) $ (.34)
Income from discontinued operations .09 .03
---------- ----------
NET LOSS PER COMMON SHARE $ (.04) $ (.31)
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Page 17
CROWELL & CO., INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Additional
Capital Stock Issued Paid-In
-------------------- Capital
Preferred Preferred Preferred Accumulated
Series A Series B Common Series A Deficit
--------- -------------------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $525,000 $486,899 $696,776 $33,648 $ (283,819)
Net loss - - - - (703,480)
--------- -------------------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1995 $525,000 $486,899 $696,776 $33,648 $ (987,299)
Purchase of Stock - - (2) - -
Net loss - - - - (13,153)
--------- -------------------- -------- ----------- -----------
BALANCE, DECEMBER 31, 1996 $525,000 $486,899 $696,774 $33,648 $(1,000,452)
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Page 18
CROWELL & CO., INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (13,153) $ (703,480)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 54,388 74,526
(Gain) loss on disposal of assets (159,927) 45,065
Changes in assets and liabilities:
(Increase) decrease in:
Properties held for resale 436,080 1,743,951
Accounts and other receivables 60,719 (20,022)
Home sale notes receivable 24,450 53,301
Other assets 10,184 122,109
Increase (decrease) in
Accounts payable (56,928) 5,111
Accrued expenses (46,969) (36,501)
Customer deposits (22,886) (74,656)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 285,958 1,209,404
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets 80,000 100,000
Purchase of property and equipment (329,579) (17,265)
Collections on notes receivable 0 452,222
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES (249,579) 534,957
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans 4,679,657 4,294,615
Payments of bank loans and other debt (4,922,106) (6,000,744)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (242,449) (1,706,129)
----------- -----------
NET INCREASE (DECREASE) IN CASH (206,070) 38,232
CASH AT BEGINNING OF YEAR 268,564 230,332
----------- -----------
CASH AT END OF YEAR $ 62,494 $ 268,564
=========== ===========
SUPPLEMENTARY DISCLOSURES
Interest paid (net of amount capitalized) $ 262,853 $ 384,119
Income taxes paid 0 5,503
Note receivable from disposal of assets 120,000 0
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Page 19
CROWELL & CO., INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - DESCRIPTION OF BUSINESS
The principal operations of Crowell & Co., Inc., and its subsidiaries
(the "Company") are development of residential properties for resale, home-
building, and providing commercial real estate brokerage services. The
Company acts as a general contractor on all development and home-building.
Crowell & Co., Inc. ("Crowell"), the parent company, primarily develops
residential properties in the Augusta, Georgia, metropolitan statistical
area. Additionally Crowell owns and operates Petersburg Racquet Club, a
tennis and pool facility located in Crowell's largest development. Crowell
also provides property appraisal services and commercial real estate
brokerage services.
Ivey Homes, Inc. ("Ivey"), and Keystone Homes, Inc. ("Keystone"), both
wholly owned subsidiaries of Crowell, build single-family and multi-family
homes on a presold and speculative basis in the Augusta, Georgia,
metropolitan statistical area. The operations of Ivey and Keystone were
combined in 1996.
The Company incurred losses from continuing operations of $246,072 and
$770,739 in 1996 and 1995, respectively. The Company sold two of its
divisions during 1996 and 1995, and management has initiated other internal
changes which management believes will help return the Company to
profitability. However, the real estate market in the Augusta area is
subject to fluctuations beyond the Company's control. As discussed in Note
5, the Company also has additional borrowing capacity under its financing
arrangements.
All operations of Crowell and its subsidiaries are domestic.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation.
ACCOUNTING ESTIMATES
The preparation of the 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.
<PAGE>
Page 20
LOSS PER SHARE
The loss per common share is computed using the weighted average of the
number of shares outstanding during the years ended December 31, 1996 and
1995. Because inclusion of convertible preferred stock would have an anti-
dilutive effect on the loss per common share, the convertible preferred stock
is excluded from the computation of the loss per common share assuming full
dilution. The preferred dividend accrued is subtracted from the net loss for
the purposes of computing the loss per common share regardless of whether the
preferred dividend is paid.
RECEIVABLES
The Company uses the allowance method for recording bad debt. At
December 31, 1996 and 1995, an allowance for collectible receivables was not
considered necessary.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Maintenance and repairs are
charged to expense. Improvements that significantly increase the lives of
assets are capitalized and depreciated or amortized over their estimated
useful lives. Gains or losses on disposals are credited or charged to
operations.
DEPRECIATION
Depreciation of property and equipment is computed on the straight-line
and declining-balance methods for both financial reporting and income tax
purposes.
PROPERTIES HELD FOR RESALE
Properties held for resale are stated at the lower of cost or market
using the specific identification method. Certain property purchases and
sales are treated as cash transactions for the statements of cash flows.
CUSTOMER DEPOSITS
A portion of the Company's cash is reserved for the repayment of
security deposits, excess cash owed to property owners on property management
accounts and earnest money received on pending real estate sales contracts.
CAPITALIZED INTEREST
The Company capitalizes the portion of interest incurred during the
construction period for funds borrowed to develop properties and construct
residential homes. Such interest is charged to properties and expensed as a
cost of sale as properties are sold.
REVENUE RECOGNITION
The Company recognizes revenues on sales of residential lots, land, and
homes at the time of closing and receipt of cash.
The Company uses the completed contract method on Company-constructed
homes. This method is used because the typical home is completed in six
months or less and the financial position and results of operations do not
vary significantly from those which would result from the use of the
percentage of completion method. A contract is considered complete at the
time of closing and receipt of cash.
<PAGE>
Page 21
Contract costs include all direct materials and labor costs, allocated
common cost of land and development and those indirect costs related to
contract performance, including interest on borrowings. General and
administrative costs are charged to expense as incurred.
The Company recognizes commissions earned on real estate brokerage
transactions at the time of closing.
RECLASSIFICATIONS
Certain 1995 amounts have been reclassified to conform with the
financial statement presentation used in 1996. These reclassifications had
no effect on net income.
NOTE 3- NOTES RECEIVABLE
<TABLE>
<CAPTION>
December 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
Note receivable from an individual due in
quarterly installments with interest at 8.8%,
secured by all assets of UDS. (See Note 9) $120,000 $ -
Various second mortgage notes receivable on
homes sold by Ivey at interest rates of 9.0%
to 11.0%, due at various dates through 1997. $ 6,315 $30,766
-------- --------
$126,315 $30,766
======== ========
</TABLE>
In the opinion of management, the fair value of the above financial
instruments does not materially differ from the face value.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company leases its office space from the majority stockholder. On
June 1, 1989, the Company entered into three (3) operating lease agreements
each with a term of twenty (20) years. The leases provide that the Company
pay all property taxes, insurance and maintenance plus an annual rental. The
total minimum rental commitment at December 31, 1996, under these leases is
$1,837,200, which is due as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1997 $ 127,200
1998 127,200
1999 130,800
2000 133,200
2001 135,600
Thereafter 1,183,200
----------
$1,837,200
==========
</TABLE>
<PAGE>
Page 22
The total rental expense for these leases included in the consolidated
statements of income for the years ended December 31, 1996 and 1995, was
$122,400 and $120,000, respectively.
NOTE 5 - NOTES PAYABLE
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
--------- ----------
<S> <C> <C>
To banks
Secured by residential properties held for resale,
maturing at various dates through 1998, at interest
rates from prime plus 1.0% to 1.5% (8.5% to 10.0% at
December 31, 1996 and 1995). $2,955,170 $3,345,402
Secured by Petersburg Racquet Club property, maturing
2009, at an interest rate of 8.5% and 7.5% at
December 31, 1996 and 1995, respectively. 541,461 330,082
Secured by single-family homes held for resale and
rental, maturing at various dates through 1998, at
interest rates of 9.0% to 11.0%. 69,828 133,424
---------- ----------
$3,566,459 $3,808,908
========== ==========
</TABLE>
In the opinion of management, the fair value of the above financial
instruments does not materially differ from the face value.
Under provisions of financing arrangements outstanding at December 31,
1996, the Company has unused commitments for financing of approximately
$940,000. These additional amounts are available upon request and approval
of development progress and are subject to the same terms and obligations as
those existing on December 31, 1996. The majority stockholder has personally
guaranteed all bank loans. In addition, the president of Ivey has personally
guaranteed all of Ivey's bank loans, which amounts to additional guarantees
of $1,667,674 as of December 31, 1996. The president of Keystone has
personally guaranteed all of Keystone's bank loans which amounts to
additional guarantees of $591,544.
Maturities of debt are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C>
1997 $2,483,111
1998 596,256
1999 34,883
2000 37,967
2001 41,323
Thereafter 372,919
----------
$3,566,459
==========
</TABLE>
Capitalized interest (see Note 2) was approximately $78,000 and $58,000
for the years ended December 31, 1996 and 1995, respectively. All other
interest incurred was recognized as financial expense in the consolidated
statements of income.
<PAGE>
Page 23
NOTE 6 - INCOME TAX MATTERS
For the years ended December 31, 1996 and 1995, Crowell filed
consolidated income tax returns with its subsidiaries Ivey and Keystone.
For the years ended December 31, 1996 and 1995, no income tax provision
was made because of the net losses the Company incurred.
As of December 31, 1996, and for the year then ended, the Company had no
significant temporary or permanent differences to report. For the year ended
December 31, 1995, the Company collected the remainder of a note receivable
recorded on the cash basis for income tax purposes in the amount of
approximately $260,000. No income tax was incurred by the collection because
of the net loss incurred by the Company.
The Company adopted SFAS No. 109 as of January 1, 1995. Under the asset
and liability method of SFAS 109, deferred tax assets and liabilities are
recognized for temporary differences between the financial reporting basis of
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. Under SFAS 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. The adoption of SFAS No. 109 had
no significant effect on income for the year ended December 31, 1995.
Deferred tax assets and liabilities at December 31, 1996 and 1995,
consist of the following:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets
Federal and state net operating loss
carryforwards $ 800,000 $ 800,000
Less valuation allowance (800,000) (800,000)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
</TABLE>
Remaining net operating loss carryforwards of $2,058,248 expire in
varying amounts between December 31, 2002, and December 31, 2011, and are
subject to Internal Revenue Code Section 382 limitations relating to a
corporation's ability to use net operating loss carryforwards subsequent to a
change in ownership. An expiration schedule is as follows:
<TABLE>
<CAPTION>
Year ending December 31
-----------------------
<S> <C>
2002 $ 320,346
2003 597,531
2004 154,945
2005 294,482
2010 683,502
2011 7,442
----------
$2,058,248
==========
</TABLE>
<PAGE>
Page 24
NOTE 7 - INDUSTRY SEGMENT DATA
The Company conducts its operations in the principal industries of real
estate development and home-building.
The real estate development segment consists principally of the
development of residential properties for resale and construction of single-
family and multi-family housing. In addition, the real estate development
segment operates a tennis and pool facility.
The real estate brokerage segment consists of commission revenue and
related expenses for primarily commercial real estate sales.
Any significant intersegment revenues for the periods presented have
been eliminated. Various industry segment data is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
1996 1995
------------ -----------
<S> <C> <C>
Net sales
Real estate development $6,779,145 $6,757,971
Real estate brokerage 206,255 137,350
---------- ----------
Net sales $6,985,400 $6,895,321
========== ==========
Operating income (loss)
Real estate development $ (36,946) $ (422,838)
Real estate brokerage 36,303 4,399
---------- ----------
Operating income (loss) $ (643) $ (418,439)
========== ==========
Capital expenditures
Real estate development $ 324,215 $ 5,741
Real estate brokerage - -
---------- ----------
Net capital expenditures $ 324,215 $ 5,741
========== ==========
Depreciation and amortization
Real estate development $ 54,388 $ 65,308
Real estate brokerage - -
---------- ----------
Net depreciation and amortization $ 54,388 $ 65,308
========== ==========
Assets employed
Real estate development $4,379,872 $4,661,515
Real estate brokerage - -
---------- ----------
$4,379,872 $4,661,515
========== ==========
</TABLE>
NOTE 8 - RELATED PARTY TRANSACTIONS
Keystone purchases developed lots for home construction from Home Sites,
Ltd. ("Home Sites"), an entity related by common control. For the years
ended December 31, 1996 and 1995, such purchases amounted to $79,500 and
$292,700, respectively. Crowell also provides management services to Home
Sites. For the years ended December 31, 1996 and 1995, management fees
earned by the Company amounted to $5,430 and $35,522, respectively.
<PAGE>
Page 25
An officer of the company also received real estate commissions on Home
Sites property sold by Crowell in the amount of $34,457 for the year ended
December 31, 1995.
NOTE 9 - DISCONTINUED OPERATIONS
On June 1, 1995, Crowell sold its residential real estate brokerage
division ("Division") to Meybohm Realty, Inc. ("Meybohm), another real estate
brokerage firm located in the Augusta area, with an effective closing date of
June 1, 1995. The sales price of the Division was $100,000 in cash, plus
payments based on various percentages of former Crowell agent earnings,
listings, and pending sale contracts transferred from Crowell to Meybohm for
one year from the date of sale. In addition, the sales price included
payments not to exceed $60,000 per year for the right to exclusively market
Crowell and related entities' developments for a period of two years. The net
book value of the division was approximately $21,000 at the time of the sale.
This amount is included as cost in the $79,000 gain on the disposal of the
Division. All other payments received under the sales agreement are
reflected in the loss from discontinued operations. There was no material
relationship between Crowell and Meybohm at the time of the sale. No income
tax was incurred from the sale of the Division because of the operating loss
incurred by Crowell for 1995. Total revenue from the residential brokerage
division for the year ended December 31, 1995, was $528,473.
On December 16, 1996 Crowell sold United Data Systems, Inc., ("UDS"), a
computer software company. The sales price of UDS was $200,000 which was
received in the form of $80,000 in cash and a note receivable of $120,000
which is secured by all sold and future assets of UDS. The net book value of
UDS was approximately $40,000. Therefore, a gain of approximately $160,000
was recognized on the sale. The purchaser of UDS was Chin U. Yu ("Chin").
There was no material relationship between Crowell and Chin at the time of
the sale. No income tax was incurred from the sale of UDS because of the
operating loss incurred by Crowell for 1996. Total revenue for UDS for the
years ended December 31, 1996 and 1995 was $421,199 and $562,713,
respectively.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Within the two year period ended December 31, 1996, there have been no
changes in independent certified public accountants or disagreements with
accountants on matters of accounting or financial disclosure.
<PAGE>
Page 26
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
Set forth below is certain information as of March 3, 1997, about each
of the directors and executive officers of Crowell.
<TABLE>
<CAPTION>
Name Age Office
------ --- ------
<S> <C> <C>
Otis L. Crowell 62 Director, President and Chairman of the
Board
O. Lamar Crowell, Jr. 30 Director and Vice President
Mark L. Gilliam 35 Director, Vice President, Secretary and Chief
Financial Officer
</TABLE>
Mr. Crowell has served as President and as a Director of Crowell or its
predecessor since 1969, and Chairman of the Board of Crowell since March
1988.
Mr. Crowell, Jr., has served as Vice President and as a Director of
Crowell since July, 1996. Mr. Crowell, Jr., has served as President of
Keystone Homes since April 1995. For five years prior to his appointment as
President of Keystone, Mr. Crowell served as a manager with Crowell and Ivey.
Mr. Gilliam has served as Vice President, Secretary and Chief Financial
Officer of Crowell since October 1992. From December 1987 to October 1992,
Mr. Gilliam practiced public accounting with the firms of Cherry, Bekaert &
Holland and Cleveland, Anderson & Company for three and two years,
respectively.
The term of each officer and director is for one year and expires on the
third Wednesday in June; however, the term of each officer and director
continues until his successor is elected and qualified. There is no
agreement or understanding between any officer and director and any other
person pursuant to which any officer or director was selected as an officer
or director. Mr. Crowell, Jr., is the son of Mr. Crowell.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the SEC thereunder require Crowell's executive officers and
directors and persons who own more than 10% of Crowell's Common Stock, as
well as certain affiliates of such persons, to file initial reports of
ownership and reports of changes in ownership with the SEC. Executive
officers, directors and persons owning more than 10% of Crowell's Common
Stock are required by SEC regulation to furnish Crowell with copies of all
Section 16(a) forms they file. Based solely on its review of the copies of
such forms received by it and written representations that no other reports
were required for those persons, Crowell believes that during the fiscal year
ended
<PAGE>
Page 27
December 31, 1996, Crowell's executive officers, directors and owners of more
than 10% of its Common Stock complied with all filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table summarizes by category, for the fiscal years ended
December 31, 1996, 1995, and 1994, the total compensation paid to the Chief
Executive Officer of the Company. No other executive officer of the Company
received salary and bonus for the fiscal year ended December 31, 1996, in an
amount in excess of $100,000:
<TABLE>
<CAPTION>
Name and Year Ended
Principal Position December 31, Salary
-------------------- -------------- --------
<S> <C> <C>
Otis L. Crowell 1996 $120,000
President and 1995 120,000
Chief Executive Officer 1994 120,000
</TABLE>
The directors of the Company are not compensated for services rendered
in such capacities.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of February 29, 1997, information
with respect to the beneficial ownership of shares of Common and Preferred
Stock of the Company by each person known to be the beneficial owner of more
than 5% of the outstanding shares of Common and Preferred stock and the
holdings of directors and executive officers individually and as a group.
Beneficial ownership as reported in the table has been determined in
accordance with Securities Exchange Commission ("SEC") regulations and
includes shares of Common Stock which may be acquired within 60 days upon the
exercise of outstanding stock options and the conversion of shares of
Preferred Stock of the Company. The named persons have sole voting and
investment power with regard to the shares shown as owned by such persons.
Pursuant to SEC regulations, all shares not currently outstanding which are
subject to options or conversion privileges exercisable within 60 days are
deemed to be outstanding for the purpose of computing the "Percent of Class"
held by the holder thereof but are not deemed to be outstanding for the
purpose of computing the "Percent of Class" held by any other shareholder of
the Company.
<PAGE>
Page 28
<TABLE>
<CAPTION>
Common Stock Series A Preferred Series B Preferred Combined Voting
Beneficially Stock Beneficially Stock Beneficially Power (Common and
Owned (Percent Owned (Percent Owned (Percent Preferred Considered
Name and Address of Class)/(1)/ of Class)/(2)/ of Class)/(3)/ as a Single Class)/(4)/
- --------------------------- ------------------ -------------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
Florice Clark/(5)/ 121,725 - 486,899 4.4%
3554 Old Ferry Road (4.6%) (100%)
Martinez, GA 30907
Otis L. Crowell*/(5)/ 1,876,622 87,500 - 67.7%
3750 Evans to Locks Road (73.8%) (16.7%)
Augusta, GA 30907
Mark L. Gilliam* 1,250 - - +
3696 El Cordero Road +
Martinez, GA 30907
Robert M. Hunter/(5)/ 70,000 280,000 - 2.5%
3801 High Hampton Drive (2.7%) (53.3%)
Martinez, GA 30907
Dennis Stanfield 161,436 - - 5.8%
P.O. Box 4501 (6.0%)
Martinez, GA 30907
Robert M. Hunter, Jr. 13,125 52,500 - +
3 Beech Lane + (10.0%)
Morristown, NJ 07960
Beverly H. Taylor 13,125 52,500 - +
688 Woodhall Abbey Court + (10.0%)
Martinez, GA 30907
Ben W. Hunter 13,125 52,500 - +
3109 West Road + (10.0%)
Martinez, GA 30907
All executive officers 1,877,872 - - 68.7%
and directors as a group (73.4%)
(3 persons)
</TABLE>
+ Less than 1.0%
* Executive officer or director
(1) Based on 2,520,835 shares of Common Stock outstanding on February 29,
1996.
(2) Based on 525,000 shares of Series A Preferred Stock outstanding on
February 29, 1996. Holders of the Series A Preferred Stock vote on the
basis of one vote for each four shares of Series A Preferred Stock held
with holders of Common Stock and holders of Series B Preferred Stock, all
voting as a single class. The Series A Preferred Stock is not registered
under Section 12 of the Securities Exchange Act of 1934, and in providing
<PAGE>
Page 29
ownership information the Company has relied on its stock transfer
records, which may not correspond to beneficial ownership. To the extent
that the Company is aware of beneficial ownership that is different from
ownership as reflected by the stock transfer records, such beneficial
ownership information has been provided.
(3) Based on 486,899 shares of Series B Preferred Stock outstanding on
February 29, 1996. Holders of the Series A Preferred Stock vote on a one
vote for each four shares of Series B Preferred Stock held with holders
of Common Stock and holders of Series A Preferred Stock, all voting as a
single class. The Series B Preferred Stock is not registered under
Section 12 of the Securities Exchange Act of 1934, and in providing
ownership information the Company has relied on its stock transfer
records, which may not correspond to beneficial ownership. To the extent
that the Company is aware of beneficial ownership that is different from
ownership as reflected by the stock transfer records, such beneficial
ownership information has been provided.
(4) Based on one vote per share for Common Stock and one vote per four shares
for Series A and B Preferred Stock.
(5) The shares of Common Stock beneficially owned by the indicated persons
include shares which may be acquired upon the conversion of outstanding
shares of Series A or B Preferred Stock, as the case may be, as follows:
Ms. Clark - 121,725 shares; Mr. Crowell - 21,875 shares; and Mr. Robert
M. Hunter - 70,000 shares; Mr. Robert M. Hunter, Jr. - 13,125 shares; Ms.
Beverly H. Taylor - 13,125 shares; and Mr. Ben W. Hunter - 13,125 shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its office space from Otis L. Crowell, who serves as
the President of Crowell. On June 1, 1989, Crowell entered into three (3)
operating lease agreements each with a term of twenty (20) years. The leases
provide that the Company will pay all property taxes, insurance and
maintenance plus an annual rental fee. The total minimum rental commitment
at December 31, 1996, under these leases is $1,837,200, which is due as
follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 127,200
1998 127,200
1999 130,800
2000 133,200
2001 135,600
2002-2009 1,183,200
----------
$1,837,200
==========
</TABLE>
The total rental expense for these leases included in the consolidated
statements of income for each year ended December 31, 1996 and 1995, was
$122,400 and $120,000, respectively.
Keystone purchases developed lots for home construction from Home Sites.
For the years ended December 31, 1996 and 1995, such purchases amounted to
$79,500 and $292,700, respectively. Crowell also provides management
services to Home Sites. For the years ended December 31, 1996 and 1995,
management fees earned by the Company amounted to $5,430 and $35,522,
respectively.
<PAGE>
Page 30
The President of Crowell, Otis L. Crowell, received real estate
commissions on Home Sites property sold by Crowell in the amount of $34,457
for the year ended December 31, 1995.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed below are filed as part of or incorporated by
reference in this report. Where such filing is made by incorporation by
reference to a previously filed report or registration statement, such
report or registration statement is identified in parenthesis. (See the
Index of Exhibits included with the exhibits filed as part of this
report.)
3(i) Restated Articles of Incorporation of the Company dated October 7,
1995, (Exhibit 3(i) to the Company's Registration Statement on Form
S-4, No. 33-70282, as declared effective by the SEC on January 14,
1995)
3(ii) Bylaws of the Company, as amended through March 15, 1995 (Exhibit
3.7 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1992, as amended by Form 8 dated April 14, 1995)
4.1 Specimen form of the Company's Common Stock Certificate (Exhibit
4.1 to the Company's Registration Statement on Form S-4, No.
33-70282, as declared effective by the SEC on January 14, 1995)
4.2 Appendix A to the Company's Restated Articles of Incorporation
setting forth the rights, preferences, and limitations of holders
of the Company's Class A Preferred Stock (included in Exhibit 3(i))
4.3 Appendix B to the Company's Restated Articles of Incorporation
setting forth the rights, preferences, and limitations of holders
of the Company's Class B Preferred Stock (included in Exhibit 3(i))
10.1 Management Compensation Agreements
(a) Stock Option Agreement dated February 21, 1989, by and between
the Company (as successor to The Mid-South Corporation) and J.
W. Ivey, Jr. (Exhibit 10.2 to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1992, as amended by
Form 8 dated April 14, 1995)
10.2 Lease Agreement dated June 1, 1989, by and between Otis L. Crowell
and the Company regarding the premises located at 2848 Washington
Road, Augusta, Georgia (Exhibit 10.13 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1992, as
amended by Form 8 dated April 14, 1995)
<PAGE>
Page 31
10.3 Lease Agreement dated June 1, 1989, by and between Otis L. Crowell
and the Company regarding the premises located at 432 South Belair
Road, Martinez, Georgia (Exhibit 10.4 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1992, as
amended by Form 8 dated April 14, 1995)
10.4 Lease Agreement dated June 1, 1989, by and between Otis L. Crowell
and the Company regarding the premises located at 454 West
Martintown Road, North Augusta, South Carolina (Exhibit 10.5 to the
Company's Annual Report on Form 10-KSB for the year ended December
31, 1992, as amended by Form 8 dated April 14, 1995)
10.5 Agreement for Purchase and Sale of Real Property dated October 21,
1995, between the Company and Sovran Strategic Investments, L.P.
(Exhibit 10.5 to the Company's Registration Statement on Form S-4,
No. 33-70282, as declared effective by the SEC on January 14, 1995)
10.6 Agreement to purchase business dated May 9, 1995, between the
Company and Meybohm Realty, Inc. (Exhibit 10.6 to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.)
10.7 Post Closing Agreement between the Company and Meybohm Realty, Inc.
(Exhibit 10.7 to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1995.)
10.8 Sub-Lease Agreement dated May 24, 1995, between the Company and
Meybohm Realty, Inc. (Exhibit 10.8 to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1995.)
10.9 Sub-Lease Agreement dated June 29, 1995, between the Company and
Healthmaster Home Health Care, Inc. (Exhibit 10.9 to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.)
10.10 Agreement to purchase business dated December 16, 1996, between the
Company and Chin U. Yu (filed herewith)
11 Computation of earnings per share
21 Subsidiaries
23.1 Consent of Cherry, Bekaert & Holland, L. L. P., Independent
Certified Public Accountants
27 Financial Data Schedule
b) Reports on Form 8-K.
The Company filed one report on Form 8-K during the Quarter ended December
31, 1996.
Date of Report Item Reported
-------------- -------------
December 16, 1996 Sale of United Data Systems, Inc.
No financial statements were filed with this report.
<PAGE>
Page 32
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CROWELL & CO., INC.
DATE March 28, 1997 /s/ Otis L. Crowell
-------------- ---------------
Otis L. Crowell, President
and Chairman of the Board
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
DATE March 28, 1997 /s/ Otis L. Crowell
-------------- ---------------
Otis L. Crowell, President
and Chairman of the Board
DATE March 28, 1997 /s/ Mark L. Gilliam
-------------- ---------------
Mark L. Gilliam, Director, Vice
President, Secretary and Chief
Financial Officer
DATE March 28, 1997 /s/ O. Lamar Crowell, Jr.
-------------- ---------------------
O. Lamar Crowell, Jr., Director
<PAGE>
Page 33
INDEX OF EXHIBITS
10.10 Agreement to purchase business dated December 16, 1996, between the
Company and Chin U. Yu.
11 Computation of earnings per share
21 Subsidiaries
23.1 Consent of Cherry, Bekaert & Holland, L. L. P., Independent Certified
Public Accountants
27 Financial Data Schedule
<PAGE>
Page 34
EXHIBIT 10.10
AGREEMENT TO PURCHASE BUSINESS DATED DECEMBER 16, 1996,
BETWEEN THE COMPANY AND CHIN U. YU
AGREEMENT TO PURCHASE BUSINESS
STATE OF GEORGIA )
) SALES CONTRACT
COUNTY OF RICHMOND )
THIS CONTRACT made and entered into this 16th day of December, 1996,
between Crowell & Co., Inc. (hereinafter referred to as the "Seller"), Chin
U. Yu, an individual (hereinafter referred to as the "Buyer"), and Otis L.
Crowell (hereinafter referred to as "Crowell");
W I T N E S S E T H:
WHEREAS, the Seller is the owner of certain equipment, fixtures and
personal property, both tangible and intangible (hereinafter referred to as
"assets"), being further set forth and identified in Exhibit "A" attached
hereto and by reference made a part hereof, said assets being used in the
operation of a computer software business being conducted under the name
"United Data Systems"; and
WHEREAS, the Seller is desirous of selling the assets of said business;
and
WHEREAS, Crowell is the major stockholder of Crowell & Co., Inc., and
the President of same and the owner of the real property upon which the
Seller operates said business; and
WHEREAS, the Buyer is desirous of purchasing said assets as set forth
above;
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
For and in consideration of Ten and 00/100 ($10.00) Dollars, and other
valuable consideration flowing to all parties, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
<PAGE>
Page 35
1. The buyer hereby agrees to purchase on or before December 16, 1996, all
the assets owned by the Seller used in the operation of the business
United Data System as set forth in Exhibit "A" attached hereto.
2. This sale and transfer shall be consummated on or before the date as set
forth above. Time is of the essence for this contract, and the Seller and
the Buyer agree that such papers as may be legal and necessary to carry
out the terms of this contract shall be executed and delivered by such
parties at the time the sale is consummated.
3. As consideration for the sale of these assets the Buyer agrees to do the
following:
a. Upon the execution of this contract pay to the Seller Ten Thousand and
00/100 ($10,000.00) Dollars as earnest money to be held in escrow with
said Ten Thousand and 00/100 ($10,000.00) Dollars to be applied toward
the sales price upon the closing of said sale. If said sale is not
consummated due to the fault of the Buyer, then and in that event,
said Ten Thousand and 00/100 ($10,000.00) Dollars shall be non-
refundable.
b. Pay Fifty-Five Thousand and 00/100 ($55,000.00) Dollars to the Seller
in a lump sum amount at closing.
c. Execute a promissory note in favor of the Seller in the amount of One
Hundred Twenty Thousand and 00/100 ($120,000.00) Dollars said note to
accrue interest on the unpaid principal at the rate of eight point
seven five (8.75%) percent annually, said note to be paid, payable in
twelve (12) quarterly installments beginning on April 15, 1997 and
further being secured by the assets conveyed herein.
4. The Seller expressly warrants ownership of all assets as set forth in
Exhibit "A", and expressly warrants that said assets are free and clear
from any liens and/or encumbrances. The Seller further warrants that on
the date of the closing of this sale it has no knowledge of any defect
present in any of said assets conveyed herein.
5. The Seller is to pay all liens, encumbrances, water charges and utility
charges and the like on said business existing at the time of the closing
and any and all transfer or other taxes, necessary to close this sale.
Rent, cost of cleaning, utility charges, licensing fees and
receptionist's salary shall be prorated as of the date of the closing.
<PAGE>
Page 36
6. The Seller further transfers to the buyer all rights, title and interest
in and unto the trade names "United Data Systems" and the Seller hereby
permanently waives any and all rights to use or operate any business
under this name.
7. All leases, customer contracts, vendor contracts and similar ongoing
agreements related to the operation of this business are to be
transferred and assigned to the Buyer at or before closing.
8. The Buyer has not compelled compliance with the Bulk Sales Act of Georgia
O.C.G.A. Section 11-6-101, et seq. The Seller agrees to indemnify and
hold harmless the Buyer from any and all damages, suits, proceedings,
claims, demands or actions of any kind or nature, including, without
limitation, any and all attorney's fees and expenses incurred in
connection therewith, from anyone arising or growing out of or otherwise
connected with the Buyer's election not to compel compliance with the
provisions of said Bulk Sales Act. The Seller further agrees to furnish
the Buyer his affidavit containing a true, correct and full list of the
names and addresses of all creditors of the Seller for or on account of
the business (Exhibit "B" attached hereto) and a schedule of the property
transferred hereunder (Exhibit "A" attached hereto) as is required by the
Uniform Commercial Code Bulk Transfers of Georgia.
9. The Seller will indemnify and hold harmless and defend the Buyer from any
outstanding indebtedness owed by the Seller on the date of the closing of
the sale, including, but not limited to, claims that have matured or will
mature on that date, whether made by creditors, any government entity for
the payment of any taxes or other associated fees, withholding taxes,
employment taxes or any other related taxes. The Seller will also further
indemnify and hold harmless the Buyer from any claims made by any person,
firm, entity of their representatives arising out of any causes of
action, that occurred prior to the date of the closing of this sale in
any way connected or related to the seller's operation of "United Data
Systems", this indemnity to included any cost incurred by the Buyer in
the defense of any such claims or causes of action.
10. The Buyer further agrees, for a period of twenty (20) years from the date
the closing, to provide Seller with a copy of the United Data software
for Seller's own use and will provide Seller with all further releases of
the software at no charge. The Buyer
<PAGE>
Page 37
agrees to provide normal support services as recognized in the industry
to the Seller at no charge during this period of time, but any additional
support service provided in excess of the normal support service will be
provided at the customary rate.
11. The Seller, for an additional payment of Twenty-Five Thousand and 00/100
($25,000.00) Dollars, further agrees, for a period of three years from
the date of this agreement, that it will not own or operate any business
that provides computer services or software support to any individual,
corporation or entity involved in the real estate industry within a
geographical area that encompasses the United States of America. The
payment of said Twenty-Five Thousand and 00/100 ($25,000.00) Dollars
shall be due and payable at the time of the closing of said sale as set
forth herein.
12. The Seller will maintain the confidentiality of and will not disclose to
anyone, other than the Buyer or anyone authorized by the Buyer to receive
said information, any trade secrets, trademarks, trade names, licenses,
processes, permits, slogans, advertising or promotional materials or
advertising lists involved in the Seller's operation of United Data
Systems
13. It is further agreed between the parties that the upstairs portion of the
building located at 432 South Belair Road, Martinez, Georgia 30907, which
is presently being occupied by United Data Systems, is to be sublet by
the Seller to the Buyer for a three (3) month period beginning on the
date of the closing. The rental of this space thereafter will be on a
month to month basis. The Buyer shall have the right to terminate the
lease at any time including the initial three (3) month period. Rent
shall be due at the beginning of each month in the amount of One Thousand
Three Hundred Sixty-Eight and 00/100 ($1,368.00) Dollars and non-
refundable. In addition to the rent, the Buyer agrees to pay the pro-rata
share of the cost of utilities, cleaning, and receptionist salary as
allocated by the existing allocation percentages to United Data Systems
until the Buyer relocates said business.
14. Crowell consents to the terms of said Sales Contract as to the lease of
the premises located at 432 South Belair Road, and further agrees to be
subject to and bound by the covenant-not-to-compete as set forth herein.
The parties further agree that, although Crowell has individually signed
an Affidavit of Indebtedness as identified
<PAGE>
Page 38
herein, the execution of this Affidavit will in no way impose any
liability on Crowell for any of the obligations and terms as set forth in
said sales contract.
15. The Seller shall have the right upon reasonable notification to receive
records material to performance under this agreement.
16. Excluding enforcement of the non-compete provision contained herein, all
disputes arising under this Contact or related to the sale (other than
claims in equity) shall be resolved by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Arbitration shall be by a single arbitrator experienced in the matter at
issue and selected by the Buyer and Seller. The arbitration shall be had
in such place in Augusta, Georgia, as may be specified by the arbitrator
(or any place agreed to by the arbitrator, Buyer and Seller). The
decision of the arbitrator shall be final and binding as to any matters
submitted under this Agreement; provided, however, if necessary, such
decision and satisfaction procedure may be enforced by either the Buyer
or Seller in any Court of Record having jurisdiction over the subject
matter or over any of the parties to this agreement. All cost and
expenses incurred in connection with such arbitration proceeding
(including reasonable attorney's fees) shall be borne by the party
against which the decision is rendered, or, if no decision is rendered,
such cost and expenses shall be borne equally by the Buyer as one party
and the Seller as the other party. If the arbitrator's decision is a
compromise, the determination of which party or parties bears the costs
and expenses incurred in connection with any such arbitration proceeding
shall be made by the arbitrator's assessment of the relative merits of
parties' positions.
17. It is further agreed between the parties that the Seller maintains a
commercial real estate brokerage business, a land development business,
Petersburg Racquet Club, Ivey Homes, Inc., and Keystone Homes, Inc., and
none of the above are involved or contemplated in this Contract.
18. This Contract constitutes the sole and entire agreement between the
parties and no modification of this contract shall be binding unless
attached to this Contract and signed by all parties to the contract.
<PAGE>
Page 39
21. No representations, promises or inducements not included in this contract
shall be binding upon any party hereto and the terms, warranties and
representations in this Contract will survive the closing and will be
enforceable in any court of law as the terms of a binding contract.
22. The parties agree that this Contract shall be governed by, construed and
enforced in accordance with the laws of the State of Georgia.
23. The parties agree that the failure of either party to insist upon strict
compliance with any of the provisions of this contract shall not be
considered to be a waiver of any subsequent default of the same or
similar nature.
24. The parties agree that in the event any provisions have been deemed
invalid or unenforceable for any reason, all other provisions shall
nevertheless remain in full force and effect.
25. The parties agree that this Contract will bind and enure to their heirs,
executors, administrators, successors and assigns. Seller hereby agrees
that Buyer shall have the right to assign this contract, at his option,
to a corporation which is now in existence or which will be formed in the
future.
26. The parties agree that this Contract shall be executed in triplicate and
each document shall be considered an original. IN WITNESS WHEREOF, the
parties have set their hands and seals hereto the day and year first
above written.
IN WITNESS WHEREOF, the parties have set their hands and sels
hereto the day and year first above written.
__________________________________ ) Seller:
WITNESS ) Crowell & Co., Inc.
) __________________________(L.S.)
__________________________________ ) BY:
NOTARY PUBLIC, ) As Its _________________________
Richmond County, Georgia )
My Commission Expires:____________ )
Individually:
Otis L. Crowell
__________________________(L.S.)
Buyer:
Chin U. Yu
__________________________(L.S.)
<PAGE>
Page 40
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
CROWELL & CO., INC.
Year ended December 31,
------------------------
1996 1995
---- ----
NET LOSS $ (13,153) $ (703,480)
PREFERRED STOCK DIVIDENDS 80,952 80,952
---------- ----------
NET LOSS APPLICABLE TO COMMON
SHAREHOLDERS $ (94,105) $ (784,432)
========== ==========
EARNINGS PER COMMON SHARE:
Weighted average number of
common shares outstanding 2,520,835 2,520,835
Primary earnings per share
loss from continuing operations $ (.13) $ (.34)
Income from discontinued operations .09 .03
---------- ----------
NET LOSS PER COMMON SHARE $ (.04) $ ( .31)
========== ==========
<PAGE>
Page 41
EXHIBIT 21
SUBSIDIARIES
CROWELL & CO., INC.
Budget Storage Warehouse, Inc., a Georgia Corporation
Ivey Homes, Inc., a Georgia Corporation
Keystone Homes, Inc., a Georgia Corporation
<PAGE>
Page 42
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
CROWELL & CO., INC.
We hereby consent to the use in the Form 10-KSB of our report dated March
25, 1996, relating to the financial statements of Crowell & Co., Inc., as of
December 31, 1996 and 1995, and for the years then ended.
CHERRY, BEKAERT & HOLLAND, L. L. P.
Augusta, Georgia
March 21, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 62,494
<SECURITIES> 0
<RECEIVABLES> 161,907
<ALLOWANCES> 0
<INVENTORY> 3,493,117
<CURRENT-ASSETS> 0
<PP&E> 619,022
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,379,872
<CURRENT-LIABILITIES> 0
<BONDS> 3,566,459
696,774
0
<COMMON> 1,011,899
<OTHER-SE> (966,804)
<TOTAL-LIABILITY-AND-EQUITY> 4,379,872
<SALES> 6,253,268
<TOTAL-REVENUES> 6,985,400
<CGS> 5,721,184
<TOTAL-COSTS> 6,024,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 245,429
<INCOME-PRETAX> (246,072)
<INCOME-TAX> 0
<INCOME-CONTINUING> (246,072)
<DISCONTINUED> 232,919
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,153)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
