U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended May 31, 1989 Commission File No. 33-17397-D
WHITNEY AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 84-1070022
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12373 E. Cornell Avenue
Aurora, Colorado 80014 (303) 337-3384
(Address of Principal's Executive Offices) (Registrant's Telephone No.
incl. area code)
Securities registered pursuant to
Section 12(b) of the Act: NONE
Securities registered pursuant to
Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes No X
The registrant's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the common stock of the registrant held by
non-affiliates on May 31, 1989 was not determinable.
At May 31, 1989, a total of 65,015 shares of common stock were outstanding.
Documents Incorporated by Reference NONE
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PART I
Item 1. Description of Business.
Background
Whitney American Corporation (the "Company"), was incorporated on June 18,
1987, under the laws of the State of Delaware. The Company's initial activities
were directed towards the raising of capital. Pursuant to an Agreement and Plan
of Reorganization described below, Industrial Waste Processing, Inc., a Nevada
corporation, was merged into the Company which subsequently changed its name to
Industrial Waste Processing, Inc. In February 1997, the Company filed with the
Delaware Secretary of State a Certificate of Amended and Restated Certificate of
Incorporation that among other things, changed the Company's name back to
Whitney American Corporation. The Company has been inactive since early 1989,
and has no significant assets or liabilities.
On June 30, 1988, the Company and Tri-Bradley Investments, underwriters to
the Company, successfully completed a public offering for the sale of 12,500
units of the Company's common stock at $1.00 per unit. Each unit consisted of
one share of $.00001 par value common stock, one Class A warrant and one Class B
warrant. Each warrant was exercisable for .06 shares of common stock for a
period commencing with the date of the Prospectus and terminating nine months
thereafter at the respective prices of $5.00 per share (Class A warrant) and
$10.00 per share (Class B warrant). The Class A and B warrants expired in
December 1988. The Company received net proceeds from the offering of $462 after
deducting offering expenses of $12,038.
On September 30, 1988 the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") with Industrial Waste Processing, Inc., a
Nevada corporation ("IWP"), which provided for the Company's acquisition of IWP,
by the issuance of 200,000 shares of the Company's $.00001 par value common
stock in exchange for all of the issued and outstanding common stock of IWP. The
acquisition of IWP was recorded as a reverse acquisition for accounting
purposes. The 200,000 shares of the Company's common stock issued to IWP
shareholders were subsequently donated back by IWP's parental affiliate, Pacific
Energy and Mining Company ("PEMC") (150,000 shares) and by its President, Marc
A. Wilder (50,000 shares), and were cancelled by the Company on October 21,
1988. PEMC remained the owner of 25,000 shares of the Company's common stock
that it acquired and paid for in private transactions.
IWP was organized for the purpose of treating and neutralizing hazardous
waste from manufactures and landfills through proprietary processes and
recycling of metals and other materials of value, initially through the use of
mobile toxic treatment vans known as Transportable Treatment Units ("TTU's").
IWP, and later the Company, completed the construction of its initial TTU. The
TTU's never became operational because of a lack of funds and because of the
inability of the Company to perfect its technological processes. On April 17,
1989, PEMC reacquired all of the significant assets of the Company and assumed
approximately $542,000 of the Company's outstanding obligations.
On February 12, 1997 the Company's shareholders approved a restructuring of
the Company's authorized and outstanding capital through (1) a 1:100 reverse
stock split, (2) an increase in the Company's authorized capital stock to
50,000,000 shares of common stock and 5,000,000 shares of preferred stock, (3) a
change in par value to $.00001 per share for both the common and preferred stock
of the Company, and (4) a change in the name of the Company from Industrial
Waste Processing, Inc. to its original name, Whitney American Corporation. The
Company's shareholders also approved changes to the Company's Certificate of
Incorporation limiting the liability of directors of the Company under certain
circumstances. All share and share amounts have been restated to reflect this
restructuring.
The Company intends to participate in one or more as yet unidentified
business ventures, which will be chosen by management after reviewing business
opportunities selected for their profit or growth potential. The Company has no
current plans to make a public offering of its securities.
Forward Looking Statements
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of its management as well
as assumptions made by and information currently available to its management.
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When used in this report, the words "anticipate", "believe", "estimate",
"expect", "intend", "plan" and similar expressions, as they relate to the
Company or its management, are intended to identify forward-looking statements.
These statements reflect management's current view of the Company with respect
to future events and are subject to certain risks, uncertainties and
assumptions. Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, estimated or expected. The
Company's realization of its business aims will depend in the near future
principally on the successful completion of its acquisition of operations as
discussed below.
Business of the Company
The Company's sole business subsequent to February 12, 1997 is to seek to
acquire assets of or an interest in a small to medium-size company or venture
actively engaged in a business generating revenues or having immediate prospects
of generating revenues. The Company plans to acquire such assets or business by
exchanging therefor the Company's securities. In order to avoid becoming subject
to regulation under the Investment Company Act of 1940, as amended, the Company
does not intend to enter into any transaction involving the purchase of another
corporation's stock unless the Company can acquire at least a majority interest
in that corporation. The Company has not identified any industry, segment within
an industry or type of business, nor geographic area, in which it will
concentrate its efforts, and any assets or interest acquired may be in any
industry or location, anywhere in the world. The Company will give preference to
profitable companies or ventures with a significant asset base sufficient to
support a listing on a national securities exchange or quotation on the NASDAQ
system. Members of management (all of whom are devoting part time to the
Company's affairs) plan to search for an operating business or venture which the
Company can acquire, thereby becoming an operating company. There is no
assurance that the Company will be successful in this endeavor. The Company has
no operations or source of revenues. Unless the Company succeeds in acquiring a
company or properties which provide cash flow, the Company's ability to survive
is in doubt.
Competition
The Company will be in direct competition with many entities in its efforts
to locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
entities will possess greater financial resources and will be able to assume
greater risks than those which the Company could consider. Many of these
competing entities will also possess significantly greater experience,
managerial abilities and contacts than the Company's management. Moreover, the
Company also will be competing with numerous other public companies available to
engage in business combinations with private entities.
Employees
The Company has no employees other than its officers and no full-time
employees. Its officers expect to devote as much of their time as they deem
necessary to find and acquire assets or interests in one or more other
businesses.
Item 2. Description of Property.
The Company neither owns nor leases any real estate or other properties.
The Company's offices are located at 12373 E. Cornell Avenue, Aurora, Colorado
80014, and are provided by its President. This arrangement will continue until
the Company determines to relocate its offices, which is not now anticipated,
since the current arrangement is entirely adequate for the Company's needs. The
Company does not intend to acquire any properties or additional offices, and
management does not anticipate that the Company will rent office space unless
and until it has acquired a business opportunity, in which case the Company's
offices almost certainly will be the same as those of the business opportunity
acquired.
Item 3. Legal Proceedings.
The Company is not involved in any threatened or pending legal proceeding.
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Item 4. Submission of Matters to a Vote of Security Holders.
On February 12, 1997 the Company's shareholders approved a restructuring of
the Company's authorized and outstanding capital through (1) a 1:100 reverse
stock split, (2) an increase in the Company's authorized capital stock to
50,000,000 shares of common stock and 5,000,000 shares of preferred stock, (3) a
change in par value to $.00001 per share for both the common and preferred stock
of the Company, and (4) a change in the name of the Company from Industrial
Waste Processing, Inc. to its original name, Whitney American Corporation. The
Company's shareholders also approved changes to the Company's Certificate of
Incorporation limiting the liability of directors of the Company under certain
circumstances.
On February 14, 1997, the Company's shareholders approved the 1997 Employee
Stock Compensation Plan and the 1997 Stock Option Plan, as described under Item
11 below.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Market Information
The Company's outstanding common shares were last publicly quoted or traded
during the fiscal year ended May 31, 1990. Once all required reports are brought
current by filing with the Securities and Exchange Commission, the Company may
seek to have its common stock quoted upon the OTC (over-the-counter) Electronic
Bulletin Board operated by the National Association of Securities Dealers, Inc.
There is no assurance that the Company's shares will be quoted in the future or
that, if quoted, an active market will arise in its shares.
Dividends
The Company does not expect to pay a cash dividend upon its capital stock
in the foreseeable future. Payment of dividends in the future will depend on the
Company's earnings (if any) and its cash requirements at that time.
Item 6. Selected Financial Information.
<TABLE>
<S> <C> <C>
June 18, 1987
Year Ended (inception) to
May 31, 1989 May 31, 1988
------------ ------------
Total revenues NONE NONE
Net income (loss) $(29,560) NONE
Net income (loss) per common share $ (.45) NONE
Number of common shares outstanding 65,015 50,000
Working capital deficit -- $ (4,458)
Total assets $ 860 $ 10,621
Current liabilities -- $ 4,526
Long term liabilities NONE NONE
Preferred stock NONE NONE
Stockholders' equity $ 860 $ 6,095
Cash dividends declared per common share NONE NONE
</TABLE>
The Company has been inactive since April 1989. The financial information
set forth above necessarily does not include events subsequent to May 31, 1989
which are discussed below under Item 7.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Background
The Company has not had active business operations or significant revenues
since April 1989, as described under Results of Operations below.
Liquidity
As of May 31, 1989, the Company has an accumulated deficit of $22,866. The
Company has no assets and is completely illiquid. Management is actively seeking
to make one or more acquisitions of privately held companies, properties or
interests as described above, but has not yet entered into any understanding,
agreement or arrangement with any person respecting such an acquisition. Whether
the Company continues as a going concern depends upon its success in finding and
acquiring a suitable private business and the success of that acquired business.
The independent auditors' report contains an explanatory paragraph concerning
the Company's ability to continue as a going concern. The Company has no
long-term liabilities and no short-term liabilities. The Company pays no
salaries or rent. Assets and cash available to the Company from its management
and shareholders may not be sufficient for the Company to carry out its business
plan. Problems relating to capital resources are more fully discussed in the
paragraph below.
Results of Operations
IWP was organized for the purpose of treating and neutralizing hazardous
waste from manufactures and landfills through proprietary processes and
recycling of metals and other materials of value, initially through the use of
mobile toxic treatment vans and known as Transportable Treatment Units. IWP, and
later the Company, completed the construction of its initial TTU. The TTU's
never became operational because of a lack of funds and because of the inability
of the Company to perfect its technological processes. On April 17, 1989, PEMC
reacquired all of the significant assets of the Company and assumed
approximately $542,000 of the Company's outstanding obligations.
During the fiscal year ended May 31, 1989, the Company incurred a net loss
of $29,560 which has been reflected in the financial statements as discontinued
operations. The Company had no operations in fiscal 1988.
Capital Resources
The Company has no commitment for any capital expenditure and foresees
none. However, the Company will incur routine fees and expenses incident to its
reporting duties as a public company, and it will incur fees and expenses in the
event it makes or attempts to make an acquisition. As a practical matter, the
Company expects no significant operating costs other than professional fees
payable to attorneys and accountants. In regard to a proposed acquisition, the
Company intends to require the target company to deposit with the Company a
retainer which the Company can use to defray such professional fees and costs.
In this way, the Company could avoid the need to raise funds for such expenses
or becoming indebted to such professionals. Moreover, investigation of business
ventures for potential acquisition will involve some costs, including travel,
lodging, postage and long-distance telephone charges. Management hopes, once a
candidate business venture is deemed to be appealing, to likewise secure a
deposit from the business venture to defray expenses of further investigation,
such as air travel and lodging expenses. An otherwise desirable business venture
may, however, decline to post such a deposit. In this event, such expenses can
only be covered if affiliates of the Company loan or contribute the necessary
capital to the Company (which is not assured) or if the Company is otherwise
able to raise funds from third parties.
The Company has no current intention of making a public offering of its
securities but will investigate the feasibility of raising capital in one or
more private transactions, if needed. The Company cannot assess the likelihood
of raising any such capital or of obtaining loans. No source of funding or
capital has been identified, and the Company has no credit or means to obtain a
loan.
Plan of Operation
The following discussion sets forth management's plan of operation for the
Company over the next twelve months from the date of this report, and
thereafter, if no acquisition is made within twelve months.
The Company intends to seek, evaluate and (if warranted) acquire one or
more properties or private companies or businesses. Such an acquisition may be
made by purchase, merger, exchange of stock or otherwise, and may encompass
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assets or a business entity such as a corporation, partnership or joint venture.
Since the Company has no capital, it is unlikely that the Company will be able
to take advantage of more than one such opportunity. Management intends to seek
acquisitions demonstrating the potential for long-term growth in real value.
The Company is not restricted in its search for business opportunities to
any particular geographical area, industry or business within an industry and
may engage in any line of business, including service, finance, mining,
manufacturing, real estate, oil and gas, distribution, transportation, medical,
communications, high technology, biotechnology or any other. It is possible that
management may later determine to concentrate its search for business
opportunities to a particular industry, segment of an industry, or a particular
line of business, or to a defined geographical area. To date, however, no such
determination has been discussed. Management's discretion is, as a practical
matter, unlimited in the choice of a business venture or ventures. The Company's
search generally will be directed toward smallish to medium-sized companies.
Management anticipates that any business opportunity seriously considered for
acquisition will be out of the development stage, and have revenues and
earnings. The Company has no current plans to advertise or publish notices
concerning its quest to make such an acquisition.
Management does not intend to pursue any potential acquisition or
combination beyond the preliminary negotiation stage with any business venture
which does not have and cannot furnish the Company acceptable audited financial
statements for at least its two most recent fiscal years and unaudited interim
financial statements for any periods subsequent to its most recently completed
fiscal year.
Form of Acquisition. It is impossible to predict the manner in which the
Company may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and desires of
the Company and the promoters of the opportunity and, upon the basis of that
review and the relative negotiating strength of the Company and such promoters,
the legal structure or method deemed by management to be suitable will be
selected. In addition, the current management and shareholders of the Company
most likely will not have control of a majority of the voting shares of the
Company following an acquisition transaction. As part of such a transaction, all
or a majority of the Company's directors may resign, and new directors may be
appointed without any vote by shareholders.
An acquisition or business combination may occur in one of several ways,
such as statutory merger or consolidation, asset purchase, or "reverse merger,"
in which the Company acquires all of the private company's outstanding common
stock in exchange for the issuance of unregistered shares of the Company's
common stock. Because the Company will have virtually no cash or other assets,
it will be foreclosed from purchasing for cash the assets or outstanding voting
stock of a viable business venture and can expect to make such an acquisition
only by issuing additional shares of its common stock.
Management anticipates that the acquisition will be structured so as to
avoid creating a taxable event under federal tax laws and probably will be
structured as a tax-free reorganization under Sections 351 or 368(a) of the
Internal Revenue Code of 1986, as amended. It is anticipated that the value of
any private company acquired no doubt will greatly exceed that of the Company.
Thus it is all but certain that, following the acquisition, the current
shareholders of the Company will in the aggregate own 10% or less of the common
stock of the Company.
The Company will participate in a business venture only after the
negotiation and execution of a written agreement. Although the terms of such an
agreement cannot be predicted, such agreements generally provide for
representations and warranties by the various parties thereto, conditions of
closing, post-closing covenants and restrictions, reciprocal indemnities,
remedies upon default and other terms. As a general matter, the Company
anticipates that it will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity. Such a letter of
intent will set forth the terms of the proposed acquisition but will not bind
the Company to consummate it. Execution of such a letter of intent will by no
means indicate that consummation of an acquisition is probable.
The Company will not be bound unless and until it executes a definitive
agreement concerning the acquisition, as described in the foregoing paragraph,
and then only if the Company has no contractual right to terminate the agreement
on specified grounds. The investigation of specific opportunities and the
negotiation, drafting and execution of agreements and other documents will
require substantial costs for attorneys, accountants and others, probably
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amounting to several thousand dollars for each acquisition attempted. The
Company does not have and may not be able to obtain the needed funds. If a
decision is made not to participate in a specific business venture, or if a
negotiated agreement is not consummated, the costs to the Company (which could
be substantial in light of the Company's lack of cash) may not be recoverable.
Management has not formulated any firm policy in this regard, but does not
intend to proceed further than the drafting of a non-binding letter of intent in
connection with any proposed acquisition unless and until (i) the Company has
determined that the company to be acquired has or can obtain the financial
statements required by applicable regulations of the Securities and Exchange
Commission, and (ii) the company to be acquired has posted a deposit with the
Company to be used for paying the Company's attorneys and accountants. Such a
precaution will enable management to limit the Company's financial exposure as
to any acquisition which cannot be completed for any reason.
Any attempted acquisition can be expected to absorb several weeks at the
least, and perhaps longer. Moreover, any acquisition may involve substantial
time delays, which can be caused for several reasons, including delays caused by
complying with requirements of state law.
Analysis and Investigation of Opportunities. The selection of a business
venture or ventures in which the Company is to participate will be entirely
subjective. The Company's lack of funds and full-time management will make it
impossible to conduct complete investigations and analyses of individual
business opportunities before making a decision. Participation may be based in
large part on the perceived quality of a private company's management and
personnel, properties or proprietary rights, products, services, marketing
concepts, level of technology, or other factors which are often difficult to
analyze with complete objectivity. Management's decisions may be made without
the benefit of detailed feasibility studies, independent analysis, market
surveys and similar professional studies which would be desirable if the Company
had more funds available to it. In many instances, it is anticipated that the
historical operations of a specific firm may not necessarily be indicative of
its potential for the future because of the possible need to shift marketing
approaches substantially, expand significantly, change product emphasis, change
or substantially augment management, or make other changes. Because of the lack
of training and experience of management, the Company will be heavily dependent
upon the owners of a business opportunity to identify such problems and to
implement, or be primarily responsible for the implementation of, required
changes. Because the Company may participate in a business opportunity with a
newly organized firm or with a firm which is entering a new phase of growth, it
should be emphasized that the Company will incur further risks, because
management in many instances will not have proved its abilities or
effectiveness, the eventual market for such company's products or services will
likely not be established, and such company may not be profitable when acquired.
It is emphasized that management may effect transactions having a
potentially adverse impact upon its shareholders pursuant to the authority and
discretion of the Company's current directors to complete acquisitions without
submitting any proposal to the shareholders for their consideration. In some
instances, however, the proposed participation in a business opportunity may be
submitted to the shareholders for their consideration, either voluntarily by the
directors to seek the shareholders' advice and consent or because state law so
requires.
The analysis of any business opportunity will be undertaken by or under the
supervision of management, none of whom is a professional business analyst or
has any previous training or significant experience in business analysis. In
selecting business ventures, management anticipates that it will consider the
following factors related to each business venture examined, among other
possible factors: (1) total and net assets and shareholders' equity, in light of
current and long-term liabilities; (2) total revenues and earnings, both current
and over the prior three fiscal years; (3) potential for revenue and earnings
growth; (4) existing and potential competition; (5) proprietary technology and
know-how, as well as patents and trademarks, if any; (6) capabilities and
experience of current management and management prospects already recruited; (7)
capital requirements; (8) availability of new capital and debt financing
sources, as well as relationships with existing lenders; (9) the cost and form
of participation by the Company; (10) special risks associated with the venture
and its industry or industry segment; and (11) perceived desirability of the
venture to investors in the public capital markets.
It is anticipated that potential opportunities will become available to the
Company from many sources, primarily its management, but also including
attorneys and accountants, securities broker-dealers, venture capitalists,
members of the financial community, consultants, entrepreneurs and others who
may present unsolicited proposals. However, as of this date, management does not
intend paying a cash "finder's fee" to any person who presents a business
opportunity to the Company. The Company may compensate a person who brings a
business opportunity to the Company which subsequently is acquired, but any such
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compensation would be in the form of common stock (or options or other
securities of the Company). Any such issuance of the Company's securities would
be made on an ad hoc basis, and the amount or type of securities cannot at this
time be predicted.
Item 8. Financial Statements and Supplementary Data.
See index to financial statements at page 13. The financial statements
begin following that index. No supplementary financial data is required or
included.
Item 9. Changes in and Disagreements with Accountants or Accounting and
Financial Disclosure.
On May 5, 1997, the Company engaged Gelfond, Hochstad, Pangburn & Co. as
it's independent auditor and business consultant.
PART III
Item 10. Directors and Executive Officers of Registrant.
Identification of Directors and Executive Officers
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers continue in office at the pleasure of the Board of Directors. The
following table sets forth the name, age, position held and tenure of each
director and executive officer:
Name Age Position Held and Tenure
---- --- ------------------------
John D. Brasher Jr. 45 Secretary from September 1988 until present.
Director from inception until February 1997.
Stephen M. Siedow 47 President, Director from February 1997.
There are no family relationships among the officers and directors. There
is no arrangement or understanding between the Company (or any of its directors
or officers) and any other person pursuant to which such person was or is to be
selected as a director or officer. The directors and officers are expected to
devote their time to the Company's affairs on an "as needed" basis, but are not
required to make any specific portion of their time available to the Company.
Biographical Information
John D. Brasher Jr. Mr. Brasher is an attorney engaged since February 1988
in the practice of law in Denver, Colorado, as proprietor of Brasher & Company
and concentrates in the fields of corporate and securities law. From February
1987 to February 1988 he practiced law as a profit-sharing partner in the firm
of Pred and Miller, Denver, Colorado, concentrating in corporate and securities
law. From August 1982 until February 1987, Mr. Brasher practiced corporate and
securities law as an associate and later as a partner of Broadhurst, Brook,
Mangham and Hardy, of Lafayette, Louisiana. Mr. Brasher received a B.A. degree
in English in 1979, and in 1982 received a law degree (J.D.), both from
Louisiana State University. He is admitted to practice in the States of Colorado
and Louisiana and is a member of the bar of the United States Supreme Court. Mr.
Brasher is Chairman, CEO and President of Cerx Entertainment Corporation, a
Denver-based Nevada corporation in the development stage. He also is a director,
CEO and President of Rising Sun Capital, Ltd., a Colorado corporation and a
director of MNS Eagle Equity Group, Inc., a Nevada corporation, both with a
business plan similar to that of the Company.
Stephen M. Siedow. Mr. Siedow is president and sole shareholder of Stephen
M. Siedow, P.C., a professional accounting firm providing auditing, management
consulting, tax services and write-up services to corporations, partnerships and
individuals since 1982. Mr. Siedow specializes in public and SEC accounting and
has experience in industries including mining (gold and coal), oil and gas,
construction and mergers/acquisitions/liquidations. Prior to that, he was with
the audit department of Ernst & Whitney, Certified Public Accountants in Denver,
Colorado, for eight years. Mr. Siedow is a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
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Accountants. He also is Chairman, CEO and President of MNS Eagle Equity Group,
Inc., a Nevada Corporation with a business plan similar to that of the Company.
General Conflicts of Interest
Certain conflicts of interest now exist and will continue to exist between
the Company and its officers and directors due to the fact that each has other
employment or business interests to which he devotes his primary attention. Each
officer and director is expected to continue to do so, not withstanding the fact
that management time should be devoted to the Company's affairs. The Company has
not established policies or procedures for the resolution of current or
potential conflicts of interest between the Company and its management. There
can be no assurance that members of management will resolve all conflicts of
interest in the Company's favor. The officers and directors are accountable to
the Company as fiduciaries, which means that they are legally obligated to
exercise good faith and integrity in handling the Company's affairs. Failure by
them to conduct the Company's business in its best interests may result in
liability to them.
Significant Employees
None, other than officers of the Company listed above.
Item 11. Executive Compensation.
Cash Compensation
For the fiscal year ended May 31, 1989, no executive officer, nor all
executive officers as a group, received cash compensation from the Company in
excess of $60,000. Payment of salaries or compensation in any form was
terminated as of April 17, 1989.
Compensation Pursuant to Plans
No compensation was paid to executive officers pursuant to any plan during
the fiscal year just ended, and the Company has no agreement or understanding,
express or implied, with any officer or director concerning employment or cash
compensation for services. No plan or agreement exists pursuant to which any
officer will receive compensation resulting from the officer's resignation,
retirement or any other termination of employment with the Company, from a
change in control of the Company, or a change in the officer's responsibilities
following any change in control of the Company.
The Company has adopted and the Company's shareholders have approved the
1997 Employee Stock Compensation Plan and the 1997 Stock Option Plan, both
discussed below. Otherwise, the Company does not have in force any pension,
profit-sharing, stock appreciation or other benefit plans, although such plans
may be adopted in the future.
1997 Employee Stock Compensation Plan. The Company's shareholders have
approved an Employee Stock Compensation Plan for employees, officers, directors
of the Company and advisors to the Company (the "ESC Plan"). The Company has
reserved a maximum of 1,500,000 common shares to be issued upon the grant of
awards under the ESC Plan. Employees will recognize taxable income upon the
grant of common stock equal to the fair market value of the common stock on the
date of the grant and the Company will recognize a compensating deduction at
such time. The ESC Plan will be administered by the Board of Directors. No stock
had been awarded under the ESC Plan to date.
1997 Stock Option Plan. The Company's shareholders have approved the 1997
Stock Option Plan for officers, key employees, potential key employees,
non-employee directors and advisors (the "CSO Plan"). The Company has reserved a
maximum of 2,000,000 common shares to be issued upon the exercise of options
granted under the CSO Plan. The CSO Plan will not qualify as an "incentive stock
option" plan under Section 422 of the Internal Revenue Code of 1986, as amended.
Options will be granted under the CSO Plan at exercise prices to be determined
by the Board of Directors or other CSO Plan administrator. With respect to
options granted pursuant to the CSO Plan, optionees will not recognize taxable
income upon the grant of options, but will realize income (or capital loss) at
the time the options are exercised to purchase common stock. The amount of
income will be equal to the difference between the exercise price and the fair
market value of the common stock on the date of exercise. The Company will be
entitled to a compensating deduction in an amount equal to the taxable income
realized by an optionee as a result of exercising the option. The CSO Plan will
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be administered by the Board of Directors or a committee of directors. No
options have been granted under the CSO Plan to date.
Other Compensation.
None.
Compensation of Directors.
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a)(b) Security Ownership
The following table sets forth, as of May 31, 1989 and May 31, 1997, the
stock ownership of each officer and director of the Company, of all officers and
directors of the Company as a group, and of each person known by the Company to
be a beneficial owner of 5% or more of its common stock. Except as otherwise
noted, each person listed below is the sole beneficial owner of the shares and
has sole investment and voting power as such shares. No person listed below has
any option, warrant or other right to acquire additional securities of the
Company, except as may be otherwise noted.
<TABLE>
<S> <C> <C> <C>
May 31, 1989
------------
Title Name and Address Amount of Percent of
of of Beneficial Common Stock Owned Common
Class Owner Beneficially Stock Outstanding
----- ---------------- ------------------ -----------------
Common Pacific Energy and Mining Company 25,000 38.5%
Stock *Tariq I. Ahmad, President
P.O. Box 18148
Reno, Nevada 89511
SAME *John D. Brasher Jr. 14,800 22.8%
90 Madison Street, Suite 707
Denver, Colorado 80206
SAME Robert A. Prange 9,938 15.3%
10305 Amy Lynn Court
Louisville, Kentucky 40233
SAME Morgan, Olmstead Kennedy & Gardner 6,830 10.5%
1000 Wilshire Blvd.
Los Angeles, California 90017
*All directors and officers 39,800 61.3%
May 31, 1997
------------
Common *Stephen M. Siedow 23,000 36.8%
Stock 12373 E. Cornell Avenue
Aurora, Colorado 80014
SAME *John D. Brasher Jr. 14,800 23.7%
90 Madison Street, Suite 707
Denver, Colorado 80206
10
<PAGE>
SAME Robert A. Prange 9,938 15.9%
10305 Amy Lynn Court
Louisville, Kentucky 40233
SAME CEDE & Company 7,132 11.4%
Box 222 Bowling Green Station
New York, New York 10274
SAME Robert W. Hershey 4,000 6.4%
1761 S. Niagara Way
Denver, Colorado 80224
*All directors and officers 37,800 60.5%
</TABLE>
Changes in Control
A change of control undoubtedly will occur when and if the Company acquires
a business opportunity. Although the extent of the change of control cannot be
predicted at this time, it is unlikely that the existing shareholders will own
more than 10% of the Company (or combined entity) following an acquisition.
There are no plans at this time to issue common shares or other securities of
the Company to any officer or director of the Company.
Item 13. Certain Relationships and Related Transactions.
On September 30, 1988 the Company approved an Agreement and Plan of
Reorganization between the Company and Industrial Waste Processing, a Nevada
corporation, provided for the Company's acquisition of IWP, by the issuance of
200,000 shares of the Company's $.00001 par value common stock in exchange for
all of the issued and outstanding common stock of IWP. The acquisition of IWP
was recorded as a reverse acquisition for accounting purposes. The 200,000
shares of the Company's common stock issued to IWP shareholders were
subsequently donated back by IWP's parental affiliate, Pacific Energy and Mining
Company (150,000 shares) and by its President, Marc A. Wilder (50,000 shares),
and were cancelled by the Company on October 21, 1988. PEMC remained the owner
of 25,000 shares of the Company's common stock that it acquired and paid for in
private transactions.
IWP, and later the Company, completed the construction of its initial TTU.
The TTU's never became operational because of a lack of funds and because of the
inability of the Company to perfect its technological processes. On April 17,
1989, PEMC reacquired all of the significant assets of the Company and assumed
approximately $542,000 of the Company's outstanding obligations. The Company has
not had active business operations or significant revenues since April 1989.
The law firm of Brasher & Company, of which, Mr. Brasher is sole proprietor
was paid $2,500 during the year ended May 31, 1989.
On February 12, 1997, Mr. Stephen M. Siedow, the Company's president
purchased from Pacific Energy and Mining Company 23,000 shares of the Company's
common stock in a private transaction for $2,500 cash.
The Company has no understandings with its officers or directors, or other
shareholders, pursuant to which such persons have agreed to contribute capital
to the Company or otherwise provide funds to the Company. The Company has no
plans to issue additional securities to affiliates of the Company prior to
completion of an acquisition. There are no other reportable transactions
involving promoters, executive officers, or directors of the Company as required
by Item 404 of Regulation S-K.
Otherwise, there were no transactions, or series of transactions, for the
fiscal year ended May 31, 1989 nor are there any currently proposed
transactions, or series of transactions, to which the Company is a party, in
which the amount exceeds $60,000, and in which to the knowledge of the Company
any director, executive officer, nominee, five percent or greater shareholder,
11
<PAGE>
or any member of the immediate family of any of the foregoing persons, have or
will have any direct or indirect material interest.
PART IV
Item 14. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report, except
those indicated as having previously been filed with the Securities and Exchange
Commission and are incorporated by reference to another report, registration
statement or form. References to the "Company" mean Whitney American
Corporation.
3.0 Certificate of Incorporation (incorporated by reference to
Exhibit 3.0 to Registration Statement No. 33-17397-D, effective
March 7, 1988) ......................................................*
3.05 Certificate of Amended and Restated Certificate of
Incorporation of the Company (incorporated by reference
to Exhibit 3.1 to Form 8-K dated February 12, 1997)..................*
3.1 Bylaws of the Company (incorporated by reference to
Exhibit 3.1 to Registration Statement No. 33-17397-D,
effective March 7, 1988)..........................................*
3.2 Amendment to Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to Registration Statement
No. 33-17397-D, effective March 7, 1988) ...........................*
3.3 Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to Form 8-K dated February 12, 1997) .......*
4.0 Instruments Defining the Rights of Security Holders
(all incorporated by reference to Registration Statement
No. 33-17397-D effective March 7, 1988):
(4.1) Unit Warrant Agreement...............................*
(4.2) Specimen Stock Certificate...........................*
(4.3) Specimen A Warrant Certificate.......................*
(4.4) Specimen B Warrant Certificate.......................*
10.1 1988 Incentive Stock Option Plan (incorporated by
reference to Exhibit 10.1 to Amendment No. 2 to
Registration Statement No. 33-17397-D,
effective March 7, 1988).............................................*
10.2 1997 Stock Option Plan (incorporated by reference
to Exhibit 10.1 to Form 8-K dated February 12, 1997).................*
10.3 1997 Employee Stock Compensation Plan (incorporated
by reference to Exhibit 10.2 to Form 8-K dated
February 12, 1997)...................................................*
* - Incorporated by reference to another registration
statement, report or document.
1 - Includes Exhibits filed as part of this Report.
(b) Reports on Form 8-K. None.
(c) Financial statements and supplementary data.
12
<PAGE>
Index to Financial Statements
Independent Auditors' Report............................................F-1
Balance Sheets as of May 31, 1989 and 1988..............................F-2
Statements of Operations for the year ended May 31, 1989
and for the period June 18,1987 (inception) through
May 31, 1988...................................................... F-3
Statements of Shareholders' Equity for the year ended
May 31, 1989 and for the period June 18, 1987 (inception)
through May 31, 1988...............................................F-4
Statements of Cash Flows for the year ended May 31, 1989
and for the period June 18, 1987 (inception)
through May 31, 1988...............................................F-5
Notes to Financial Statements...........................................F-6
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Whitney American Corporation
Aurora, Colorado
We have audited the accompanying balance sheets of Whitney American Corporation
as of May 31, 1989 and 1988, and the related statements of operations, changes
in stockholders' equity, and cash flows for the year ended May 31, 1989 and for
the period June 18, 1987 (inception) to May 31, 1988. These financial statements
are the responsibility of the management of Whitney American Corporation. 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 audits 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 Whitney American Corporation as
of May 31, 1989 and 1988, and the results of its operations and its cash flows
for the year ended May 31, 1989 and for the period from June 18, 1987
(inception) to May 31, 1988, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company's recurring losses and accumulated deficit
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are discussed in Note A.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Denver, Colorado
June 3, 1997
F-1
<PAGE>
WHITNEY AMERICAN CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
May 31,
------------------------
1989 1988
---------- ---------
<S> <C> <C>
Current asset:
Cash $ -- $ 68
---------- ---------
Other assets: (Note A)
Deferred offering costs -- 9,478
Organization costs 860 1,075
---------- ---------
860 10,553
---------- ---------
$ 860 $ 10,621
========== =========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ -- $ 4,526
---------- ---------
Stockholders' equity: (Notes B, C and F)
Preferred stock; $.00001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.00001 par value; authorized -
50,000,000 shares; issued and outstanding -
65,015 shares at May 31, 1989 and 50,000
shares at May 31, 1988 1 1
Additional paid-in capital 23,725 6,094
Accumulated deficit (22,866) --
---------- ---------
Total stockholders' equity 860 6,095
---------- ---------
$ 860 $ 10,621
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
WHITNEY AMERICAN CORPORATION
Statements of Operations
For the Period June 18, 1987 (Inception) to May 31, 1988
and for the Year Ended May 31, 1989
<TABLE>
<CAPTION>
1989 1988
--------- ---------
<S> <C> <C>
Costs and expenses:
General and administrative $ 215 $ --
--------- ---------
Loss from operations (215) --
--------- ---------
Discontinued operations (Note C) (29,345) --
--------- ---------
Net loss $ (29,560) $ --
========= =========
Loss per common share:
Loss from operations $ -- $ --
========= =========
Discontinued operations $ (.48) $ --
========= =========
Net loss $ (.48) $ --
========= =========
Weighted average shares outstanding 61,562 50,000
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
WHITNEY AMERICAN CORPORATION
Statements of Changes in Stockholders Equity
For the Period June 18, 1987 (Inception) to May 31, 1988
and for the Year Ended May 31, 1989
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-in Accumulated
Shares Amount Capital Deficit
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balances, June 18, 1987 (inception) -- $ -- $ -- $ --
Common stock issued for services,
valued at $.03 per share 30,000 1 899 --
Common stock issued for cash,
valued at $.32 per share 62 -- 20 --
Common stock issued for cash,
valued at $.20 per share 1,250 -- 250 --
Common stock issued for cash,
valued at $.12 per share 1,500 -- 175 --
Common stock issued for cash,
valued at $.28 per share 17,188 -- 4,750 --
Net loss --
---------- ---------- ---------- -----------
Balances, May 31, 1988 50,000 1 6,094 --
Common stock issued for cash
at $1.00 per share, net of
offering costs of $12,038 12,515** -- 462 --
Common stock issued pursuant
to a stock for stock merger 200,000 2 -- --
Reverse acquisition accounting -- -- (6,694) 6,694
Donation of common stock (200,000) (2) -- --
Common stock issued for cash,
valued at $9.55 per share 2,500 -- 23,863 --
Net loss (29,560)
---------- ---------- ---------- -----------
Balances, May 31, 1989 65,015 $ 1 $ 23,725 $ (22,866)
========== ========== ========== ===========
</TABLE>
** An additional 15 shares results from full shares issued for fractional
shares in the reverse stock split (Note F).
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
WHITNEY AMERICAN CORPORATION
Statements of Cash Flows
For the Period June 18, 1987 (Inception) to May 31, 1988
and for the Year Ended May 31, 1989
<TABLE>
<S> <C> <C>
1989 1988
--------- --------
Cash flows from operating activities:
Net loss $ (29,560) $ --
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization 215 --
Cancellation of debt for assets (106,828) --
Contribution of capital 863 --
Decrease in accounts payable (4,526) --
--------- --------
Net cash used in operating activities (139,836) --
--------- --------
Cash flows from investing activities:
Organization costs -- (175)
Purchases of equipment (219,231) --
Advances to affiliates (147,000) --
--------- --------
Net cash used in investing activities (366,231) (175)
--------- --------
Cash flows from financing activities:
Payments of deferred offering costs (2,560) (4,952)
Proceeds from series 1 zero coupon bonds 280,000 --
Proceeds from bank note 30,000 --
Advances from parental affiliate 163,059 --
Proceeds from sale of common stock 35,500 5,195
--------- --------
Net cash provided by financing activities 505,999 243
--------- --------
Net increase (decrease) in cash (68) 68
Cash at beginning of year 68 --
--------- --------
Cash at end of year $ -- $ 68
========= ========
</TABLE>
Continued
F-5
<PAGE>
WHITNEY AMERICAN CORPORATION
Statements of Cash Flows - continued
For the Period June 18, 1987 (Inception) to May 31, 1988
and for the Year Ended May 31, 1989
<TABLE>
<S> <C> <C>
1989 1988
--------- ---------
Supplemental disclosure of noncash investing and financing activities:
On October 20, 1988, the Company acquired assets and liabilities in a reverse
acquisition, and on April 17, 1989, substantially all of the Company's assets
were reacquired by the Company's parental affiliate (Note C).
Common stock issued for services regarding
organizational costs $ -- $ 900
========= =========
Deferred offering costs incurred $ -- $ 4,526
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements
Note A - Summary of Significant Accounting Policies
Description of Business
The financial statements presented are those of Whitney American Corporation
(the "Company"). The Company was incorporated on June 18, 1987, under the laws
of the State of Delaware. The Company's initial activities were directed towards
the raising of capital. Pursuant to an Agreement and Plan of Reorganization,
Industrial Waste Processing, Inc. a Nevada corporation ("IWP"), was merged into
the Company on October 20, 1988 and subsequently changed its name to Industrial
Waste Processing, Inc. In February 1997, the Company filed with the Delaware
Secretary of State a Certificate of Amended and Restated Certificate of
Incorporation that, among other things, changed the Company's name back to
Whitney American Corporation.
IWP was organized on May 25, 1988 for the purpose of treating and neutralizing
hazardous waste from manufactures and landfills through proprietary processes
and recycling of metals and other materials of value, initially through the use
of mobile toxic treatment vans known as Transportable Treatment Units ("TTU's").
IWP, and later the Company, completed the construction of its initial TTU. The
TTU's never became operational because of a lack of funds and because of the
inability of the Company to perfect its technological processes. On April 17,
1989, the Company's parental affiliate Pacific Energy and Mining Company
("PEMC") reacquired all of the significant assets of the Company and assumed
approximately $542,000 of the Company's outstanding obligations. The Company has
been inactive since April 1989, and has no significant assets or liabilities.
As shown in the financial statements, as of May 31, 1989, the Company has
incurred an accumulated deficit of approximately $22,900 and has no cash. The
Company's continued existence is dependent on its ability to generate sufficient
cash flow to meet its obligations on a timely basis. The financial statements do
not include any adjustments that might be necessary should the Company be unable
to continue in existence. Subsequent to February 12, 1997, the Company has been
exploring sources to obtain additional equity or debt financing. The Company has
also indicated its intention to participate in one or more as yet unidentified
business ventures, which management will select after reviewing the business
opportunities for their profit or growth potential.
Organization Costs
Organization costs are amortized over five years.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing 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 reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
F-7
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements - continued
Note A - Summary of Significant Accounting Policies - continued
Loss Per Common Share
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting 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 period. Actual results
could differ from those estimates.
Note B - Stockholders' Equity
Common Stock Transactions
On June 25, 1987, the Company issued 30,000 shares of common stock for services
regarding organization costs, valued at $.03 per share. These shares were issued
to an officer and director of the Company.
On July 31, 1987, the Company issued 62 shares of common stock for cash, valued
at $.32 per share.
On July 31, 1987, the Company issued 1,250 shares of common stock for cash,
valued at $.20 per share.
On July 31, 1987, the Company issued 1,500 shares of common stock for cash,
valued at $.12 per share.
On July 31, 1987, the Company issued 17,188 shares of common stock for cash,
valued at $.28 per share. These shares were issued to an officer and director of
the Company.
On June 30, 1988, the Company and Tri-Bradley Investments, underwriters to the
Company, successfully completed a public offering for the sale of 12,500 units
of the Company's common stock at $1.00 per unit. Each unit consisted of one
share of $.00001 par value common stock, one Class A warrant and one Class B
warrant. Each warrant was exercisable for .06 shares of common stock for a
period commencing with the date of the Prospectus and terminating nine months
thereafter at the respective prices of $5.00 per share (Class A warrant) and
$10.00 per share (Class B warrant). The Class A and B warrants expired in
December 1988. The Company received net proceeds from the offering of $462 after
deducting offering expenses of $12,038.
F-8
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements - continued
Note B - Stockholders' Equity - continued
Common Stock Transactions - continued
On September 30, 1988, the Company entered into an Agreement and Plan of
Reorganization between the Company and Industrial Waste Processing, Inc. a
Nevada corporation, which provided for the Company's acquisition of IWP, by the
issuance of 200,000 shares of the Company's $.00001 par value common stock in
exchange for all of the issued and outstanding common stock of IWP. For
accounting purposes the acquisition was treated as a recapitalization of IWP
with IWP as the acquirer (a reverse acquisition). The 200,000 shares of the
Company's common stock issued to IWP shareholders were subsequently donated back
by IWP's parental affiliate PEMC (150,000 shares) and by its President, Marc A
Wilder (50,000 shares), and were canceled by the Company on October 21, 1988.
PEMC remained the owner of 25,000 shares of the Company's common stock that it
acquired and paid for in private transactions.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
No shares of the Company's $.00001 par value preferred stock have been issued or
are outstanding. Dividends, voting rights and other terms, rights and
preferences of the preferred shares have not been designated but may be
designated by the Board of Directors from time to time.
1988 Incentive Stock Option Plan
The Company adopted an incentive stock option plan (the "ISO Plan") for key
employees on January 20, 1988. The Company has reserved a maximum of 50,000
shares to be issued upon the exercise of options which may be granted under the
ISO Plan. The ISO Plan is intended to qualify as an "incentive stock option"
plan under Section 422A of the Internal Revenue Code of 1986, as amended.
Accordingly, options will be granted under the ISO Plan at exercise prices at
least equal to the fair market value per share of the Company's common stock on
the respective dates of grant and will be subject to the limitation provided by
such law. However, options may be granted to employees who own more than 10% of
the Company's outstanding common stock at an option price which is at least 110%
of the fair market value of the common stock on the date the option is granted.
The plan was administered by the Board of Directors. No options have been
granted as of May 31, 1989. On February 14, 1997 the Company's Board of
Directors terminated the ISO Plan.
F-9
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements - continued
Note C - Reverse Acquisition and Discontinued Operations
On September 30, 1988 an Agreement and Plan of Reorganization between the
Company and Industrial Waste Processing, Inc. provided for the issuance of
200,000 shares of the Company's $.00001 par value common stock in exchange for
all of the issued and outstanding common stock of IWP. On October 20, 1988, IWP,
which began business May 31, 1988, was merged into the Company and subsequently
changed its name. For accounting purposes the acquisition was treated as a
recapitalization of IWP with IWP as the acquirer (a reverse acquisition). The
following assets and liabilities were transferred to the Company:
Cash $ 26,944
Advances to employees 1,500
Advances to affiliates 83,250
Transportable treatment units 126,545
Other fixed assets 4,441
Advances from parental affiliate (106,918)
Series 1 zero coupon bonds (215,000)
----------
Net $ (79,238)
==========
On October 21, 1988, the Company's president and its parental affiliate PEMC
donated the entire 200,000 shares of common stock issued as a result of the
exchange with IWP, back to the Company without consideration. PEMC remained the
owner of 25,000 shares of the Company's common stock that it acquired and paid
for in private transactions.
On April 17, 1989 the Company's parental affiliate PEMC reacquired the following
assets and liabilities:
Advances to affiliates $ 147,000
Transportable treatment units 214,790
Other fixed assets 4,441
Accounts payable and accrued expenses (68,849)
Advances from parental affiliate (163,059)
Series 1 zero coupon bonds (280,000)
Bank note (30,000)
----------
Net $ (175,677)
==========
The Company incurred a net loss of $29,560 during this time period, of which,
$29,345 has been reflected as discontinued operations in these financial
statements.
F-10
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements - continued
Note D - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
May 31,
1989 1988
--------- ---------
<S> <C> <C>
Federal income tax benefit at statutory rate (15.0%) $ (4,400) $ --
State income tax benefit net of federal tax effect (1,200) --
Deferred income tax valuation allowance 5,600 --
--------- ---------
$ -- $ --
========= =========
The Company's deferred tax assets are as follows:
May 31,
1989 1988
--------- ---------
Net operating loss carryforward $ 5,600 $ --
Valuation allowance (5,600) --
--------- ---------
$ -- $ --
========= =========
</TABLE>
At May 31, 1989, the Company has net operating loss carryforwards of $28,660
which may be available to offset future taxable income through 2004.
Note E - Related Party Transactions
The Company's legal counsel, of which the Secretary of the Company is the sole
proprietor, was paid $2,500 during the year ended May 31, 1989.
Note F - Subsequent Events
Restructuring of Company
On February 12, 1997 the Company's shareholders approved a restructuring of the
Company's authorized and outstanding capital through (1) a 1:100 reverse stock
split, (2) an increase in the Company's authorized capital stock to 50,000,000
shares of common stock and 5,000,000 shares of preferred stock, (3) a change in
par value to $.00001 per share for both the common and preferred stock of the
Company, and (4) a change in the name of the Company from Industrial Waste
F-11
<PAGE>
WHITNEY AMERICAN CORPORATION
Notes to Financial Statements - continued
Note F - Subsequent Events - continued
Restructuring of Company - continued
Processing, Inc. to its original name, Whitney American Corporation. The
Company's shareholders also approved changes to the Company's Certificate of
Incorporation limiting the liability of directors of the Company under certain
circumstances. All share and per share amounts have been restated to reflect
this restructuring.
1997 Stock Option Plan
The Company has adopted a stock option plan (the "CSO Plan") which allows for
the issuance of options to purchase up to 2,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The CSO Plan is
not intended to qualify as an "incentive stock option plan" under Section 422 of
the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1997 Employee Stock Compensation Plan
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,500,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
F-12
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report on Form 10-K to be signed on its behalf
by the undersigned, thereto duly authorized individual.
Date: July 10, 1997
WHITNEY AMERICAN CORPORATION
By /S/ Stephen M. Siedow
.................................
Stephen M. Siedow, President
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/S/ Stephen M. Siedow
........................ President and Director July 10, 1997
Stephen M. Siedow
/S/ John D. Brasher Jr.
........................ Secretary July 10, 1997
John D. Brasher Jr.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 000082265
<NAME> Whitney American Corporation
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> MAY-31-1989
<PERIOD-START> JUN-01-1988
<PERIOD-END> MAY-31-1989
<EXCHANGE-RATE> 0
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 860
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 859
<TOTAL-LIABILITY-AND-EQUITY> 860
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 215
<LOSS-PROVISION> 0
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</TABLE>
