<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
AMENDMENT NO. 1
TO
FORM 10SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
WHITEHALL LIMITED, INC.
-----------------------
(Name of Small Business Issuer in its charter)
<TABLE>
<CAPTION>
<S> <C>
Florida 84-1092599
- ---------------------------------------- --------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
290 Cocoanut Avenue, Sarasota, Florida 34236
- -------------------------------------- --------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's Telephone Number (941) 954-1181
--------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
----------------------------
(Title of Class)
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Background
WHITEHALL LIMITED, INC. (the "Registrant") is a corporation which has
been domesticated and presently exists under Florida law effective June 24,
1999. Prior to the business combination described herein, the Registrant had
been an inactively traded public company and conducted no significant
operations since the completion of its public offering in 1988. In such status,
the Company explored the commencement of several lines of business activity or
business combinations, but none were consummated. In summary, an inactive
public company is a corporate entity, the equity securities of which are
publicly held but which conducts no business activity and has minimal, if any,
assets. Prior to June 24, 1999, the Registrant was known as Cambridge Universal
Corporation. The Registrant was initially formed under Colorado corporate law
in 1988 and in such year conducted a public offering of its investment units,
each unit being comprised of one share of the Registrant's Common Stock and
Class A and Class B Common Stock Purchase Warrants, which Warrants have either
been exercised or have expired. The definitive prospectus containing the offer
of such units bore an effective date of December 8, 1988 and thereafter the
Registrant filed the periodic and annual reports with the United States
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934, as amended. For a period of time, the Registrant did not
file such periodic and annual reports. Such reports have been brought to a
current status and the Registrant believes that it is current with respect to
such reports as of the time of the filing of this Registration Statement.
As more fully described subsequently herein, the Registrant is
continuing the business activities conducted by a Florida corporate entity
known as Whitehall Homes II, Inc. ("Whitehall"), which now is a wholly-owned
corporate subsidiary of the Registrant. The business of the Registrant and of
Whitehall relates to the development of residential subdivisions and the
construction of residential dwelling units and the marketing thereof in the
geographic area of the West Coast of Florida.
Control Persons of the Registrant
As a result of the business combination referenced above and
subsequently described herein, as well as other circumstances, the following
persons may be considered as "control persons" of the Registration as of March
1, 2000 (the phrase "control persons" meaning persons or entities exercising
control over an issuer of securities as a result of the beneficial ownership of
the issuer's outstanding voting securities, by virtue of serving as a director
or officer of such issuer, as a result of contractual relationships or other
circumstances):
<PAGE> 3
<TABLE>
<CAPTION>
Identity of Control Person Nature of Control Relationship
- -------------------------- ------------------------------
<S> <C>
Ronald Mustari Record and beneficial ownership (with
Joanne Mustari) of 51.51% of Registrant's
outstanding voting Common Stock; member of
the Board of Directors, President and Chief
Executive Officer
Joanne Mustari Record and beneficial ownership (with
Ronald Mustari) of 51.51% of Registrant's
outstanding voting Common Stock
Harry Van Der Noord(1) Director, Chairman of the Board of
Directors of the Registrant
J. Robert Ground(2) Director
Gerald Howard Gould(1) Director
Robert E. Messick(1) Director
</TABLE>
- ----------
(1) Such directors do not own of record or beneficially shares of the
voting Common Stock of the Registrant.
(2) Mr. Ground owns of record and beneficially 216,334 shares of the
Registrant's outstanding voting Common Stock constituting 2.42% of
shares outstanding.
See Part I, Item 4, Security Ownership of Certain Beneficial Owners and
Management and Part I, Item 5, Directors and Executive Officers, Promoters and
Control Persons
With respect to such control persons and the shares of Common Stock of
the Registrant owned of record and beneficially by such persons as of March 1,
2000, the Registrant has been advised that, in the opinion of the United States
Securities and Exchange Commission (the "Commission"), as expressed in a "no
action" letter of the Commission to Ken Worm (Assistant Director OTC Compliance
Unit, NASD Regulation, Inc.) and dated January 21, 2000, such control persons
(and any affiliates thereof) are underwriters and, accordingly, may only sell
shares of the Common Stock of the Registrant pursuant to an effective
Registration Statement filed under the Securities Act of 1933, as amended.
See, also, Part II, Item 4, Recent Sales of Unregistered Securities,
of this Registration Statement.
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Development of Whitehall Business
The business activities of the Registrant and Whitehall commenced in
1985 as a result of the efforts of Ronald Mustari, who is a member of the Board
of Directors and President and Chief Executive Officer of the Registrant. The
first corporate entity utilized by Mr. Mustari in such activities was Whitehall
Development Corporation. The Registrant estimates that the Whitehall Entities
have constructed approximately 1,400 residential dwelling units (principally
single family homes) in the Florida counties of Sarasota, Manatee, Charlotte
and Hillsborough, since 1985 through December 31, 1999. As used herein, the
term "Whitehall Entities" means Whitehall and other affiliated entities which
have been consolidated with Whitehall as explained in the immediately following
paragraph.
During the time of such construction and marketing activity, Mr.
Mustari conducted the business of the Whitehall entities with another
principal, Donald Lichter of Sarasota, Florida. During the early part of 1999,
Mr. Mustari negotiated a purchase of such other principal's entire 35%
ownership interest in the various Whitehall Entities and such transaction was
consummated effective April 29, 1999 and involved a consideration of $319,000
(consisting of cash and promissory notes). Mr. Lichter is no longer active in
the business of the Registrant and Whitehall and there are no present business
relationships between Mr. Lichter and Mr. and Mrs. Mustari. As a result of the
consummation of such transaction, Mr. Mustari, with his wife Joanne Mustari,
acquired all of Mr. Lichter's interest in the Whitehall Entities identified in
Note 1 to the historical financial statements of Whitehall referenced in this
paragraph. With the exception of one entity, the acquisition transaction
between Mr. and Mrs. Mustari and Mr. Lichter resulted in 100% of the ownership
of such corporations being vested in Mr. and Mrs. Mustari. With respect to such
one entity (Whitehall Group, Inc.), 70% of such ownership interest was vested
in Mr. and Mrs. Mustari with the balance of 30% being owned by three other
persons who are not active in the business of Whitehall. Subsequent to the
acquisition transaction between Mr. and Mrs. Mustari and Mr. Lichter, all of
such entities described in this paragraph were consolidated with and into
Whitehall. For additional information, see the historical financial statements
of Whitehall included as Part F/S of this Registration Statement.
Subsequent to the purchase transaction between Mr. Lichter and Mr. and
Mrs. Mustari, the Registrant concluded the exchange transaction with Mr. and
Mrs. Mustari whereby Whitehall (which included the Whitehall Entities
consolidated with and into Whitehall) became the wholly-owned subsidiary of the
Registrant. In such transaction, Mr. and Mrs. Mustari were issued 4,608,268
shares of the Registrant's Common Stock, which Common Stock is restricted and
not free trading.
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Development of the Registrant's Business and Present Activities
The Registrant maintains its corporate and administrative offices in a
facility owned by the Registrant which is located at 290 Cocoanut Avenue,
Sarasota, Florida 34236. The Registrant's telephone at such address is
941/954-1181 and the Registrant's FAX number is 941/954-3676. The Registrant's
web site is www.whitehallhomes.com.
Contemporaneous to the exchange transaction between the Registrant and
Mr. and Mrs. Mustari, the Registrant was domesticated under the Florida
Business Corporation Act and adopted its present corporate name, Whitehall
Limited, Inc. Also, at such time the Registrant effected the reverse split of
its outstanding Common Stock, whereby each three shares of the Registrant's
Common Stock became one share. All Common Stock share amounts set forth in this
Registration Statement, including the financial statements included herewith,
reflect such reverse stock split.
The Registrant, directly and through Whitehall, provides quality homes
with custom features at moderate prices and designed principally for the entry
level or "moving up" home buyers' market, as well as the retirement segment of
such market. Dwelling residences constructed and marketed by the Registrant
usually range in size from 1,200 to 3,500 square feet and have purchase prices
ranging from $120,000 to $400,000. The Registrant and Whitehall market the
residential dwelling unit inventories through commissioned employees and
independent real estate brokers in the Registrant's and Whitehall's market
area, which consists of the west coast of the State of Florida, primarily,
Sarasota, Manatee, Charlotte, Pasco and Hillsborough Counties. Residential
dwelling unit sales are usually conducted from sales offices located in
furnished models located in each subdivision where the Registrant and Whitehall
are active. The Registrant and Whitehall also typically will construct a
limited number of speculative homes in each residential subdivision in which
they are active in order to enhance marketing and sales activities.
At September 30, 1999, the Registrant and Whitehall had approximately
$1.57 million invested in land and development costs and approximately $1.4
million invested in homes under construction and furnished models.
Existing Projects. The Registrant, through Whitehall, is presently
engaged in residential real estate project development and the construction of
single family dwellings in four developments. These developments are the
Village at Beekman Place, Sarasota, Florida; the Estates at Beekman Place,
Sarasota, Florida; Governor's Green and Bermuda Club at Plantation Golf and
Country Club, Venice, Florida; Avalon at the Villages of Palm Aire, Sarasota,
Florida; Ibis/Heron Green Country Club and Pine Meadows/Heron Green Country
Club, North Port, Florida; Stillwater, Englewood, Florida; and Lake Jovita,
Tampa, Florida. All of the subdivisions where such development and construction
activity is being conducted contain appropriately zoned residential dwelling
unit building lots and construction permits are obtained prior to the
construction of a unit. The table set forth
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below presents summaries of statistical data with respect to the identified
real estate projects:
<TABLE>
<CAPTION>
Number of
Dwelling
Number Estimated Number of Contractors
of Build Average Dwelling in Devel Estimated
ing Lots Selling Units Sold/ opment in Time of
Status of Avail- Price Per Number of Addition Develop
Infrastructure able to Dwelling Units under to the ment
Identity of Development Development Registrant Unit Construction Registrant Build-Out
- ----------------------- ----------- ---------- ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Avalon at the Villages Complete 114 $ 175,000 47/67 4 36 months
of Palm Aire
Beekman Place & Village Complete 148 165,000 146/2 2 Fall, 1999
Bermuda Club Complete 30 200,000 20/4 0 Fall, 2000
Governor's Green Complete 16 250,000 14/2 1 Spring, 2000
Ibis/Heron Creek Complete 112 152,000 4/16 0 39 months
Country Club
Pine Meadows/Heron Complete 60 250,000 2/8 3 30 months
Green Country Club
Lake Jovita Complete 58 185,000 2/10 0 30 months
Stillwater Complete 197 235,000 2/6 2 48 months
</TABLE>
Substantially all of the residential dwelling unit construction activities of
the Registrant and Whitehall are and will be conducted through utilization of
the services of experienced and reliable subcontractors who provide for
electrical, sewer, concrete slab, framing, roofing and similar matters. The
Registrant believes that there is an adequate supply of reliable and
experienced subcontractors available to the Registrant in the areas of its
construction activities and the Registrant believes that its relationships with
such subcontractors is good.
In its development and construction activities, the Registrant,
through Whitehall, endeavors to offer high quality homes with custom features
not usually found in dwelling units priced at the prices established by the
Registrant. Such units are designed principally for the entry level homeowner,
that market commonly referred to as the "move up" market and the retirement
segments of the community. Average dwelling unit sizes range from 1,200 to
3,500 square feet and range in price from $120,000 to $400,000. The plans for
the residential dwelling units constructed by the Registrant and Whitehall are
prepared by architects in order to maximize the aesthetic appeal of the units
to the buying public. In the construction process, while as indicated the
Registrant and Whitehall utilize the services of material and service
subcontractors, supervision is exercised by construction supervisors employed
directly by the Registrant.
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The present development activity of the Registrant and Whitehall is
not being conducted pursuant to joint ventures or similar arrangements,
although such have been utilized in past activities of Whitehall. See Part I,
Item 2, Management's Discussion and Analysis of Plan of Operation.
Marketing. In such construction and residential dwelling unit
marketing activities, the Registrant and Whitehall continually monitor the
sales and margins achieved with respect to residential dwelling unit
construction costs, other related costs and the market price realized in the
sale of the unit to the purchaser. The Registrant generally offers five to ten
home designs in each of the developments in which it is active but is prepared
to provide to the interested home buyer additional building plans and further
options and variances from the standard plan. Additional customization of a
residential dwelling unit may also be provided by the Registrant and Whitehall
to the customer.
In its marketing activities, Whitehall attempts to maximize the affect
of its advertising expenditures by participating in promotional activities,
publications and newsletters sponsored by local real estate brokers, mortgage
companies, utility companies and trade associations and, in certain instances
where possible, by positioning its developments in locations that maximize the
exposure of the development to local traffic patterns. The Registrant and
Whitehall market the residential dwelling units through commissioned employees
and independent real estate brokers. Dwelling unit sales are typically
conducted from sales offices located in furnished model homes located within
each development. Registrant sales representatives and consultants assist
prospective home buyers by providing them with floor plans, price information,
tours of model homes and the selection of options and other custom features.
The management of the Registrant and Whitehall believe that their commissioned
employees are adequately trained in terms of their sales capability and it is
the policy of the Registrant and Whitehall to keep such persons informed as to
the availability of financing, construction schedules and future marketing and
advertising plans.
In addition to using model homes, Whitehall typically builds a limited
number of speculative homes in each development in order to enhance its
marketing and sales activities. Construction of these speculative homes is also
considered necessary to satisfy the requirement of relocated personnel and
independent brokers who often represent home buyers requiring a completed
residential dwelling unit within 60 days or less. A majority of such
speculative homes are, in fact, sold before construction is completed or are
sold immediately following completion. The Registrant and Whitehall attempt to
limit the number of speculative homes contained in each of their developments.
In its marketing activities, the Registrant and Whitehall recognize
the importance of the availability of residential dwelling unit financing and
accordingly work with a variety of mortgage lenders and mortgage brokers who,
on a regular basis, make available to home buyers a range of conventional
mortgage financing, as well as FHA and VA mortgage programs. By assisting in
the financing of their residential dwelling units, the Registrant and
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Whitehall believe that they are better able to coordinate and expedite the
consummation of the sales transaction.
Regulatory Factors. The development of residential real estate
projects and the construction of single family dwellings constitutes activity
which is subject to extensive regulation primarily by local governmental
authorities and agencies thereof, although Florida, on a statewide basis,
exercises significant regulation in terms of environmental concerns and other
matters. As a result of this extensive regulation, the Registrant and
Whitehall, as well as the subcontractors serving the Registrant and Whitehall,
are required to comply with various state and local laws and regulations,
including those relating to zoning, density requirements, the necessity of
obtaining building permits, matters relating to environmental considerations,
advertising, rules relating to the extension of credit and other subjects.
Regulatory factors also affect the specifications and quality of materials that
must be utilized on a minimum basis with respect to any constructed residential
dwelling unit, as well as the completion of the infrastructure required in any
development.
In the opinion of the management of the Registrant and Whitehall, the
business of the Registrant and Whitehall are currently being conducted in a
manner which is in compliance with all applicable Federal, state and local
regulations.
Property Acquisitions. The Registrant and Whitehall continually
inspect and determine the relative feasibility of real estate parcels for
future residential development projects and, accordingly, constantly inspect
available parcels of real estate in their operating area which is Sarasota,
Manatee, Charlotte and Hillsborough Counties, Florida. Real estate properties
possibly suitable for development will also be investigated which are not
located in such four county area. The Registrant and Whitehall have contracted
for the purchase of property in Collier County, Florida (Naples) and have
entered into a contract for the acquisition of development real estate in the
Mount Dora, Florida area. Mount Dora is near Orlando, Florida (Orange County,
Florida). The Registrant and Whitehall also have under contract for acquisition
a development tract of real estate located in Pine Island, Florida, which is in
Lee County. The Registrant and Whitehall are also presently inspecting a
property located in Lake County, Florida. Generally the Registrant and
Whitehall endeavor to acquire developed building lots after all zoning and
other governmental entitlements and approvals have been obtained. In effecting
purchases in this manner, the Registrant and Whitehall believe that they may
move into the particular market in a more rapid fashion from the time of land
acquisition, construction of the residential dwelling unit and the ultimate
sale thereof, thereby reducing the customary cycle experienced by most home
builders. The disadvantages perceived by management in acquiring property in
such fashion are the possible depressing effect on the profit margins of the
Registrant and Whitehall which may occur due to the increased acquisition price
which has as an element thereof the costs incurred and expended in obtaining
zoning and necessary permits. Profits margins may be favorably influenced by
such process, however, by permitting more certain building and construction
schedules with respect to residential units. In such acquisition activities,
the Registrant and Whitehall have and will continue to utilize lot options and
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similar contracts to secure developed lots or to assure, upon option exercise,
an adequate inventory of such developed lots. Substantially all real estate
purchased by the Registrant and Whitehall will involve those properties which
have obtained all necessary permits and entitlements and complied with all
regulatory factors, thereby permitting the Registrant and Whitehall to
immediately begin residential dwelling construction activities.
Competition. The residential dwelling development and construction
industry is highly competitive throughout the United States and particularly in
the Registrant's geographic market area which is constituted by Southwest
Florida. In times of strong demand for residential building lots, entities such
as the Registrant are inclined to initiate a number of developments and the
construction of residential dwelling units at substantially the same time,
thereby potentially creating an oversupply of available residential dwelling
units. When demand for such residential dwelling units slackens, downward
pressure with respect to the pricing of inventory units usually occurs or the
acquisition on a pre-construction basis of residential dwelling units by home
buyers decreases significantly. Factors which will affect the relative
competitive position of the Registrant including, without limitation, its
project development activities, residential dwelling unit construction and the
marketing thereof, including the location of the Registrant's available
residential dwelling units and the project in which they are located, the
presence of competing entities in the Registrant's areas of operations and the
relative level of consumer acceptance of the Registrant's residential dwelling
units from an aesthetic, pricing and availability standpoint. The ultimate
pricing of the residential dwelling unit and the related lot will also be a
competitive factor. The Registrant believes that it is in competition with
development and construction entities which are vested with substantially
greater financial, managerial and other resources than those presently
available to the Registrant and Whitehall. The Registrant estimates that there
are approximately 12 major residential dwelling unit home contractors operating
in the area of Florida in which the Registrant and Whitehall operate. No
assurance can be given that the Registrant will effectively meet competition on
a continuing basis.
The Residential Home Building Industry
The residential home building industry which includes the development
of residential real estate projects has three primary components. These
components are land acquisition, land development and home construction and
sales. The Registrant and Whitehall believe that there is considerable overlap
among those who participate in one or more of the components of the industry.
Investors purchase undeveloped or under utilized real estate with a view to
realizing appreciation in value as a result of urban or suburban growth but
such investors usually do not engage in development activities. Developers and
residential dwelling contractors such as the Registrant and Whitehall typically
purchase real property which is usually unimproved and unplatted but is
appropriately zoned for development and such entities develop such property
into subdivisions containing platted, semi-finished or finished lots for sale
to home builders. In some instances, developers like the Registrant and
Whitehall also engage in residential home construction. The Registrant and
Whitehall
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both acquire properly zoned real estate for further development and constructs
residential dwellings thereon as well as engaging in the activity of
residential dwelling construction in residential real estate subdivisions
containing lots which are fully developed and ready for construction activity.
In the home construction and sales component of the industry, there
are four major activities which are the construction of custom homes, building
production homes, building townhomes, condominiums and apartments and
remodeling. The Registrant concentrates on its residential dwelling activities
in the construction of single family custom homes which are in the medium price
range. The Registrant's geographic area of operation is estimated to contain
approximately 12 major developers and residential dwelling unit contractors,
some of whom conduct nationwide operations and engage in the building of
production homes. The management of the Registrant believes that within the
Registrant's area of operations, the Registrant ranks among the top ten of such
developers. Management's estimate is based upon a publication known as The
Construction Guide which publishes on a monthly basis statistical data relating
to the number of residential unit "construction starts" occurring in any
particular month and which is cumulated on a year-to-date basis. It should be
noted, however, that the range of construction starts varies widely and a
number of home builders have monthly construction starts significantly in
excess of those attributable to the Registrant and Whitehall. For example, 47
construction starts were attributed to Whitehall for the year ended December
31, 1999. Seven residential dwelling unit contractors, however, reported
construction starts in excess of those attributable to Whitehall and such
ranged from a low of 51 construction starts to a high of 243 construction
starts.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Overview and Background
As indicated in Item 1 of this Registration Statement, the Registrant
was formerly known as Cambridge Universal Corporation, which, during the time
that it utilized such corporate name, was an inactively traded public company
existing under Colorado law. Until the business combination described in Item 1
hereof, the Registrant conducted no business activity but engaged in activity
intended to identify a business activity and/or opportunity. As a result of the
business combination whereby the Registrant acquired all of the outstanding
common stock of Whitehall Homes II, Inc. ("Whitehall") which is now a
wholly-owned corporate subsidiary of the Registrant, the Registrant is engaged
in the business activity described in this Registration Statement. In
connection with such business combination, the Registrant changed its corporate
name to its present name, Whitehall Limited, Inc., and also became a
corporation domesticated under Florida law.
The business activities of Whitehall and the other entities identified
in this Registration Statement have been and are engaged in the residential and
dwelling construction business and related development activities. This
activity has been conducted
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since 1985. These activities have constituted the sole activities of Whitehall,
its affiliated predecessor entities and the Registrant. See the historical
financial statements of the Registrant and Whitehall contained in Part F//S.
The Registrant and Whitehall derive their revenues principally from
the following activities:
1. Homes and lot sales;
2. Management fees;
3. Real estate commissions; and
4. Income categorized as Other Income which has been principally
derived from management fees, rentals, sales of furniture
contained in models and deposit forfeitures.
The Registrant and Whitehall's operating expenses are principally comprised of
the following categories:
1. Costs of homes and lot sales;
2. Selling and general administrative expenses;
3. Office costs consisting of salaries and general expenses;
4. Real estate commissions paid; and
5. Interest.
Included in Part F/S of this Registration Statement are the historical
financial statements of the Registrant at and for the years ended March 31,
1999 and 1998 and the historical financial statements of Whitehall at and for
the years ended December 31, 1998 and 1997, at and for the nine month period
ended December 31, 1999 (unaudited) and the three month periods ended March 31,
1999 and 1998 which have been examined by the independent certified public
accountants of the Registrant and Whitehall as indicated in their report
thereon.
The fiscal year of the Registrant is and has been March 31. The fiscal
year of Whitehall and the affiliated entities of Whitehall now combined with
Whitehall was December 31. Whitehall has now adopted March 31 as its fiscal
year in order that the Registrant may report its financial condition, results
of operations and other matters on a consolidated basis with Whitehall in
future financial statements.
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The Registrant
At and for the fiscal years ended March 31, 1999 and 1998, the
Registrant reflected no assets, income or cash flows. At March 31, 1999 and
1998, the Registrant reflected a total accumulated deficit of $(190,448).
Whitehall
Included in Part F/S of this Registration Statement are the unaudited
financial statements of Whitehall reflecting its financial condition and
results of operations at and for the nine month period ended December 31, 1999.
Such unaudited financial statements are those contained in the Form 10-QSB
Report as filed with the Commission by the Registrant for such nine month
period. As indicated, the business combination between the Registrant and
Whitehall was consummated in June 1999.
Nine Months Ended December 31, 1999
For the nine month period ended December 31, 1999, Whitehall (as then
consolidated with the Registrant) reported aggregate total income of $6,438,243
which was comprised of sales of homes and lots ($5,886,908), management fees
($255,106), real estate commissions ($99,133), interest income (6,989), joint
venture income ($1,750) and other income ($188,357). Costs of homes and lots
sold was reported at $5,405,966, resulting in a net income before operating
expenses of $1,032,277.
The Registrant and Whitehall reported total operating expenses for the
nine month period ended December 31, 1999 of $1,454,249, which operating
expenses are comprised of selling and general expenses ($551,168), personnel
expenses ($405,734), office expenses ($283,752), real estate commissions
($103,417) and interest expenses ($110,178). Taking such operating expenses
into account, the Registrant and Whitehall, on a consolidated basis, reported a
net loss for the period of ($421,972) or $.04717 per share on the basis of
8,946,843 common shares being outstanding.
Results of Operations Comparing the Three Months Ended March 31, 1999 and March
31, 1998
For the three month period ended March 31, 1999, total income realized
by Whitehall was $1,709,038 compared to $1,167,284 for the three month period
ended March 31, 1998, an increase of $541,798. Such increase is primarily
attributable to homes and lot sales which for the three month period ended
March 31, 1999 were $1,599,051 compared to $1,041,564 for the three month
period ended March 31, 1998, an increase of $557,487 or 54% over the three
month period ended March 31, 1998. The management of the Registrant and
Whitehall attribute such increase to the stronger demand for residential
dwelling units which has existed in the operating area of the Registrant and
Whitehall
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during substantially all of calendar 1999 and the existence of adequate
residential unit inventories held by Whitehall.
Total operating expenses were $484,258 for the three month period
ended March 31, 1999 compared to total operating expenses of $449,175 for the
three month period ended March 31, 1998, an increase of only $35,078. Expense
categories showing increases were selling and general expenses which were
reflected at $226,839 for the three months ended March 31, 1999 compared to
$180,890 for the three month period ended March 31, 1998, an increase of
$45,949. Personnel, office and interest expense also increased during the three
month period ended March 31, 1999 over those expense categories as reported for
the three month period ended March 31, 1998 as reflected below:
<TABLE>
<CAPTION>
Three Month Three Month
Period Ended Period Ended Increase/
March 31, 1999 March 31, 1998 (Decrease)
-------------- -------------- -----------
<S> <C> <C> <C>
Selling & general expense $ 226,839 $ 188,090 $ 45,949
Personnel 102,107 144,813 (42,706)
Office 73,773 55,411 18,362
Interest expense 59,881 32,897 26,984
</TABLE>
The only operating expense category which reflected a decrease was real estate
commissions which were reported at $21,653 for the three month period ended
March 31, 1999 compared to $35,164 for the three month period ended March 31,
1998, a decrease of $13,511.
Whitehall experienced a significant increase in the costs of homes and
lots which was reported at $1,238,536 for the three month period ended March
31, 1999 compared to $711,921 for the three month period ended March 31, 1998,
an increase of $526,615 (or 43%). Such increase resulted from the efforts of
the Registrant and Whitehall to establish sufficient residential dwelling unit
inventories and the creation of new developments. Such expenditures precede the
ability of the Registrant and Whitehall to realize revenues from such created
inventories.
For the three month period ended March 31, 1999, the Registrant and
Whitehall reported a net loss of $13,751 or ($0.00153) per share compared to a
nominal net income of $6,144 for the same period in 1998. The management of the
Registrant and Whitehall attribute such loss to the increase in operating
expenses experienced by the Registrant and Whitehall for the three month period
ended March 31, 1999 ($484,258) compared to $449,175 for the three month period
ended March 31, 1998. Such expense increases are in the categories described
above.
12
<PAGE> 14
Results of Operations Comparing the Calendar Years Ended December 31, 1997 and
1998
For the calendar year ended December 31, 1998, total income realized
by Whitehall was $3,831,673 compared to $6,384,834 for the calendar year ended
December 31, 1997, a decrease in the most current year of $2,553,161. Such
decrease is largely accounted for by the decrease in homes and lot sales
experienced during such calendar years, such revenues being $3,290,486 for the
calendar year ended December 31, 1998 compared to $5,762,271 for the calendar
year ended December 31, 1997, a decrease in 1998 from the prior year of
$2,471,785. Such decrease in 1998 is attributed by the management of the
Registrant and Whitehall to insufficient residential unit inventories. As
indicated earlier in this Analysis, such demand conditions have significantly
improved during calendar 1999 and strong demand for residential dwelling units
and lots is also expected to continue through calendar 2000.
During the calendar year ended December 31, 1998 other revenue
categories were substantially consistent with the calendar year ended December
31, 1997 with the exception that Whitehall did not experience joint venture
income during 1998 . Whitehall did not experience joint venture income during
calendar 1999 and such is also the case with year 2000 through February 29,
2000. Other Income, however, during 1998 was reported at $208,638 compared to
$161,910 for the calendar year ended December 31, 1997, an increase in the most
current calendar year over the prior calendar year of $47,728.
Total operating expenses during the most calendar year ended December
31, 1998 were reported at $3,901,526 compared to $6,377,411 for the calendar
year ended December 31, 1997, a decrease in 1998 over the previous calendar
year of $2,475,885. The principal reductions in net and total operating
expenses for 1998 occurred in the expense categories of costs of homes and lot
sales ($2,247,198 for the calendar year ended December 31, 1998 compared to
$4,511,467 for the calendar year ended December 31, 1997, a decrease of
$94,781) which decrease results and relates to the reduced home and lot sales
for the calendar year ended December 31, 1998 which were reported at
$3,290,486. For the calendar year ended December 31, 1998, other operating
expense categories correspondingly decreased with the exception of Interest
Expense which increased from $117,789 for the calendar year ended December 31,
1997 to $145,218 for the calendar year ended December 31, 1998, an increase of
$27,429. Such increase in Interest Expense during the most current calendar
year results from the increase in loans and notes payable which were reported
at $2,326,936 at the conclusion of the calendar year ended December 31, 1997
and $2,621,134 at the conclusion of the most current fiscal year, an increase
of $294,198. Such increase in indebtedness from the prior calendar year has
been utilized by the Registrant and Whitehall to finance work in progress -
homes and models which balance sheet item was reported at $983,359 for the
calendar year ended December 31, 1997 and at $1,956,207 for the calendar year
ended December 31, 1998, an increase of $975,848. Such increase in indebtedness
was also utilized to finance the increase in the operating deficit experienced
by Whitehall during the calendar year ended December 31, 1998 which was
reported at ($69,853) compared to a net income of $7,423 for the calendar year
ended December 31, 1997.
13
<PAGE> 15
Expenses categories also reflecting a decrease during the most current
fiscal year over the previous fiscal year are reflected in the table below:
<TABLE>
<CAPTION>
Year Ended Year Ended
December December
Expense Category 31, 1997 31, 1998 Decrease
- ------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Selling and General Expenses $ 671,370 $ 576,589 $ 94,781
Salaries 692,615 583,447 100,168
General Expenses 167,441 147,989 19,452
</TABLE>
For the two fiscal years ended December 31, 1997 and 1998, margins
with respect to homes and lot sales and costs of homes and lot sales again
remained fairly constant, being 78% for the calendar year ended December 31,
1997 and 68% for the most current calendar year.
Liquidity, Capital Resources and Cash Flow
During the years covered by the financial statements included with
this Registration Statement in Part F/S, the Registrant and Whitehall depended
primarily on proceeds received from homes and lot sales and loans as their
sources of liquidity, capital resources and cash flow. During the fiscal year
ended December 31, 1997, the Registrant and Whitehall also received significant
cash flow as a result of participation in joint ventures in the amount of
$159,358. Such joint ventures related to Beekman Village and the Preserves at
Palm Aire. Both of these joint ventures have concluded. This compares with the
negative effect of $406,592 on cash flow for the calendar year ended December
31, 1998. This reported deficit cash flow resulted primarily from residential
unit inventories in the project known as Avalon at the Villages of Palm Aire.
Sources of liquidity during the years and periods covered by the
financial statements included herewith, as indicated, also included funds
provided by land and development loans, construction loans, loans made by
stockholders and miscellaneous notes payable which have been incurred. The
table set forth below reflects the net increase (decrease) in cash which was
available at the conclusion of each period indicated.
14
<PAGE> 16
<TABLE>
<CAPTION>
Nine
Months
Ended Three Months Twelve Month Periods
December Ended March 31, Ended December 31,
31, 1999 1998 1999 1998 1997
-------- ----- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Net Increase (decrease) $ 269,016 $ (127,412) $ (17,009) $ 72,967 $ (106,577)
in cash
</TABLE>
The Registrant and Whitehall anticipate that additional capital
resources and liquidity will be afforded by virtue of the successful conclusion
of a private placement of the equity securities of the Registrant anticipated
to occur during calendar 2000. No assurance can be given, however, that such
will be the case. The Registrant anticipates that the private placement will
involve its 8.75% Convertible Preferred Stock in anticipated proceeds amount of
$10 million at a per share offering price of $5. No assurance can be given that
the $10 million proceeds amount will be realized and the Registrant may receive
more limited proceeds from the private placement of such Preferred Stock, if
such is conducted. The net proceeds realized from such intended private
placement will be utilized primarily for the further development of existing
residential dwelling projects and construction of residential dwelling units
and in the acquisition of new residential development projects (approximately
$7 million) and to reduce indebtedness and as working capital. The Registrant
has not determined when such private placement will be initiated, but
anticipates that such will be initiated during the last six months of 2000.
Additionally, the Registrant and Whitehall have substantially
completed negotiations with certain lending banks located in Florida which are
expected to result in financing arrangements whereby an estimated aggregate
$8.7 million will be made available to the Registrant and Whitehall from
approximately six lending entities for use in the present projects of the
Registrant and Whitehall. Such financing arrangements will involve land loans
and construction loans and will be of a short and interim term nature.
Year 2000 Matters
The Registrant and Whitehall do not expect adverse consequences as a
result of year 2000 concerns with respect to their own internal operations.
Disruption in the conduct of the business of the Registrant and Whitehall may
occur, however, as a result of system failure occurring in computer and
technology systems of entities with which the Registrant and Whitehall do
business, such as suppliers and other vendors. General year 2000 matters may
also affect operations from the standpoint of telephone service communications,
electrical power, exchange data services, accounting and other functions.
15
<PAGE> 17
ITEM 3. DESCRIPTION OF PROPERTY
The principal properties of the Registrant, as consolidated with
Whitehall, are constituted by cash, investments, capitalized construction costs
including homes under construction and furnished models, property and
equipment, and miscellaneous other assets. As reflected in the unaudited
consolidated balance sheet of the Registrant at December 31, , 1999, such
principal property items are as follows:
<TABLE>
<CAPTION>
Present Value
for Financial
Reporting
Category of Asset Purposes
----------------- --------------
<S> <C>
Cash $ 418,177
Land and Development Costs 2,377,905
Homes Under Construction and Furnished
Models 4,363,579
Office Land and Administrative Building(1) 866,241
Office Furniture and Fixtures(1) 57,253
Construction Equipment and Vehicles(1) 164,898
</TABLE>
- ----------
(1) Before deduction of aggregate depreciation charges of $37,214.
With respect to such principal properties identified above, there exist at
September 30, 1999 various financing arrangements, the liens with respect to
which act as encumbrances to the asset categories reflected above. See the
Notes to the Financial Statements included in Part F/S of this Registration
Statement.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 1, 2000, there were outstanding 8,946,843 shares of the
Registrant's Common Stock. The table presented below reflects the record and
beneficial ownership of the directors and officers of the Registrant
individually and as a group and any other person known by the Registrant to be
the beneficial owner of more than 5% of the Registrant's outstanding Common
Stock as of March 1, 2000:
16
<PAGE> 18
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Owner of Class
- -------------- ------------------- ---------- --------
<S> <C> <C> <C>
Common Stock, $.10 par Ronald and Joanne Mustari, 4,608,268 51.51%
value Husband and Wife Shares Owned
888 Blvd. of the Arts of Record and
Sarasota, FL 34236 Beneficially
J. Robert Ground 216,334 2.42
Shares Owned
of Record and
Beneficially
Officers and Directors 4,824,602 53.93%
as a Group (two persons) Shares Owned
of Record and
Beneficially
</TABLE>
Persons identified in the foregoing table do not have any right to
acquire beneficial ownership of additional shares of the Registrant's Common
Stock. As of the date of the preparation of this Registration Statement and to
the knowledge of the Registrant, no person or group of persons is known to be
vested with beneficial ownership of 5% or more of the Registrant's outstanding
Common Stock as of March 1, 2000, with the exception of the group consisting of
Andrews & Associates, Inc. ("Andrews") and the record and beneficial owners of
all of the outstanding voting securities of Andrews, who are brothers. As of
March 1, 2000, Andrews and such brothers own of record and beneficially the
number of shares of Common Stock of the Registrant as reflected below:
<TABLE>
<CAPTION>
Number
of Shares Percent
Record and Beneficial Holder Held of Class
- ---------------------------- --------- --------
<S> <C> <C>
Andrews & Associates, Inc. 426,510 4.77%
Patrick J. Andrews 250,000 2.80
Gregory M. Andrews 250,000 2.80
Jerome S. Andrews 250,000 2.80
---------- ------
Totals 1,176,510 13.17%
</TABLE>
The Registrant and Whitehall utilize the consulting services of
Andrews & Associates, Inc., which provides consulting and related services to
entities engaged in residential real
17
<PAGE> 19
estate development. Andrews is a Florida corporation, the outstanding voting
common stock of which is equally owned by Patrick J. Andrews, Gregory M.
Andrews and Jerome S. Andrews, who are brothers. The President and Chief
Executive Officer of Andrews is J. S. Andrews, who does not own of record or
beneficially any of the outstanding voting securities of Andrews but who is the
father of Patrick J., Gregory M. and Jerome S. Andrews. During the period May
21 - June 24, 1999, Gregory M. Andrews served as a director of the Registrant.
The agreement pursuant to which such consulting services are rendered
by Andrews to the Registrant and Whitehall is included with this Registration
Statement as an Exhibit. See Part III hereof.
Pursuant to an agreement styled Agreement Providing for Purchase of
Capital Stock (the "Agreement") dated as of February 18, 1999, Andrews acquired
the right to acquire record ownership of 763,333 shares of the Common Stock of
the Registrant as adjusted for subsequent reverse stock splits (the "Shares").
The persons or entities from whom such shares are being acquired, assuming
Andrews fulfills its obligations under the Agreement, are Howard P. Carroll,
First Development Investment Corporation, McFarland Consulting Services, Inc.,
Craig Graham and Allen Land and Cattle, Inc. (the "Holders"), which persons and
entities are and were at the time of the transaction believed by Andrews to not
be in a control relationship with the Registrant and that the shares of Common
Stock of the Registrant subject to the Agreement were in the hands of such
Holders non-restricted.
Under the Agreement, Andrews was and is obligated to pay an aggregate
consideration for such shares of $100,000, which consideration was paid in cash
and promissory notes. As of the date of this Registration Statement, Andrews
has remitted the amount of $43,750 with respect to the aggregate consideration
due the Holders and there remains a promissory note obligation of $50,000. Such
Shares received or entitled to be received are reflected in the record and
beneficial ownership of shares of the Common Stock of the Registrant
attributable to Andrews as reflected above. Shares which are subject to the
Agreement but for which the consideration is yet to be remitted are held
pursuant to the provisions of an escrow agreement administered by Holders'
legal counsel. The voting power with respect to all of such Shares which are
the subject of the Agreement, including the escrowed Shares, however, is vested
in Andrews and Messrs. Patrick J., Gregory M. and Jerome S. Andrews, unless
Andrews defaults under the Agreement and the related promissory notes, in which
case Shares then held in escrow will revert to the Holders.
If Andrews fully performs its obligations under the Agreement, Andrews
and Messrs. Patrick J. Gregory M. and Jerome S. Andrews will then own of record
and beneficially that number of shares of the Registrant's outstanding Common
Stock as reflected below:
18
<PAGE> 20
<TABLE>
<CAPTION>
Number
of Shares Percent
Record and Beneficial Holder Held of Class
- ---------------------------- ---------- --------
<S> <C> <C>
Andrews & Associates, Inc. 426,510 4.77%
Patrick J. Andrews 340,834 3.81
Gregory M. Andrews 340,834 3.81
Jerome S. Andrews 340,834 3.81
---------- -------
Totals 1,449,012 16.20%
</TABLE>
By virtue of the provisions of the Agreement, Andrews temporarily
exercised voting control over the Registrant by virtue of the delivery by the
Holders to Andrews at the time of the closing of the Agreement transactions
proxies representing voting control of the Registrant. Any such voting control,
however, was extinguished at the time of the consummation of the exchange
transaction between the Registrant and Ronald and Joanne Mustari and voting
control of the Registrant is vested in Mr. and Mrs. Mustari and such has been
the case since June 24, 1999. Additionally, such proxies delivered upon
Agreement consummation are believed to have expired pursuant to the provisions
of Colorado law and Florida law.
The Registrant has been advised that Andrews and such persons do not
intend to vote in concert. Gregory M. Andrews served as a director of the
Registrant during the period May 21 - June 24, 1999. See Part II, Item 4,
Recent Sales of Unregistered Securities.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The business activities of the Registrant and Whitehall are governed
and supervised by the Board of Directors of the Registrant which, in turn, also
acts as the Board of Directors of Whitehall. The day-to-day operations of the
Registrant are carried out by the executive officers of the Registrant and
other managerial personnel. As indicated earlier herein, Whitehall is engaged
in the development of residential real estate projects and construction of
residential dwelling units and the marketing thereof since approximately 1985
through subsidiary and affiliated entities.
The directors and officers of the Registrant are as follows:
<TABLE>
<CAPTION>
Name and Age of Director and/or Officer Positions Held with the Registrant
- --------------------------------------- ----------------------------------
<S> <C>
Harry Van Der Noord, age 58 Chairman of the Board of Directors, Director
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
Name and Age of Director and/or Officer Positions Held with the Registrant
- --------------------------------------- ----------------------------------
<S> <C>
Ronald Mustari, age 58 Director, President and Chief Executive Officer
J. Robert Ground, age 66 Director and Secretary
Joanne Mustari, age 53 Treasurer and Chief Financial Officer
Gerald Howard Gould, age 75 Director
Robert E. Messick, Esq., age 48 Director
</TABLE>
Ronald and Joanne Mustari are husband and wife and should be considered as
control persons. All director terms expire in June 2000.
Information Concerning Directors and Officers
HARRY VAN DER NOORD resides in Bradenton, Florida and has engaged in
various aspects of real estate development and investment since 1968. In such
activities, Mr. Van Der Noord has constructed and operated approximately 350
rental units. Mr. Van Der Noord has also engaged in the development of mobile
home communities and has owned or owns mobile home communities in Lansing,
Peoria and Decatur, Illinois and in Hebron, Chesterton and Lafayette, Indiana,
as well as Jacksonville, Cocoa Beach and Tallahassee, Florida. Subsequent to
moving to Bradenton, Florida in 1985, Mr. Van Der Noord expanded his business
activities to include marinas located at Palmetto, Florida and in the Charlotte
Harbor, Florida area. Such marinas include Regatta Pointe and Stump Pass
Marina. Since July 1997 Mr. Van Der Noord has served as Chairman of The America
Companies which is a subsidiary of America Holdings Corporation. Such entities
engage in the management of real estate sales and rentals, real estate
development and construction management and manufactured goods design,
engineering, manufacturing, sales and marketing.
RONALD MUSTARI began his career in the construction industry in 1962
as a construction administrator for Liberty Builders, a large home remodeling
contractor located in the Chicago, Illinois area. At the time of his departure
from such company in 1968, Mr. Mustari held the position of General Manager of
Liberty Builders. In 1968 Mr. Mustari formed his own company, Trend Homes, a
home builder constructing medium priced residential dwelling units in Elmhurst,
Villa Park and Lombard, Illinois. Mr. Mustari sold Trend Homes in 1972 and
relocated to South Carolina where he formed Colonial Builders which engaged in
the construction of new residential dwelling units suitable for low income
families who receive financial aid in the purchase of residences from the
United States
20
<PAGE> 22
government. Colonial Homes constructed over 1,000 residential dwelling units
under these government programs. In 1976 Mr. Mustari returned to Chicago,
Illinois where he formed Trend Properties, which specialized in the conversion
of apartment buildings to condominium form, as well as the renovation of older
residential properties. Since moving to Florida in 1985, Mr. Mustari has been
active as the Chief Executive Officer or Managing Partner of the various
Whitehall entities.
J. ROBERT GROUND resides in Phoenix, Arizona. Mr. Ground is a founding
partner of Dillin, Ground and Associates, an advertising and public relations
firm which handled and handles a number of national accounts. Mr. Ground was
associated with Dillin, Ground and Associates during the period 1958-1960.
Dillin, Ground and Associates is located in Lake Wales, Florida. During the
period 1960-1969, Mr. Ground served as Director of Advertising for Lehigh Acres
Development Corporation, Lehigh, Florida. Mr. Ground is a founder of
Consolidated Agri-chemicals, Inc. which became a significant producer of
certain home and garden plant foods and hydroponic nutrients. Mr. Ground was
associated with Consolidated Agri-chemicals, Inc. during the period 1970-1980.
Mr. Ground was also a founder of National Battery Corporation, an automobile
battery manufacturing company which developed and patented a system for
inexpensively producing high quality lead acid batteries. Mr. Ground was
associated with National Battery Corporation during the period 1980-1996. Since
1996, Mr. Ground has served as an Associate Editor for Cambridge Books, a
publishing concern. Mr. Ground holds a Ph.D. in Literature awarded by
Brantridge University, Sussex, England.
JOANNE MUSTARI is the wife of Ronald Mustari and is active in the
business of the Registrant and Whitehall. Prior to joining Whitehall, Mrs.
Mustari was an internal auditor with IBM Corporation for 18 years.
GERALD HOWARD GOULD resides in South Miami, Florida and has engaged in
real estate development and related activities for approximately 40 years.
Since 1977 to the present time, Mr. Gould has served as President of Gerald H.
Gould and Associates, a real estate consulting firm and real estate broker.
During the period 1971 to 1976, Mr. Gould served as President of W-G
Development Corporation, a real estate development firm based in Tampa,
Florida. During the period 1954 to 1972, Mr. Gould was associated with Lehigh
Development Corporation, a firm engaged in development activities on the West
Coast of Florida (St. Petersburg and Sarasota, Florida). During the period 1954
to 1971, Mr. Gould served as President of Lehigh Development Corporation and
during the period 1971 to 1972, as Chairman of the Board of Directors of such
enterprise.
ROBERT E. MESSICK, ESQ. is a practicing attorney in Sarasota, Florida
and is presently a senior partner and shareholder of Icard Merrill Cullis Timm
Furen & Ginsburg, P.A. Mr. Messick has been associated with such firm since
October 1980. Mr. Messick's practice emphasis is real estate law, banking and
commercial transactional law, as well as a specialized litigation practice in
creditor bankruptcy rights as they relate to real estate
21
<PAGE> 23
interests. Mr. Messick holds a Bachelor of Arts degree (with honors) awarded in
1975 and a Juris Doctor degree (with honors) from the College of Law,
University of Florida.
Key Employees of the Registrant and Whitehall
JOSEPH PUFTA, age 45, has been employed by the Registrant and
Whitehall for the last approximate six years and serves presently as General
Superintendent for all new home construction. Presently Mr. Pufta supervises
eight persons relating to the home construction and development activities of
the Registrant and Whitehall. Prior to becoming associated with the Registrant
and Whitehall, Mr. Pufta spent approximately eight years as the Project Manager
for one of the largest commercial construction companies in the United States
providing employment services to such entity in Georgia, South Carolina and
Florida. Mr. Pufta also has approximately five years experience as a custom
home builder and as a framing contractor.
DANIEL LUCAS, age 40, has been employed by the Registrant and
Whitehall for the past approximate six years as a new home sales
representative, project sales manager and is currently serving in the capacity
as Director of New Home Sales. In such present capacity, Mr. Lucas is
responsible for sales, marketing, planning and marketing and sales budgeting
for all of the developments of the Registrant and Whitehall and in such
capacity hires, trains and supervises the sales staff utilized by the
Registrant and Whitehall in their various developments. Mr. Lucas also provides
recommendations to the Registrant and Whitehall with respect to residential
unit redesign (with a view to enhancing buyer acceptance) and is responsible
for new home quality control as well as the sponsorship of homeowner
association matters.
Key Consulting Arrangements
The Registrant and Whitehall have utilized the consulting services of
Andrews & Associates, Inc., a Sarasota, Florida based consulting entity
("Andrews"). Such services have been utilized by the Registrant and Whitehall
for approximately two years. Such consulting services provided by Andrews
relate to the development of a comprehensive business plan which is intended to
govern the expansion and growth of the Registrant and Whitehall which is
intended to culminate a market position where the Registrant and Whitehall will
develop and endeavor to market approximately 400 new residential units during
each calendar year. Andrews, in the providing of its consulting services, has
been vested with the responsibility of managing sales and marketing, land
acquisitions, land development and the procurement of appropriate financing
arrangements whereby additional capital is provided to the Registrant and
Whitehall. The personnel of Andrews work directly with Ronald Mustari, the
President and Chief Executive Officer of the Registrant and Whitehall.
The agreement relating to such consulting services is included with
this Registration Statement as an Exhibit.
22
<PAGE> 24
See Part I, Item 4, Security Ownership of Certain Beneficial Owners
and Management and Part II, item 4, Recent Sales of Unregistered Securities.
ITEM 6. EXECUTIVE COMPENSATION.
For the 12 month period ended December 31, 1998, no executive officer
or other person received compensation from the Registrant in any amount.
The table presented below provides information relating to the amount
of compensation (of all types and from all sources) to be paid to the President
and Chief Executive Officer of the Registrant by the Registrant or by
Whitehall. Other than Ronald Mustari, no director, officer or other person
employed by the Company and/or Whitehall will receive during the 12 month
period ending December 31, 2000 compensation of any type from any source in
excess of $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------ -----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Name Annual Restricted Under- All Other
and Compen- Stock lying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- -------- ---- --------- -------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald Mustari, President twelve $144,000 (1) (2)
and Chief Executive Officer months
ending
December
31, 2000
</TABLE>
- --------------
(1) Mr. Mustari may be paid bonuses depending upon the performance and
results of operations of the Registrant and Whitehall during the 12
month period ended December 31, 1999 if so determined by the Board of
Directors of the Registrant (with Mr. Mustari abstaining from any vote
with respect to bonus compensation or other additional compensation.
(2) Mr. Mustari receives health insurance benefits paid for by the
Registrant and Whitehall having a value of approximately $5,000 a
year, as well as an automobile allowance of $600 per month and
reimbursement for all other expenses incurred by him in the carrying
out of the business operations of the Registrant and Whitehall. At the
present time, those are the only benefits available to Mr. Mustari by
the Registrant and Whitehall.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NOT APPLICABLE
23
<PAGE> 25
ITEM 8. DESCRIPTION OF SECURITIES.
The Articles of Incorporation of the Registrant, as filed with the
Department of State, State of Florida, and under which the Registrant became a
Florida domesticated corporation subject to the Florida Business Corporation
Act, authorize an aggregate six hundred million (600,000,000) shares of capital
stock divided into two classes. Five hundred million (500,000,000) shares of
such 600,000,000 shares are allocated to Common Stock having a par value of
$.10 per share (the "Shares") and the remaining one hundred million
(100,000,000) shares have been designated as Preferred Stock issuable in series
and also having a par value of $.10 per share.
Common Stock
As of March 1, 2000, there are outstanding 8,946,843 Shares of Common
Stock. There are no Shares reserved for issuance pursuant to options, warrants,
rights or as a result of the conversion of convertible securities. As of March
1, 2000, there were no outstanding options, warrants, rights or convertible
securities of the Registrant calling for the issuance of any Shares.
Each holder of Shares is entitled to one vote for each Share owned of
record. The holders of Common Stock do not and will not possess cumulative
voting rights which means that the holders of more than 50% of the outstanding
shares of Common Stock voting for the election of directors can elect all of
the directors and in such event, the holders of the remaining shares of Common
Stock will be unable to elect any of the Registrant's directors. Action may be
taken without a meeting of shareholders if a written consent setting forth the
action taken is signed by the holders of not less than the minimum number of
shares of Common Stock necessary to authorize such action at a meeting where
all shares of Common Stock entitled to vote were present and, in fact, voted.
Under Florida law, notice must be given to holders of shares of Common Stock
who did not so consent to the action taken by the holders of a majority of
shares of Common Stock within ten days after obtaining such authorization to
the action in question by written consent. Such circumstances will continue to
be the case until such time that the Registrant becomes subject to the proxy
solicitation rules of the United States Securities and Exchange Commission (the
"Commission"). When the Registrant is subject to such rules and written action
is intended to be taken by a majority of the Common shareholders without a
meeting of the shareholders, a notice and information statement must be given
to all holders of shares of Common Stock within a specified number of days
before the written action is intended to be taken. Upon the effectiveness of
this Registration Statement, the Registrant will be subject to the proxy
solicitation rules of the Commission.
Subject to any of the rights of the holders of outstanding Preferred
Stock of the Registrant, holders of outstanding Shares are entitled to receive
dividends out of Registrant assets legally available therefor at such times and
in such amounts as the Board of Directors may from time to time determine. It
is the Registrant's present policy to reinvest
24
<PAGE> 26
substantially all of any earnings in its business. Accordingly, cash dividends
are not anticipated to be paid on outstanding Shares, at least in the near
future time and may not be paid with respect to any fiscal year.
Upon the liquidation, dissolution or winding up of the Registrant, the
assets legally available for distribution to the shareholders will be
distributable ratably among the holders of Shares outstanding at that time,
subject to any preferential rights of the holders of the Registrant's then
outstanding Preferred Stock, if any. Holders of Shares have no pre-emptive,
conversion or subscription rights and Shares are not subject to redemption. All
outstanding shares of Common Stock are and will be fully paid and
non-assessable. .
Preferred Stock Issuable in Series
The Articles of Incorporation of the Registrant permit the Board of
Directors to authorize and issue various series of Preferred Stock on behalf of
the Registrant without shareholder approval or vote. Shareholder vote is
required in certain instances, however, where more than one series is proposed
to be outstanding and a series of Preferred Stock proposed by the Board of
Directors to be issued contains provisions and rights superior to those
provisions and rights attributable to the then presently outstanding series of
Preferred Stock.
Each series of Preferred Stock must incorporate the same rights and
provisions relating to dividends, voting rights, rights upon liquidation of the
Registrant, conversion into other securities of the Registrant and other
matters. The Board of Directors of the Registrant has only authorized the
issuance and sale of a series of Preferred Stock designated as the Registrant's
8.75% Convertible Preferred Stock, $.10 par value, 2,000,000 Shares of which
are intended to be privately offered and sold by the Registrant during the
period June - December, 2000. No shares of the 8.75% Convertible Preferred
Stock of the Registrant have been sold, however. The 8.75% Convertible
Preferred Stock, $.10 par value, of the Registrant is subsequently referred to
in this Registration Statement as the Preferred Stock".
The Preferred Stock is not entitled to voting rights except as
required by the Florida Business Corporation Act and does not have preferential
rights in the event of the liquidation of the Registrant. The Preferred Stock,
when and if issued, will constitute the only class of Preferred Stock of the
Registrant outstanding although the Board of Directors may authorize additional
series of Preferred Stock in connection with the conduct of the business of the
Registrant and to facilitate any future property acquisition activity. Each
outstanding share of Preferred Stock will be entitled to receive a dividend
with respect to each fiscal year of the Registrant, which is March 31 of each
year. Such dividend entitlement provides that the holder of each share of
Preferred Stock shall receive a cash dividend in the amount of $.44 per share
of Preferred Stock or, at the option of the Registrant, such dividend
entitlement may be paid in shares of Common Stock of the Registrant and in such
event, each share of Common Stock of the Registrant utilized for
25
<PAGE> 27
such dividend entitlement shall be attributed a value of $1.67 per Share.
Fractional shares of Common Stock will be issued with respect to such dividend.
For a period of 60 months from date of issuance (if issuance occurs),
each share of Preferred Stock in the hands of the holders thereof may be
converted into shares of Common Stock of the Registrant at the conversion ratio
of three shares of Common Stock of the Registrant for each share of Preferred
Stock converted. Such conversion will include fractional shares of Common Stock
rounded up to the next whole share of Common Stock. Commencing the 61st month
from date of issue through the 84th month from date of issue, each share of
Preferred Stock may be converted into two shares of Common Stock. On the first
day of the 85th month from date of issue and for any period thereafter, shares
of Preferred Stock outstanding and unconverted may be mandatorily converted at
the option of the Registrant into a like number of shares of Common Stock.
Accordingly, if all 2,000,000 shares of Preferred Stock intended to be
privately offered are, in fact, sold, such shares of Preferred Stock may be
converted into 6,000,000 shares of Common Stock if share conversion occurs
within the initial 60 month period. Anti-dilution provisions will be
incorporated in the terms of issuance of the Shares which will provide for
adjustment in the number of shares of Common Stock issued upon conversion in
the event of stock reclassifications, dividends or other events which relate to
an issuance of Common Stock for a consideration other than cash or property.
The number of shares of Common Stock of the Registrant issued upon conversion
will take into account and will include any fractional shares of Common Stock
which have been utilized by the Registrant to meet the annual dividend
entitlement attributable to the shares of Preferred Stock. This means that the
number of shares of Common Stock issued upon conversion of shares of Preferred
Stock by any holder may be reduced by the number of fractional shares of Common
Stock received by such holder as a result of the payment of the dividend
entitlement utilizing Common Stock.
Upon issuance of any of the shares of Preferred Stock as a result of
the private and limited sale thereof of which there can be no assurance), each
holder will also receive for each share of Preferred Stock purchased a Common
Stock Purchase Warrant providing for the purchase of one share of Common Stock
of the Registrant at an exercise price of $2 (the "Class A Warrant") and a
second Common Stock Purchase Warrant providing, upon exercise thereof, for the
acquisition of one share of Common Stock of the Registrant at an exercise price
of $2.50 per share (the "Class B Warrant"). The exercise period for the Class A
Warrants will be the 24 month period following Warrant issuance. Such exercise
period may be extended by the Registrant. The exercise period for the Class B
Warrants will be the 36 months from Warrant issuance. For a period of 90 days
from the date of Class A and B Warrant issuance, the Class A and B Warrants may
be called by the Registrant, in whole or in part, by providing notice of such
call and by paying a call fee of $.10 per Class A or Class B Warrant called.
Upon receipt of such notice of call, the affected Class A or B Warrant holder
will have a period of 30 days in which to exercise, in whole or in part, the
called Warrants.
26
<PAGE> 28
The foregoing description of such Preferred Stock reflects the
intended terms of issuance thereof, as such has been established by the Board
of Directors. Such is subject to change prior to the commencement of the
intended private offering of such Preferred Stock. No assurance can be given
that the Registrant will be successful to any degree in its attempt to
privately offer and sell such Preferred Stock or any other securities of the
Registrant. This Registration Statement does not constitute an offering or
informational document relating to such intended private offer and sale of such
Preferred Stock. Other than determining the terms and characteristics of such
Preferred Stock, the Registrant has not made any arrangements or developed a
plan of distribution relating to the private offer and sale thereof.
If the intended private offering of the Registrant's Preferred Stock
is completed in its entirety (as presently structured), such will not affect
the voting control of the Registrant. Voting control of the Registrant will
continue to be vested in Ronald and Joanne Mustari.
The Articles of Incorporation of the Registrant, as amended to date,
and the present bylaws of the Registrant do not contain provisions which would
delay, defer or prevent a change in control of the Registrant. While the
Florida Business Corporation Act provides change of control provisions and
super voting requirements, such provisions of the statute must be affirmatively
adopted by a corporate entity, such as the Registrant, in its Articles of
Incorporation.
27
<PAGE> 29
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The management of the Registrant believes that the market for the
Registrant's outstanding, unrestricted Common Stock has been centered in Denver,
Colorado and has been extremely sporadic with few buy-sell transactions
occurring over the past approximate five years. Management believes that there
is not an active trading market for its Common Stock and there is not available
to the Registrant information with respect to the high and low sales prices for
any calendar quarter during the five year period ended December 31, 1998 and
through September 30, 1999. The Registrant estimates that its outstanding Common
Stock is beneficially held by approximately 388 record holders.
Any market transactions involving the Common Stock of the Registrant
are expected to occur in the over-the-counter market (the NASDAQ Bulletin
Board). While the Registrant intends to seek a listing of its Common Stock
pursuant to the listing requirements of NASDAQ Small Cap, no assurance can be
given that such will occur during the future time. Accordingly, the Registrant's
Common Stock may be classified as a designated security pursuant to the Rules of
the United States Securities and Exchange Commission. A designated security is
sometimes referred to as a "penny stock". If such occurs, broker-dealers
effecting transactions in the Registrant's Common Stock will be subject to the
requirements of Commission Rules 15g-1 through 15g-9 which have been adopted
under the Securities Exchange Act of 1934, as amended (the "'34 Act"). Such
Rules require that any broker-dealer effecting transactions in a penny stock
accomplish and satisfy special sales practices which include a requirement that
such broker-dealers make a written suitability determination with respect to
each anticipated purchaser of a penny stock and that such broker-dealer receive
the written consent of such purchaser prior to the occurrence of the purchase
transaction. Additionally, provisions of the '34 act applicable to transactions
involving "penny stocks" also require that a broker-dealer participating in any
such transactions deliver a risk disclosure document, which document contains
risks attributable to all transactions in the ownership of penny stocks. Such
risk disclosure document must be delivered by the participating broker-dealer
prior to any transaction involving a penny stock. Participating broker-dealers
must also provide the penny stock customer with current bid and offer quotations
for the penny stock which is the subject of the anticipated transaction, the
compensation to be realized by the broker-dealer and its associated persons as a
result of the consummation of such transactions and the monthly statements
provided to the penny stock purchaser must reflect the current market value of
each penny stock held in the penny stock customer's account maintained with such
broker-dealer.
The additional burdens imposed upon broker-dealers by such requirements
relating to penny stocks could, most likely discourage broker-dealers from
effecting transactions in the Registrant's Common Stock and such may severely
limit and restrict any market liquidity
28
<PAGE> 30
attributable to the Registrant's Common Stock and the ability of purchasers
thereof to sell same in any market.
Generally, a penny stock is any stock which has a price of under $5 per
share and is issued by an issuer which does not meet certain net tangible asset
requirements pursuant to Rules adopted by the Commission which provide that the
issuer (a) be in continuous operation for at least three years and have net
tangible assets in excess of $2 million, (b) have been in continuous operation
for less than three years but have net tangible assets in excess of $5 million,
or (c) have average revenue of at least $6 million for the last three years. Net
tangible assets or revenues must be demonstrated by such issuer by virtue of
financial statements dated no less than 15 months prior to the date of a related
transaction. As of December 31, 1999, the Registrant did not meet such net
tangible asset or revenue requirements.
Item 2. Legal Proceedings.
The Registrant and Whitehall are not involved in any material legal
proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
NOT APPLICABLE.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
As disclosed in Item 1 of this Registration Statement, the Registrant
exchanged 4,608,268 shares of its Common Stock for all of the outstanding Common
Stock of Whitehall. Such 4,608,268 shares of Common Stock was issued to Mr. and
Mrs. Ronald Mustari and such Shares have not been registered under the
Securities Act of 1933, as amended. Additionally the shares in the hands of Mr.
and Mrs. Mustari may be considered control shares since Mr. and Mrs. Mustari may
be viewed as control persons from the standpoint of the Federal securities laws.
See Item 1, Description of Business, for additional information with respect to
persons deemed in control of the Registrant.
With respect to the foregoing-described transaction, an exemption from
the registration requirement of the Securities Act of 1933, as amended is
believed available to the Registrant pursuant to the provisions of Section 4(2)
thereof and Regulation D promulgated thereunder, in that such transaction
constituted an issuer transaction and did not involve a public offering. The
value per Share attributable to this issuance transaction is the par value of
such Shares ($.10).
By virtue of Board of Director action taken May 21, 1999 by the Board
of Directors of the Registrant, 1,000,000 shares of the Registrant's Common
Stock issued to Andrews & Associates, Inc., which is beneficially held in equal
amounts of 250,000 shares by Andrews and the shareholders thereof, Patrick J.,
Gregory M. and Jerome S. Andrews, who each hold
29
<PAGE> 31
250,000 Shares. Messrs. Patrick J. Gregory M. and Jerome S. Andrews are
brothers. Such 1,000,000 Shares were issued in partial payment of consulting
fees due under the Consulting Agreement existing between the Registrant and
Andrews and in lieu of cash payments.
Andrews and Messrs. Patrick J., Gregory M. and Jerome S. Andrews, are
the record and beneficial owners of additional shares of the Common Stock of the
Registrant and have voting power respect to such additional shares, as is
described in Part I, Item 4, Security Ownership of Certain Beneficial Owners and
Management.
The Board of Directors also authorized the issuance of 100,000 Shares
to Charles Broun, an employee and consultant to Whitehall and the Registrant;
150,000 Shares to Seymour Cassell, a consultant to Whitehall and the Registrant;
and 100,000 Shares to L. Robert Ground, who then served and presently serves as
a member of the Board of Directors of the Registrant and as a consultant to the
Registrant. Such Shares were in payment of such services and in lieu of cash.
Pursuant to Board of Director action taken June 25, 1999, an aggregate
537,109 shares of the Registrant's Common Stock were issued to the following
persons:
<TABLE>
<S> <C>
Gina Golich 200,000 shares
Donna Hill 100,000 shares
J. R. Mustari 100,000 shares
Joanne Marsell 137,109 shares
</TABLE>
All of such identified issuees are the adult children or grandchildren of Ronald
and Joanne Mustari.
The per Share value attributed to such issuance transactions is the
part value thereof ($.10 per Share).
With respect to such issuance transactions, an exemption from
registration is believed to be available pursuant to the provisions of Section
4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder in that such transaction constituted an issuer transaction and did
not involve a public offering. See, however, the information presented
subsequently in this Item 4.
On July 1, 1999, the Board of Directors of the Registrant approved for
issuance shares of the Registrant's Common Stock to three categories of issuees:
13 employees of the Registrant and Whitehall; 63 issuees who have acted as
service or material providers to the Registrant and/or Whitehall
(subcontractors); and 154 issuees who have purchased residential dwelling units
from the Registrant, Whitehall and the predecessor and affiliated entities of
Whitehall now combined with Whitehall and the Registrant. With respect to such
categories of issuees, an aggregate 57,500 shares of the Registrant's Common
Stock were issued to employees of the Registrant and Whitehall, 13,000 shares of
the Registrant's
30
<PAGE> 32
Common Stock were issued to subcontractors of the Registrant and Whitehall; and
50,400 shares of the Registrant's Common Stock were issued to those issuees
classified as homeowners. In connection with such issuance, no consideration was
paid to the Registrant by any of the issuees in connection with the issuance and
receipt by such issuees of such shares. The per Share value attributed to such
issuance transaction is the par value thereof ($.10 per Share). At a time
contemporaneous to such issuance to the three classes of issuees identified
above, the Registrant was advised that such issued Shares as held by the
employees and subcontractors of the Registrant would constitute Restricted
Securities subject to applicable holding periods as imposed by Commission Rule
144 and that the Shares issued to the issuee category of home owners would be
unrestricted in the light of the position taken by the staff of the Commission
in Shaklee Corp., August 6, 1977.
Subsequent to such advisement, however, the Registrant has been
informed of a more current position of the staff of the Commission, as expressed
in a no action letter dated January 21, 2000. (Ken Worm (January 21, 2000) In
Ken Worm, the staff of the Commission expressed its opinion that issuance
transactions such as those immediately described in the preceding paragraph
result in the issuees being deemed "underwriters" as that term is described
under the Federal securities laws and that, accordingly, such Shares received by
employees and subcontractors of the Registrant and home purchasers of the
Registrant may only be resold pursuant to an effective Registration Statement
filed under the Securities Act of 1933 as amended and disposition of such Shares
may not occur in reliance upon the provisions of Rule 144. Such is also the case
with respect to certain persons deemed to be control persons of the Registrant.
See Part I, Item 1 Description of Business. The issuance transactions described
in the preceding paragraphs of this Item 4 and relating to the adult children
and grandchildren of Ronald and Joanne Mustari are also considered to be subject
to the opinions expressed by the Commission in Ken Worm.
As a result of Ken Worm, the Registrant is in the process of advising
its Transfer Agent, American Securities Transfer & Trust, Inc., 12039 West
Alameda Parkway, Lakewood, Colorado 80228, that the affected Shares constitute
Shares which may only be transferred by virtue of operation of law (inheritance,
etc.) and may only be resold into any market which exists for the Registrant's
Common Stock during the future time pursuant to an effective Registration
Statement. Additionally, each issuee in such three categories will be advised of
the effect of Ken Worm and the Registrant's adherence to the Commission's
opinions expressed therein.
The issuance transactions described above involving Andrews &
Associates, Inc., Messrs. Patrick J. Andrews, Gregory M. Andrews, Jerome S.
Andrews, Charles Broun, Seymour Cassell and Robert Ground are believed by the
Registrant to involve securities subject to the provisions of Commission Rule
144.
31
<PAGE> 33
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Chapter 607.0850, Florida Statutes, as amended (the Florida Business
Corporation Act or the "Act") permits a corporation formed and existing under
such Act to have the power to indemnify any party who was or is a party to any
proceeding by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against liability incurred
in connection with such proceeding, including any appeal thereof. Such power to
indemnify is conditioned upon such indemnitee having acted in a good faith
manner and in a manner that such indemnitee reasonably believed to be in or not
opposed to the best interests of the corporation and with respect to any
criminal action or proceeding, the indemnitee had no reasonable cause to believe
that the indemnitee's conduct was unlawful.
The Act imposes certain conditions and requirements with respect to the
providing of such indemnification.
Article VIII of the Bylaws of the Registrant presently in force
provides as follows:
ARTICLE VIII. INDEMNIFICATION
The following shall be the indemnification policy of the Corporation:
(a) The Corporation shall have power to indemnify any
person who was or is a party to any proceeding (other than an
action by, or in the right of, the Corporation) by reason of
the fact that he is or was a director, officer, employee, or
agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or
other enterprise against liability incurred in connection with
such proceeding, including any appeal thereof, if he acted in
good faith and in a manner which he reasonably believed to be
in, or not opposed to, the best interests of the Corporation
and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best
interests of the Corporation or, with respect to any criminal
action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) The Corporation shall have power to indemnify any
person who was or is a party to any proceeding, by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a
32
<PAGE> 34
director, officer, employee, or agent of the Corporation or is
or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against
expenses and amounts paid in settlement not exceeding, in the
judgment of the Board of Directors, the estimated expense of
litigating the proceeding to conclusion actually and
reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof.
Such indemnification shall be authorized if such person acted
in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the Corporation,
except that no indemnification shall be made under this
subsection (b) in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable
unless, and only to the extent that, the court in which such
proceeding was brought or any other court of competent
jurisdiction shall determine upon application that, despite
the adjudication of liability but in view of all circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem
proper.
(c) To the extent that a director, officer, employee, or
agent of the Corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in
subsection (a) or subsection (b), or in defense of any claim,
issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsection (a) or
subsection (b), unless pursuant to a determination by a court,
shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in subsection (a) or subsection (b). Such
determination shall be made by:
(i) The Board of Directors by a majority vote of
a quorum consisting of directors who were not parties
to such proceeding or by the shareholders by a
majority vote of a quorum consisting of shareholders
who were not parties to such action, suit, or
proceeding;
(ii) If such a quorum is not obtainable or, even
if obtainable, by majority vote of a committee duly
designated by the Board of Directors (in which
directors who are parties may participate) consisting
solely of two or more directors at the time parties
to the proceeding;
(iii) By independent legal counsel:
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<PAGE> 35
(A) Selected by the Board of Directors
prescribed in paragraph (i) or the committee
described in paragraph (ii); or
(B) If a quorum of the directors cannot
be obtained for paragraph (i) and the
committee cannot be designated under
paragraph (ii), selected by majority vote of
the full Board of Directors (in which
Directors who are parties may participate);
or
(iv) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not
parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who
were not parties to such proceeding.
(e) Evaluation of the reasonableness of expenses and
authorization of indemnification shall be made in the same
manner as the determination that indemnification is
permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by
sub- paragraph (d)(iii)(A) shall evaluate the reasonableness
of expenses and may authorize indemnification. Expenses
incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the Corporation in advance
of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to
repay such amount if he is ultimately found not to be entitled
to indemnification by the Corporation pursuant to this
section. Expenses incurred by other employees and agents may
be paid in advance upon such terms or conditions that the
Board of Directors deems appropriate.
(f) The indemnification and advancement of such expenses
provided pursuant to the foregoing are not exclusive and the
Corporation shall have the power to make any other or further
indemnification or advancement of expenses on behalf of the
persons herein described, in the manner and consistent with
the provisions of the Florida General Corporation Act.
(g) Indemnification and advancement of expenses as
provided in this Article shall continue, unless otherwise
provided when authorized or ratified, as to a person who has
ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and
administrators of such a person.
(h) For purposes of this Article, the term "Corporation"
includes, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or
agent of a
34
<PAGE> 36
constituent corporation, or is or was serving at the request
of a constituent corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture,
trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation
as he would have been with respect to such constituent
corporation if its separate existence had continued. For
purposes of this Article, the term "other enterprises"
includes employee benefit plans; the term "expenses" includes
counsel fees, including those for appeal; the term "liability"
includes obligations to pay a judgment, settlement, penalty,
fine (including an excise tax assessed with respect to any
employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding; the term "proceeding"
includes any threatened, pending, or completed action, suit,
or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or
informal; the term "agent" includes a volunteer; and the term
"serving at the request of the corporation" includes any
service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including
duties relating to an employee benefit plan and its
participants or beneficiaries; and the term "not opposed to
the best interest of the corporation" describes the actions of
a person who acts in good faith and in a manner he reasonably
believes to be in the best interests of the participants and
beneficiaries of an employee benefit plan.
(i) The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation or is
or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
(j) If any expenses or other amounts are paid by way of
indemnification otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance
maintained by the Corporation, the Corporation shall, not
later than the time of delivery to shareholders, unless such
meeting is held within three (3) months from the date of such
payment, and, in any event, within fifteen (15) months from
the date of such payment, deliver either personally or by mail
to each shareholder of record at the time entitled to vote for
the election of directors a statement specifying the persons
paid, the amounts paid, and the nature and status at the time
of such payment of the litigation or threatened litigation.
35
<PAGE> 37
PART F/S
Included as Part F/S of this Registration Statement are the audited
financial statements of the Registrant at and for the years ended March 31, 1998
and 1999, which have been included in this Registration Statement in reliance
upon the report of Alex N. Chaplan & Associates, Inc., independent accountants,
given on the authority of that firm as experts in accounting and auditing. Also
included in this Registration Statement are the financial statements of
Whitehall at and for the nine month period ended December 31, 1999, the three
month periods ended March 31, 1998 and 1999, and the calendar years ended
December 31, 1997 and 1998. The financial statements of Whitehall at and for the
nine month period ended December 31, 1999 and the three month period ended March
31, 1999 are unaudited. The financial statements of Whitehall for the calendar
years ended December 31, 1997 and 1998 and the three month period ended March
31, 1999 have bee included in this Registration Statement in reliance on the
report of Alex N. Chaplan & Associates, Inc., independent accountants, given on
the authority of that firm as experts in accounting and auditing. With respect
to the unaudited financial statements and information for the nine month period
ended December 31, 1999 and the three month period ended March 31, 1998, the
independent accountants have not reviewed or audited such financial statements
and have not expressed an opinion or any other form of assurance with respect to
such financial information.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
36
<PAGE> 38
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
FINANCIAL STATEMENTS
March 31, 1999 and March 31, 1998
1
<PAGE> 39
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- -------------------------------------------------------------------------------
<S> <C>
Accountant's Report 3
Comparative Balance Sheet 4
Comparative Statement of Income 5
Statement of Stockholders' Equity (Deficit) 6
Comparative Statement of Cash Flows 7
Notes to Financial Statements 8-9
</TABLE>
2
<PAGE> 40
ALEX N. CHAPLAN & ASSOCIATES [LETTERHEAD]
Certified Public Accountant
Alex N. Chaplan, C.P.A. 23622 Calabasas Road, Suite 107A Member
Calabasas, California 91302 Society of
(818) 591-1901 Fax (818) 222-0727 California Accountants
To the Board of Directors and Stockholders
of Cambridge Universal Corporation
(An Inactive Company)
In our opinion, the accompanying comparative balance sheets and the related
comparative statements of income and cash flows present fairly, in all material
respects, the financial position of Cambridge Universal Corporation as of March
31, 1999 and 1998, and the results of its operations and its cash flows for
each of the two year periods, in conformity with generally accepted accounting
principles. 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 which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company has been inactive for a number of years and is not a
viable entity in its present state. (See Note 6) We believe that our audit
provides a reasonable basis for the opinion expressed above.
/s/ Alex N. Chaplan & Associates
Alex N. Chaplan & Associates
Calabasas, CA 91302
March 15, 2000
3
<PAGE> 41
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
COMPARATIVE BALANCE SHEETS
AS OF MARCH 31, 1999 AND MARCH 31, 1998
<TABLE>
<CAPTION>
ASSETS
March 31, March 31,
1999 1998
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 0 $ 0
Other Current Assets 0 0
---------- ----------
Total Current Assets 0 0
---------- ----------
OTHER ASSETS:
Certificates of Deposits & Investments 0 0
Investment in Subsidiary (Note 5) 0 10
---------- ----------
Total Other Assets 0 0
---------- ----------
TOTAL ASSETS $ 0 $ 10
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts Payable $ 0 $ 0
Accounts Payable - Officers & Directors 0 0
Notes Payable 0 0
---------- ----------
Total Current Liabilities 0 0
========== ==========
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $1.00 par value, 100,000,000
shares authorized; none issued 0 0
Common Stock, no par value, 500,000,000
Authorized, 7,100,000 issued and outstanding
25,600,000 issued and outstanding 190,448 190,458
Total Accumulated Deficit (190,448) (190,448)
---------- ----------
Total Liabilities and Stockholders' $ 0 $ 10
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statement.
4
<PAGE> 42
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
COMPARATIVE STATEMENT OF INCOME
FOR THE FISCAL YEARS ENDED
MARCH 31, 1999 AND MARCH 31, 1998
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
------------ ------------
<S> <C> <C>
REVENUE:
From Operations $ 0 $ 0
Other Revenues 0 0
------------ ------------
Total Revenue 0 0
------------ ------------
EXPENSES:
Operating Expense 0 0
------------ ------------
Total Expenses 0 0
------------ ------------
Net Income (Loss) 0 0
============ ============
OTHER INCOME (EXPENSE)
Miscellaneous 0 0
------------ ------------
Net Other Income (Loss) 0 0
------------ ------------
EXTRAORDINARY ITEMS:
See (Note 3) 0 0
------------ ------------
Net Income or Loss for the Periods $ 0 $ 0
============ ============
NET INCOME OR (LOSS) PER SHARE $ 0 $ 0
============ ============
Weighted Average Number of Common Shares
Issued and Outstanding 7,100,000 25,600,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statement.
5
<PAGE> 43
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED
MARCH 31, 1999 AND MARCH 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION COMMON STOCK DEFICIT NET
TO EQUITY
SHARES AMOUNT DATE (DEFICIT)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance-April 1, 1997 25,600,000 $ 190,458 $ (190,448) $ 0
Change for the fiscal year
ended March 31, 1998 0 0 0 0
Balance At: March 31, 1998 25,600,000 190,458 (190,448) 0
------------ ------------ ------------ ------------
Changes for the fiscal year
ended March 31, 1999:
Share retired (Note 5) 18,500,000 (10)
------------ ------------
Net Income or (Loss)
(Loss) (Note 3) 0 0
------------ ------------
BALANCE AT
MARCH 31, 1999 7,100,000 $ 190,468 $ (190,448) $ 0
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statement.
6
<PAGE> 44
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
COMPARATIVE STATEMENT OF CASH FLOWS
FOR THE FISCAL YEARS ENDED
MARCH 31, 1999 AND MARCH 31, 1998
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) (Note 3) $ 0 $ 0
------------ ------------
Net Cash (Used For) Provided From Operations 0 0
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in Restricted Certificates of Deposits 0 0
------------ ------------
Net Cash Provided From (Used For) Investing
Activities 0 0
------------ ------------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Proceeds from Issuing Company Stock 0 0
------------ ------------
Net Cash (Used For) Provided From
Financing Activities 0 0
------------ ------------
Net (Decrease) Increase In Cash 0 0
------------ ------------
Cash at the Beginning of the Period 0 0
------------ ------------
Cash at the End of the Period $ 0 $ 0
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statement.
7
<PAGE> 45
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
Page 1 of 2
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 and March 31, 1998
NOTE-1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A) The Company has been inactive for a number of years and has no
operations during this period.
NOTE-2 REGULATORY REQUIREMENTS:
A) The COMPANY is a corporation, organized and duly registered to
transact business under the laws of the State of Colorado.
B) The Company is a Publicly Held Corporation and as such is subject to
the rules and regulations of the United States Securities and Exchange
Acts of 1933 and 1934.
NOTE-3 OTHER:
During the Fiscal Periods here presented ALL expenses which would
normally be paid or accrued by the Company had been paid by various
Stockholders.
NOTE-4 INCOME TAXES:
A) The Company has accumulated net operating losses over its' life.
B) The Company's Management is not aware of any tax liability, accrued or
deferred that is not presented herein.
8
<PAGE> 46
CAMBRIDGE UNIVERSAL CORPORATION
(AN INACTIVE COMPANY)
Page 2 of 2
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 and March 31, 1998
NOTE-5 INVESTMENT IN SUBSIDIARY:
During the first quarter of the current fiscal year the company's
management and its then consulting firm came into a financing disagreement. The
outcome was that the Consulting firm resigned and tendered their common stock
in the company, which was duly canceled with the companies Registrar and all
directors summarily resigned. A group of interested stockholders then call a
Stockholders' Meeting at which time the company was restored to its original
status, a new Board of Directors was elected and the company began seeking out
possibilities to acquire a viable subsidiary.
NOTE-6 SUBSEQUENT EVENTS:
The stockholders meeting of June 17, 1999, approved the actions and
agreements of the Board of Directors to acquire 100% of the common stock of
Whitehall Homes II, Inc., A Florida Corporation, thereby making it a wholly
owned subsidiary, effective January 1, 1999.
9
<PAGE> 47
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM FINANCIAL STATEMENTS
December 31, 1999
As presented by Management
10
<PAGE> 48
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INDEX TO INTERIM FINANCIAL STATEMENTS
December 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ----------- ----
<S> <C>
Management Report 12
Interim Consolidated Balance Sheet 13-14
Interim Consolidated Statement of Stockholders' Equity 15
Interim Consolidated Statement of Income 16
Interim Consolidated Statement of Cash Flows 17
Notes to Interim Consolidated Financial Statements 18
</TABLE>
11
<PAGE> 49
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
MANAGEMENT REPORT ON FINANCIAL STATEMENTS
DECEMBER 31, 1999
TO ALL READERS OF THE ATTACHED FINANCIAL DATA:
The Company has prepared the attached Interim Consolidated Balance Sheet and
Interim Consolidated Statement of Stockholders Equity as of December 31, 1999,
and the Interim Consolidated Statement of Income and Interim Consolidated
Statement of Cash Flows for the nine months ended December 31, 1999
The Management of the Company has reviewed the accompanying Financial Data and
the related Stockholder actions and Board of Directors Resolutions and to the
best of their knowledge and belief they fairly represent the Financial Condition
of the Company and Results of Operations for the quarter presented.
It should be duly noted that all of the attached Financial Data hereinafter
presented is totally without the benefit of Independent Audit.
WHITEHALL LIMITED, INC.
IT'S MANAGEMENT
12
<PAGE> 50
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
------
CURRENT ASSETS
Cash in Banks $ 418,117
Due from affiliated companies 179,888
Due from stockholder (Net) 161,640
Investments-(at cost) (Note III) 200,000
----------
TOTAL CURRENT ASSETS $ 959,645
----------
CONSTRUCTION COSTS IN PROGRESS
Land and development costs $2,377,905
Homes under construction and furnished models 4,363,579
----------
TOTAL CONSTRUCTION COSTS IN PROGRESS $6,741,484
----------
PROPERTY AND EQUIPMENT
Office land and building $ 866,241
Office furniture and fixtures 57,253
Construction equipment 78,880
Vehicles 86,018
----------
TOTAL 1,088,392
Less: Depreciation 37,214
----------
TOTAL PROPERTY AND EQUIPMENT $1,051,178
----------
OTHER ASSETS
Deposit on land $ 66,850
Prepaid model lease and sales office 154,458
Miscellaneous 3,733
----------
TOTAL OTHER ASSETS $ 225,041
----------
TOTAL ASSETS $8,977,348
==========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
13
<PAGE> 51
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS EQUITY EQUITY
LIABILITIES
Accounts payable-trade $ 933,822
Notes payable to banks 300,000
Note payable (secured by office building) 355,705
Notes Payable (secured by equipment) 109,473
Notes payable - other 300,000
Land and development loans 386,225
Construction loans payable 2,196,610
Customers' deposits 1,127,324
-----------
TOTAL LIABILITIES $ 5,709,159
-----------
NOTE PAYABLE TO STOCKHOLDER (NOTE IV) $ 1,427,245
-----------
STOCKHOLDERS' EQUITY
Preferred stock; $.10 par value; authorized - 100,000,000 shares;
issued shares - none $ 0
Common stock; $.10 par value; authorized-
500,000,000 shares; issued and
outstanding 8,946,000 shares 894,600
Paid in capital 1,573,634
Retained earnings (deficit) (627,290)
-----------
TOTAL STOCKHOLDERS' EQUITY $ 1,840,944
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,977,348
===========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
14
<PAGE> 52
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK PAID - IN EARNINGS
SHARES AMOUNT CAPITAL DEFICIT
------ ------ ------- -------
<S> <C> <C> <C> <C>
BALANCE - APRIL 1, 1999 8,946,000 $894,600 1,573,634 (217,947)
ADD: U-STORE IT ADJUSTMENT 12,629
(NOTE IV)
LESS: Net Loss for the nine months
ended December 31, 1999 (421,972)
------------------------------------------------------------
Balance-December 31, 1999 8,946,000 894,600 1,573,634 (627,290)
============================================================
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
15
<PAGE> 53
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INCOME
Sales of homes and lots $ 5,886,908
Management Fees $ 255,106
Real Estate Commissions $ 99,133
Interest Income $ 6,989
Joint Venture 1,750
Other 188,357
-----------
TOTAL INCOME 6,438,243
COST OF HOMES AND LOTS SOLD 5,405,966
-----------
NET INCOME (BEFORE OPERATING EXPENSES) 1,032,277
-----------
OPERATING EXPENSES
Selling and General $ 551,168
Personnel 405,734
Office 283,752
Real estate commissions 103,417
Interest 110,178
-----------
TOTAL OPERATING EXPENSES 1,454,249
-----------
NET (LOSS) FOR THE PERIOD $( 421,972)
===========
NET (LOSS) PER COMMON SHARE $ 0.04717
===========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
16
<PAGE> 54
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $( 421,972)
-----------
Adjustments to reconcile net (loss) to net
cash provided by operating activities
Depreciation 30,095
Increase/(decrease) in:
Land and development costs (1,611,051)
Homes under construction and furnished models 933,546
Customer deposits 593,645
Vehicles 72,305
Accounts payable and accrued liabilities 445,204
Other assets 89,589
Due from affiliates 47,507
Due to affiliates (36,391)
-----------
TOTAL ADJUSTMENTS 564,449
-----------
NET CASH PROVIDED (USED) BY $ 142,477
-----------
CASH FLOWS TO/FROM INVESTING ACTIVITIES
Net cash provided for investing activities:
Joint Venture 2
Investment in securities $( 200,000)
Stockholders Withdrawal of Securities Account $ 403,607
Withdrawal of Corporation - U Store It (Note III) $ 669,148
Net cash from borrowings:
Land and development loans (101,275)
Construction loans 662,173
Notes payable 10,756
Stockholder loans (245,117)
Note Payable-Stockholders (Notes III and IV) (1,072,755)
-----------
NET CASH FLOWS FROM
INVESTMENT ACTIVITIES $ 126,537
-----------
NET CASH (INCREASE) 269,016
CASH IN BANK - APRIL 1, 1999 149,101
-----------
CASH IN BANK - DECEMBER 31, 1999 $ 418,117
===========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
17
<PAGE> 55
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND LINE OF
BUSINESS
CONSOLIDATION: The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary WHITEHALL HOMES, II,
INC. after elimination of significant inter-company accounts and transactions.
Significant accounting policies and line of business have not changed
from March 31, 1999, except as noted below.
NOTE II - DEBT
The Company increased debt due to significant increase in building
operations, but substantially within its established lines of credit. All notes
payable are current.
NOTE III - INVESTMENTS
As of December 31, 1998, the major stockholders of the company
contributed to the capital of the Company a security investment account
containing securities with a cost basis of $403,607. As of September 30, 1998,
these securities were returned to the major stockholders and charged against
their note payable - stockholders account.
The Company has invested excess working capital in short term
securities during this period in the amount of $200,000.
NOTE IV - NOTE PAYABLE - STOCKHOLDERS
The original agreement with Whitehall Homes, Inc., and eight other
corporations and Whitehall Homes II, Inc. to purchase their assets less
liabilities in exchange for common stock of Whitehall Homes II, Inc. will be
amended, effective January 1, 1999, as follows:
1. The corporation known as U-Store It, Inc. (A Florida
Corporation), will be returned to the major stockholders since
the nature of its business is inconsistent with the primary
business of the Company.
2. The original acquisition cost of $669,148 was charged to note
payable - stockholders.
18
<PAGE> 56
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
HISTORICAL FINANCIAL STATEMENTS
OF WHITEHALL HOMES II, INC.
March 31, 1999
19
<PAGE> 57
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
March 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ------------------------------------------------------------------
<S> <C>
Accountant's Report 21
Consolidated Balance Sheet 22-23
Consolidated Statement of Income 24
Consolidated Statement of Cash Flows 25
Consolidated Statement of Stockholders' Equity 26
Notes to the Financial Statements 27-29
</TABLE>
20
<PAGE> 58
To the Board of Directors and Stockholders
Whitehall Limited, Inc.
FKA Cambridge Universal Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and of cash flows present fairly, in all
material respects, the financial position of Whitehall Limited, Inc. at March
31, 1999, and the results of its operations and its cash flows for the three
months ended March 31, 1999, in conformity with generally accepted accounting
principles. 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 audit in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provide a reasonable
basis for the opinion expressed above.
Alex Chaplan & Associates
Calabasas, Ca 91302
March 15, 2000
21
<PAGE> 59
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
<TABLE>
<S> <C>
ASSETS
ASSETS
Cash in Banks $ 149,101
Due from affiliated companies 132,381
Investments-(at cost) 403,607
----------
TOTAL CURRENT ASSETS $ 685,089
----------
CONSTRUCTION COSTS IN PROGRESS
Land and development costs $3,988,956
Homes under construction and furnished models 3,430,033
----------
TOTAL CONSTRUCTION COSTS IN PROGRESS $7,418,989
----------
PROPERTY AND EQUIPMENT
Office land and building $ 866,241
Office furniture and fixtures 57,253
Construction equipment 78,880
Vehicles 13,713
----------
TOTAL 1,016,087
Less: Accumulated Depreciation 9,190
----------
TOTAL PROPERTY AND EQUIPMENT $1,006,897
----------
OTHER ASSETS
Deposit on lot $ 50,000
Prepaid model lease 79,922
Miscellaneous 5,890
----------
TOTAL OTHER ASSETS $ 135,812
----------
TOTAL ASSETS $9,246,787
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 60
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable-trade $ 488,618
Notes payable to banks 389,942
Note payable (secured by office building) 364,480
Notes payable - other 300,000
Land and development loans 487,500
Construction loans payable 1,534,437
Due to affiliated companies 299,619
Customers' deposits 533,679
Due to stockholder 84,477
-----------
TOTAL LIABILITIES $ 4,482,752
-----------
NOTES PAYABLE TO STOCKHOLDER $ 2,500,000
-----------
STOCKHOLDERS' EQUITY
Preferred stock $.10 par value authorized, 100,000,000 shares
issued shares - none $ 0
Common stock; $.10 par value authorized,
500,000,000 shares; issued and
outstanding 8,946,000 shares 894,600
Paid in capital 1,573,634
Retained earnings (deficit) (204,199)
-----------
TOTAL STOCKHOLDERS' EQUITY $ 2,264,035
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,246,787
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 61
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
CONSOLIDATED STATEMENT OF ICNOME
FOR THE THREE MONTHS ENDED
<TABLE>
<S> <C>
INCOME
Sales of homes and lots $ 1,599,051
Management fees 62,691
Real estate commissions 12,354
Interest Income 2,292
Other 32,650
-----------
TOTAL INCOME $ 1,709,038
-----------
COST OF HOMES AND LOTS $ 1,238,536
-----------
NET INCOME (BEFORE OPERATING EXPENSES) $ 470,502
-----------
OPERATING EXPENSES
Selling and General $ 226,839
Personnel 102,107
Office 73,773
Real estate commissions 21,653
Interest Expense 59,881
-----------
TOTAL OPERATING EXPENSES $ 484,253
-----------
NET (LOSS) $ (13,751)
===========
NET (LOSS) PER COMMON SHARE $ (0.00153)
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 62
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1999 TO MARCH 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (13,751)
---------
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Depreciation 9,190
Increase/(decrease) in:
Land and development costs (31,257)
Homes under construction and furnished models (162,049)
Customer deposits (203,284)
Accounts payable and accrued liabilities (55,113)
Other assets (85,677)
Due from affiliates (57,342)
Due to affiliates (14,678)
---------
TOTAL ADJUSTMENTS (600,210)
---------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES $(613,961)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities $ 0
Net cash from borrowings:
Land and development loans 96,400
Construction loans 366,234
Notes payable (7,408)
Stockholder loans 31,323
---------
NET CASHFLOWS FROM
BORROWING $ 486,549
---------
NET CASH (DECREASE) $(127,412)
CASH IN BANK - JANUARY 1, 1999 $ 276,513
---------
CASH IN BANK - MARCH 31, 1999 $ 149,101
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 63
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
Retained
Common Stock Paid in Earnings
Shares Amount Capital (Deficit)
--------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1999 7,100,000 $190,448 0 (190,448)
Less: Reverse Stock Split-
1 Share for each 3 shares
outstanding 4,733,333 0 0 0
--------- -------- ---------- --------
Balance 2,366,667 190,448 0 (190,448)
Add: Common Stock issued to
Acquire Whitehall Homes II, Inc.
Effective January 1, 1999 4,608,268 0 2,277,786 0
Common Stock issued to
Complete Acquisition of
Whitehall Homes II, Inc. 1,971,065 0 0 0
To Adjust from no par common
stock to $.10 par value
common stock 0 704,152 (704,152) 0
Less: Net (Loss) for the three months
ended March 31, 1999 0 0 0 (13,751)
--------- -------- ---------- --------
Balance - As of March 31, 1999 8,946,000 894,600 1,573,634 (204,199)
========= ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 64
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination:
Effective on January 1, 1999 the stockholders' of nine Florida
Corporations, as listed below, exchanged all of their outstanding common stock,
at fair value, for the common stock of Whitehall Homes II, Inc., resulting in
one Florida Corporation.
<TABLE>
<S> <C>
Whitehall Homes, Inc. Fairway Lakes Homes, Inc.
U-Store It, Inc. Whitehall Homes At Maple Hammock, Inc.
Whitehall Homes At Avalon, Inc. Whitehall Management, Inc.
Bermuda Development Corporation Beekman Village Development Corporation
Whitehall Associates, Inc.
</TABLE>
Effective also on January 1, 1999, the stockholders of Whitehall Homes
II, Inc., exchanged all of its common stock for 4,608,268 shares of the common
stock of Cambridge Universal Corporation, a Colorado Corporation, thereby making
it a wholly-owned subsidiary. Subsequently, Cambridge Universal Corporation
changed its domicile to the state of Florida, and its name to Whitehall Limited,
Inc.
As a result of the above, actions by the stockholders, Board of
Directors and the Corporation's activities, these financial statements were
prepared as Consolidated Financial Statements for the three months ended March
31, 1999 to conform to the parent company fiscal year, March 31, 1999.
The Consolidated Financial Statements include the accounts of its
wholly owned subsidiary, Whitehall Homes II, Inc. after elimination of all
significant inter-company accounts and transactions:
NOTE 2 - DESCRIPTION OF THE BUSINESS
Whitehall Homes, Inc. and Affiliated Companies, now known as Whitehall
Homes II, Inc. was originally formed in 1985 by the major stockholders to
develop land and construct single family and/or multi-family housing either in
their own affiliated companies or in joint ventures with others. Land costs are
capitalized until subdivided and parceled for building. All construction costs
are recorded on a specific job basis. Certain overhead costs are allocated to
development costs and/or specific jobs. All properties are carried at the lower
of cost or net realizable values.
NOTE 3 - INVESTMENTS
As of December 31, 1998, the major stockholder of the Companies
contributed to the capital of Whitehall Homes, Inc. a security investment
account containing securities with a cost basis of $403,607. The fair market
value of these securities was in excess of $500,000 as represented by
management.
27
<PAGE> 65
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 4 - PROPERTY AND EQUIPMENT
Property and Equipment is depreciated over the estimated useful lives
of the assets using the straight-line method. Expenditures for maintenance,
repairs, renewals and betterments, which do not materially prolong useful lives
of the assets are charged to income as incurred. The cost of property retired or
sold and the related accumulated depreciation is removed from the accounts and
any gain or loss from sales is recorded as income.
NOTE 5 - DEBT
The companies were indebted to various lending institutions as follows:
<TABLE>
<CAPTION>
March 31
1999
----------
<S> <C>
Land and Land Development Loans - secured by land and land improvements prior to
building activities:
@ 1% to 1.50% over prime rate $ 487,500
==========
Construction Loans - secured by specific homes under construction, interest at
1.00% to 1.50% over prime rate, maximum loans may net exceed $3,087,400 at
December 31, 1998. Payable upon sale of homes $1,534,437
==========
Notes Payable:
Secured by mortgage on land and buildings
Interest at 1.50% over prime rate. Payable on a 20 year
schedule, all due and payable on February 26, 2006 $ 364,480
Installment Notes - secured by computer equipment and
loader, due April 2002 48,124
Secured by mortgage on U-Store It, Inc. land, payable to
three individuals upon sale. Interest @12.00% 300,000
Unsecured line of credit payable to bank, interest @1.50%
over prime rate guaranteed by stockholders 41,818
Unsecured note; interest @1% over prime rate 200,000
Unsecured note; interest @2.25% over prime rate; due September 2, 1999 100,000
----------
$1,054,422
==========
</TABLE>
28
<PAGE> 66
WHITEHALL LIMITED, INC.
FKA CAMBRIDGE UNIVERSAL CORPORATION AND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 6 - INCOME TAXES
The former stockholders of the companies had elected to be taxed under
the provisions of Sub Chapter "S" of the United States Internal Revenue Code and
as a result, the Corporation was not liable for Federal Income Taxes in prior
years. The current period required no provision for federal or state income
taxes due to its operating loss.
NOTE 7 - PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumption that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NOTE 8 - COMMITMENTS AND CONTINGENCY:
Whitehall Limited, Inc. and its wholly owned subsidiary Whitehall Homes
II, Inc. have secured various lines of credit with financial institutions. The
major stockholders have guaranteed certain loans and/or assigned a life
insurance policy as security.
NOTE 9 - SUBSEQUENT EVENTS:
The stockholders meeting of June 17, 1999 approved the actions and
agreements of the Board of Directors as discussed in Note 1.
29
<PAGE> 67
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED FINANCIAL STATEMENTS
March 31, 1998
As Presented by Management
30
<PAGE> 68
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
MANAGEMENT REPORT ON FINANCIAL STATEMENTS
MARCH 31, 1998
TO ALL READERS OF THE ATTACHED FINANCIAL DATA:
The Company has prepared the attached Interim Combined Balance Sheet and
Interim Combined Statement of Stockholders Equity as of March 31, 1998 and the
Interim Combined Statement of Income and Interim Combined Statement of Cash
Flows for the three months ended March 31, 1998.
The Management of the Company has reviewed the accompanying Financial Data and
the related Stockholder actions and Board of Directors Resolutions and to the
best of their knowledge and belief they fairly represent the Financial
Condition of the Company and Results of Operations for the quarter presented.
It should be duly noted that all of the attached Financial Data hereinafter
presented is totally without the benefit of Independent Audit.
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
IT'S MANAGEMENT
31
<PAGE> 69
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INDEX TO INTERIM COMBINED FINANCIAL STATEMENTS
March 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ------------------------------------------------------------------------------------
<S> <C>
Management Report 31
Interim Combined Balance Sheet 33-34
Interim Combined Statement of Stockholders' Equity 35
Interim Combined Statements of Income 36
Interim Combined Statements of Cash Flows 37
Notes to the Interim Combined Financial Statements 38
</TABLE>
32
<PAGE> 70
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED BALANCE SHEET
AS OF MARCH 31, 1998
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash in Banks $ 186,537
Due from affiliated companies 174,889
Due from stockholder 98,725
Investment in Joint Venture 2
----------
TOTAL CURRENT ASSETS 460,153
----------
CONSTRUCTION COSTS IN PROGRESS
Land and development costs 1,678,683
Homes under construction and furnished models 789,474
----------
TOTAL CONSTRUCTION COSTS IN PROGRESS 2,468,157
----------
PROPERTY AND EQUIPMENT
Office land and building 466,241
Office furniture and fixtures 57,253
Construction equipment 78,880
Vehicles 1,000
----------
TOTAL 603,374
Less: Accumulated Depreciation 194,443
----------
TOTAL PROPERTY AND EQUIPMENT 408,931
----------
OTHER ASSETS
Deposit on lot 50,000
Prepaid model lease 41,869
Miscellaneous 3,892
----------
TOTAL OTHER ASSETS 95,761
----------
TOTAL ASSETS $3,433,002
==========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
33
<PAGE> 71
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED BALANCE SHEET (Page 2)
AS OF MARCH 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
LIABILITIES
Accounts payable $ 341,863
Customers' Deposits 507,820
Due to Stockholders' 199,115
Due to Affiliates 0
Notes and Loans Payable:
Land and Development Loans 497,292
Construction Loans 478,334
Notes Payable 1,144,571
----------
TOTAL LIABILITIES 3,168,995
----------
STOCKHOLDERS' EQUITY
Common stock; $1.00 par value issued and
outstanding 6,900 shares 6,900
Paid in capital in excess of par value of stock 1,164,110
Retained earnings (deficit) (907,003)
----------
TOTAL STOCKHOLDERS' EQUITY 264,007
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,433,002
==========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
34
<PAGE> 72
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Number Amount Capital in Retained
of Common Common Excess of Earnings
Shares Shares Par Value (Deficit)
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1998 6,900 $ 6,900 $ 986,935 $(694,373)
Add: Added capital contributed by 177,175
stockholders
Less: Distributions to stockholders
under Sub-Chapter "5" (218,774)
Net income for the three months
ended March 31, 1998 6,144
---------- ---------- ---------- ---------
Balance - September 30, 1999 6,900 $ 6,900 $1,164,110 $(907,003)
========== ========== ========== =========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
35
<PAGE> 73
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<S> <C>
INCOME
Sales of Homes and Lots $1,041,564
Management Fees 71,875
Real Estate Commissions 15,268
Interest 97
Joint Venture Income 750
Other 37,686
----------
TOTAL INCOME 1,167,240
COST OF HOMES AND LOTS SALES 711,921
----------
NET INCOME (BEFORE OPERATING EXPENSES) 455,319
----------
OPERATING EXPENSES
Selling and General 180,890
Personnel 144,813
Office 55,411
Real estate commissions 35,164
Interest 32,897
----------
TOTAL OPERATING EXPENSES 449,175
----------
NET INCOME $ 6,144
==========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
36
<PAGE> 74
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INTERIM COMBINED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 6,144
----------
Adjustments to reconcile net (income) to net
cash provided by operating activities
Depreciation and Amortization 8,296
Increase/(decrease) in:
Land and development costs (65,449)
Construction in Progress-Homes and Models 190,885
Customer deposits 68,890
Accounts payable 49,864
Property and Equipment 16,976
Other assets (3,051)
Due from affiliates (39,476)
----------
NET ADJUSTMENTS 226,935
----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 233,079
----------
CASH FLOWS FROM INVESTING AND FINANCING ACTIVITIES:
Net (Decrease) in Joint Ventures (750)
----------
NET CASH FLOWS FROM INVESTING ACTIVITIES (750)
----------
NET FINANCING ACTIVITIES:
Land and development loans (56,380)
Construction loans (80,308)
Notes payable (70,051)
Stockholders' Distributions (Net) (41,599)
----------
NET CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES (249,338)
----------
NET CASH FLOWS PROVIDED BY (USED) IN
FINANCING ACTIVITIES (250,088)
----------
NET (DECREASE) IN CASH (17,009)
CASH IN BANKS - JANUARY 1, 1998 203,546
----------
CASH IN BANKS - MARCH 31, 1998 $ 186,537
==========
</TABLE>
The preceding management letter
and accounting notes to interim
financial statements are an integral part
of these statements.
37
<PAGE> 75
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
NOTES TO THE INTERIM COMBINED FINANCIAL STATEMENTS:
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination:
Effective on January 1, 1999 the stockholders' of nine Florida
Corporations, as listed below, exchanged all of their outstanding common stock,
at fair value, for the common stock of Whitehall Homes II, Inc., resulting in
one Florida Corporation.
<TABLE>
<S> <C>
Whitehall Homes, Inc. Fairway Lakes Homes, Inc.
U-Store It, Inc. Whitehall Homes At Maple Hammock, Inc.
Whitehall Homes At Avalon, Inc. Whitehall Management, Inc.
Bermuda Development Corporation Beekman Village Development Corporation
Whitehall Associates, Inc.
</TABLE>
Effective also on January 1, 1999, the stockholders of Whitehall Homes
II, Inc., exchanged all of its common stock for 4,608,268 shares of the common
stock of Cambridge Universal Corporation, a Colorado Corporation, thereby
making it a wholly-owned subsidiary. Subsequently, Cambridge Universal
Corporation changed its domicile to the state of Florida, and its name to
Whitehall Limited, Inc.
As a result of the above, actions by the stockholders, Board of
Directors and the Corporation's activities, the financial statements were
prepared as Interim Combined Financial Statements for the three months ended
March 31, 1998.
The Interim Combined Financial Statements include the historical
accounts of the companies after elimination of all significant inter-company
accounts and transactions:
NOTE 2 - DEBT
The companies decreased debt during the period, and are within their
established lines of credit. All notes payable are current.
NOTE 3 - COMMITMENTS AND CONTINGENCY:
Whitehall Homes, Inc. and its eight affiliated companies have secured
various lines of credit with financial institutions. The major stockholders
have guaranteed certain loans and/or assigned a life insurance policy as
security.
NOTE 4 - SUBSEQUENT EVENTS:
The stockholders meeting of June 17, 1999 approved the actions and
agreements of the Board of Directors as discussed in Note 1.
38
<PAGE> 76
WHITEHALL HOMES, INC.
AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
HISTORICAL FINANCIAL STATEMENTS
December 31, 1997 and 1998
39
<PAGE> 77
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
INDEX TO FINANCIAL STATEMENTS
December 31, 1997 and 1998
<TABLE>
<CAPTION>
DESCRIPTION PAGE
- ------------------------------------------------------------------
<S> <C>
Accountant's Report 41
Comparative Combined Balance Sheets 42
Comparative Combined Statement of Income 43
Comparative Combined Statement of Cash Flows 44
Combined Statement of Stockholders' Equity 45
Pro Forma Balance Sheet 46
Notes to the Financial Statements 47-49
</TABLE>
40
<PAGE> 78
To the Board of Directors and Stockholders
Whitehall Homes, Inc. and Affiliated Companies
and Whitehall Homes II, Inc.
In our opinion, the accompanying comparative combined balance sheet and the
related combined statements of income and of cash flows present fairly, in all
material respects, the financial position of Whitehall Homes, Inc. and
Affiliated Companies and Whitehall Homes II, Inc. at December 31, 1997 and 1998,
and the results of their operations and their cash flows for each of the two
year periods, in conformity with generally accepted accounting principles. In
addition, we have included the purchase of Whitehall Homes, Inc. and Affiliated
Companies by Whitehall Homes II, Inc. effective on January 1, 1999 in the Pro
Forma Balance Sheet, as of that date, as more fully described in Note 1. 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
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Alex Chaplan & Associates
Alex Chaplan & Associates
Calabasas, CA 91302
March 15, 2000
41
<PAGE> 79
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
COMPARATIVE COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1997 1998
----------- -----------
<S> <C> <C>
Assets:
Cash on hand and in banks $ 203,546 $ 276,513
Accounts and Notes Receivable
Affiliates 135,413 60,139
Others 724 0
Stockholders 98,725 278,833
Investments (Note 3) 752 403,609
Land and Development Costs 1,613,234 1,413,126
Work in Progress-Homes and Models 980,359 1,956,207
Property and Equipment (at cost)
Land 68,097 68,097
Buildings 398,144 398,144
Office Furniture and Equipment 57,253 57,253
Construction Equipment 78,880 78,880
Vehicles 17,976 13,713
----------- -----------
Total 620,350 616,087
Less: accumulated depreciation 189,371 218,458
----------- -----------
$ 430,979 $ 397,629
----------- -----------
Other Assets 92,710 111,911
----------- -----------
$ 3,556,442 $ 4,897,967
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Accounts Payable $ 291,999 $ 543,732
Customers' Deposits 438,930 736,963
Due to Stockholders' 199,115 331,987
Due to Affiliates Notes 0 299,397
Notes and Loans Payable:
Land and Development Loans 553,672 391,100
Construction Loans 558,642 1,168,203
Notes Payable 1,214,622 1,061,831
----------- -----------
Total Liabilities $ 3,256,980 $ 4,533,213
----------- -----------
Stockholders' Equity-Nine Corporations:
Common Stock-Par Value $1.00 per share
Issued and outstanding S Corporations, 6900 shares $ 6,900 $ 6,900
Additional Paid In Capital 986,935 1,678,148
Retained Earnings (Deficit) (694,373) (1,320,294)
----------- -----------
Total Stockholders' Equity -
Nine Corporations 299,462 364,754
----------- -----------
Total Liabilities and Stockholders' Equity $ 3,556,442 $ 4,897,967
=========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
42
<PAGE> 80
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
COMPARATIVE COMBINED STATEMENT OF INCOME
FOR THE YEARS ENDING DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------
1997 1998
----------- -----------
<S> <C> <C>
Income:
Homes and Lot Sales $ 5,762,271 $ 3,290,486
Management Fees 271,403 249,128
Real Estate Commissions 78,704 75,691
Interest 341 7,730
Joint Venture 110,205 0
Other 161,910 208,638
----------- -----------
Total Income $ 6,384,834 $ 3,831,673
----------- -----------
Operating Expenses:
Cost of Homes and Lot Sales $ 4,511,467 $ 2,247,198
Selling and General 671,370 576,589
Office Costs:
Salaries 692,615 583,447
General 216,729 201,085
Rent Estate Commissions 167,441 147,989
Interest 117,789 145,218
----------- -----------
Total Operating Expenses $ 6,377,411 $ 3,901,526
----------- -----------
Net Income (Loss) $ 7,423 $ (69,853)
=========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
43
<PAGE> 81
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
COMPARATIVE COMBINED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDING DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------
1997 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 7,423 $ (69,853)
----------- -----------
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and Amortization 37,715 41,394
Increase/Decrease In:
Land and Development Costs 748,129 200,108
Work in Progress-Homes and Models 163,952 (975,848)
Customers' Deposits (249,051) 298,033
Accounts Payable (225,038) 251,733
Property and Equipment (71,449) (6,270)
Other Assets (4,331) (17,240)
Due From/To Affiliates 78,563 374,671
Accounts Receivable - Other (724) 724
----------- -----------
Total Adjustments $ 477,766 $ 167,305
----------- -----------
Net Cash Provided By Operating Activities $ 485,189 $ 97,452
----------- -----------
Cash Flows From Investing Activities:
Net (Increase) Decrease in Joint Ventures $ 159,358 $ (2,985)
Net Investments From Stockholder 0 (403,607)
----------- -----------
Net Cash Flows From Investing $ 159,358 $ (406,592)
----------- -----------
Activities
Net Borrowing Under:
Land and Development Loans $ (175,785) $ (162,572)
Construction Loans (393,351) 609,561
Notes Payable 139,003 (152,791)
Notes Payable - Stockholders 0 0
Stockholders' Loans 281,334 (47,236)
Stockholders' Distributions (602,325) 135,145
----------- -----------
Net Cash Provided (Used) By $ (751,124) $ 382,107
----------- -----------
Financing Activities
Net (Decrease) (Increase) In Cash (106,577) 72,967
Net Cash - Beginning of Year 310,113 203,546
----------- -----------
Net Cash - End of Year $ 203,536 $ 276,513
=========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
44
<PAGE> 82
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
Number Amount of Capital in Retained
of Common Common Excess of Earnings
Shares Shares Par Value (Deficit)
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1997 5,700 $ 5,700 $ 1,361,757 (578,288)
Add: Net Income for the year ended
December 31, 1997 7,423
Common stock issued for companies:
Whitehall Homes at Avalon, Inc. 200 200 49,800
Whitehall Management, Inc. 1,000 1,000 84,310
Less: Cash Withdrawals (508,932)
Sub-Chapter "S" distributions to
Stockholders (123,508)
--------- --------- ----------- ----------
Balance - December 31, 1997 6,900 6,900 986,935 (694,373)
Add: Securities account contributed by
Stockholders 403,607
Cash contribution by stockholders 287,606
Less: Sub-Chapter "S" distributions to
Stockholders (556,068)
Net (Loss) for the year ended
December 31, 1998 (69,853)
--------- --------- ----------- ----------
Balance - December 31, 1998 6,900 6,900 1,678,148 (1,320,294)
========= ========= =========== ==========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial
Statements.
45
<PAGE> 83
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
PRO FORMA BALANCE SHEET
AS OF JANUARY 1, 1999
<TABLE>
<CAPTION>
Balance Increase Balance
December 31, to Fair January 1,
Assets: 1998 Value 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash on hand and in banks $ 276,513 $ -- $ 276,513
Accounts and Notes Receivable:
Affiliates 60,139 -- 60,139
Stockholders 278,833 -- 278,833
Investments 403,609 -- 403,609
Land and Development Costs 1,413,126 2,544,573 3,957,699
Work in Progress-Homes and Models 1,956,207 1,250,000 3,206,207
Property and Equipment 616,087 400,000 1,016,087
Accumulated Depreciation (218,458) 218,458 0
----------- ----------- -----------
Total Property and Equipment 397,629 618,458 1,016,087
----------- ----------- -----------
Other Assets 111,911 -- 111,911
----------- ----------- -----------
Total Assets $ 4,897,967 $ 4,413,031 $ 9,310,998
=========== =========== ===========
Liabilities and Stockholders' Equity
Accounts Payable $ 543,732 $ -- $ 543,732
Customers' Deposits 736,963 -- 736,963
Due to Stockholder 331,987 -- 331,987
Due to Affiliates 299,397 -- 299,397
Note and Loans Payable -
Financial Institutions 2,621,134 -- 2,621,134
Note Payable - Stockholders 0 2,500,000 2,500,000
----------- ----------- -----------
4,533,213 2,500,000 7,033,213
----------- ----------- -----------
Stockholders' Equity
Net Stockholders' Equity
Whitehall Homes, Inc. and Related Companies
Common stock Exchanged for the
Common Stock of Whitehall Homes II, Inc. 364,754 1,913,031 2,277,785
----------- ----------- -----------
Total Liabilities and Stock-
holders' Equity $ 4,897,967 $ 4,413,031 $ 9,310,998
=========== =========== ===========
</TABLE>
The accompanying Notes are an integral part of the Combined Financial Statements
46
<PAGE> 84
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
NOTES TO THE COMBINED FINANCIAL STATEMENTS:
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination:
Effective on January 1, 1999 the stockholders' of nine Florida
Corporations, as listed below, exchanged all of their outstanding common stock,
at fair value, for the common stock of Whitehall Homes II, Inc., resulting in
one Florida Corporation, per the Pro Forma Balance Sheet as reflected herein.
Effective also on January 1, 1999, the stockholders of Whitehall Homes
II, Inc., exchanged all of their common stock for 4,608,268 shares of the common
stock of Cambridge Universal Corporation, a Colorado Corporation, thereby
becoming a wholly-owned subsidiary. Subsequently, Cambridge Universal
Corporation changed its domicile to the state of Florida, and its name to
Whitehall Limited, Inc.
As a result of the above, actions by the stockholders, Board of
Directors and the Corporation's activities, the financial statements were
prepared as Combined Financial Statements for the two calendar years ending
December 31, 1998.
The Combined Financial Statements include the accounts of the following
listed companies after elimination of all significant inter-company accounts and
transactions:
Whitehall Homes, Inc. Fairway Lakes Homes, Inc.
U-Store It, Inc. Whitehall Homes At Maple Hammock, Inc.
Whitehall Homes At Avalon, Inc. Whitehall Management, Inc.
Bermuda Development Corporation Beekman Village Development Corporation
Whitehall Associates, Inc.
NOTE 2 - DESCRIPTION OF THE BUSINESS
Whitehall Homes, Inc. and Affiliated Companies now known as Whitehall
Homes II, Inc. was originally formed in 1985 by the major stockholders to
develop land and construct single family and/or multi-family housing either in
their own affiliated companies or in joint ventures with others. Land costs are
capitalized until subdivided and parceled for building. All construction costs
are recorded on a specific job basis. Certain overhead costs are allocated to
development costs and/or specific jobs. All properties are carried at the lower
of cost or net realizable values.
NOTE 3 - INVESTMENTS
As of December 31, 1998, the major stockholders of the Companies
contributed to the capital of Whitehall Homes, Inc. a security investment
account containing securities with a cost basis of $403,607. The fair market
value of these securities was in excess of $500,000 as represented by
management.
47
<PAGE> 85
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
NOTES TO THE COMBINED FINANCIAL STATEMENTS:
NOTE 4 - PROPERTY AND EQUIPMENT
Property and Equipment is depreciated over the estimated useful lives
of the assets using the straight-line method. Expenditures for maintenance,
repairs, renewals and betterments, which do not materially prolong useful lives
of the assets are charged to income as incurred. The cost of property retired or
sold and the related accumulated depreciation is removed from the accounts and
any gain or loss from sales is recorded as income.
NOTE 5 - DEBT
The companies were indebted to various lending institutions as
follows:
<TABLE>
<CAPTION>
December 31
1997 1998
----------- -----------
<S> <C> <C>
Land and Land Development Loans - secured by land and
land improvements prior to
building activities:
Bermuda Development Corp-Interest
@1% to 1.50% over prime rate $ 553,672 $ 316,000
Whitehall Homes at Avalon, Inc.
Interest @1.00% over prime rate -0- 81,100
----------- -----------
$ 553,672 $ 391,100
=========== ===========
Construction Loans - secured by specific homes under
construction, interest at
1.00% to 1.50% over prime rate,
maximum loans may net exceed $3,087,400 at
December 31, 1998. Payable upon sale of homes $ 558,642 $ 1,168,203
=========== ===========
Notes Payable:
Secured by mortgage on land and buildings
Interest at 1.50% over prime rate. Payable on a 20 year
schedule, all due and payable on February 26, 2006 $ 377,393 $ 367,744
Installment Notes - secured by computer equipment and
loader, due April 2002 73,503
52,269
Secured by mortgage on U-Store It, Inc. land, payable to
three individuals upon sale. Interest @12.00% 300,000 300,000
Unsecured line of credit payable to bank, interest @1.50%
over prime rate guaranteed by stockholders 183,649 41,818
Unsecured note; interest @1% over prime rate 180,077 200,000
Unsecured note; interest @2.25% over prime rate; due
September 2, 1999 100,000 100,000
----------- -----------
$ 1,214,622 $ 1,061,831
=========== ===========
</TABLE>
48
<PAGE> 86
WHITEHALL HOMES, INC. AND AFFILIATED COMPANIES
AND WHITEHALL HOMES II, INC.
NOTES TO THE COMBINED FINANCIAL STATEMENTS:
NOTE 6 - INCOME TAXES
The former stockholders of the companies had elected to be taxed under
the provisions of Sub Chapter S of the United States Internal Revenue Code and
as a result, the Corporations were not liable for Federal Income Taxes for the
periods herein.
NOTE 7 - PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumption that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NOTE 8 - COMMITMENTS AND CONTINGENCY:
Whitehall Homes, Inc. and its eight affiliated companies have secured
various lines of credit with financial institutions. The major stockholders has
guaranteed certain loans and/or assigned a life insurance policy as security.
NOTE 9 - SUBSEQUENT EVENTS:
The stockholders meeting of June 17, 1999 approved the actions and
agreements of the Board of Directors as discussed in Note 1.
49
<PAGE> 87
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized.
WHITEHALL LIMITED, INC.
March 30, 2000 By /s/ Ronald Mustari
-------------------------------------
Ronald Mustari, President and Chief
Executive Officer
50
<PAGE> 88
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
- ------ ---------------------- ------
<S> <C> <C>
(2) Charter and Bylaws of the Registrant*
(3) Not Applicable
(4) Not Applicable
(5) Not Applicable
(6) Not Applicable
(7) Not Applicable
(8) Agreement Providing for the Exchange of Capital Stock by and
Between Cambridge Universal Corporation, the holders of all of
the outstanding voting Common Stock of Whitehall Homes II,
Inc. and Whitehall Homes II, Inc. dated as of June 17, 1999
(without Schedules or Exhibits) with First Addendum thereto*
(9) Not Applicable
(10) Not Applicable
(12)(a) Opinion letter of William T. Kirtley, P.A. dated September
30, 1999 to American Securities Transfer & Trust, Inc.*
(12)(b) Consulting Agreement between Registrant and Andrews &
Associates, Inc.
</TABLE>
* previously filed
51
<PAGE> 1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is being made as of the 15th day of February,
1999 by and between RONALD MUSTARI, an individual residing in Sarasota County,
Florida (herein "Mustari") and ANDREWS & ASSOCIATES, INC., a corporation
organized and existing pursuant to the laws of the State of Florida and having
its principal place of business in the City of Sarasota, Florida ("Andrews").
B A C K G R O U N D
Andrews has acted as a consultant to Mustari and in connection with the
conduct of a residential home development and construction business conducted by
Mustari through one or more corporate entities, which includes, without
limitation, Whitehall Homes, Inc. (collectively referred to in this Agreement as
the "Whitehall Entities" or individually as a "Whitehall Entity"). In connection
with the providing of such consulting services to Mustari and the Whitehall
Entities, Andrews, with the full knowledge, consent and acquiescence of Mustari,
has entered into or will enter into a certain agreement styled "Agreement
Providing for the Purchase of Capital Stock" (the "Purchase Agreement") which
exists or which is to exist between Andrews, Cambridge Universal Corporation, a
Colorado corporation based in Denver, Colorado ("Cambridge") and the record and
beneficial holders of not less than 2,290,000 shares of the outstanding common
stock, $.10 par value of Cambridge, which holders are Howard P. Carroll, First
Development Investment Corp., McFarland Consulting Services, Inc., Craig Gratham
and Allan Land & Cattle, Inc. (referred to herein as the "Cambridge Shares" and
the "Holders" respectively). Cambridge is publicly held and is what is generally
described as a "public shell." Unless specifically defined in this Agreement,
capitalized terms have the meanings and definitions attributed to such terms as
set forth in the Purchase Agreement.
The Purchase Agreement provides, inter alia, for the acquisition by
Andrews of 2,290,000 Cambridge Shares at a per Share consideration of
approximately $.0437 for an aggregate consideration of $100,000 (the "Share
Consideration"). The Share Consideration will be paid by Andrews to the Holders
in accordance with their respective entitlements on the basis of an initial
payment of $5,000, which amount has been deposited in the Trust Account of legal
counsel to Andrews, William T. Kirtley, P.A. and which will be released and paid
to the Holders at the time that the Purchase Agreement is fully executed by the
Agreement Parties. An additional payment of $20,000 will be made by Andrews to
such Holders at the time that certain United States Securities and Exchange
Commission periodic and annual reports have been prepared and filed with respect
to Cambridge. The balance of the Share Consideration will be paid by utilization
of a promissory note which is Schedule I to the Purchase Agreement and which
shall have the terms and conditions set forth in the Purchase Agreement and
Schedule I thereto.
One of the purposes of the acquisition of the Cambridge Shares by
Andrews is to obtain voting control of Cambridge by virtue of such acquisition
and the delivery by the
<PAGE> 2
Holders of good and valid proxies constituting, when taken with the Cambridge
Shares, 51% or more of voting control of Cambridge. The attainment of this
position by Andrews with respect to Cambridge is believed by Mustari and Andrews
to better facilitate an anticipated business combination between a Whitehall
Entity or Whitehall Entities and Cambridge, thereby permitting such Whitehall
Entity or Whitehall Entities to, in effect, become publicly held. In that
regard, it is anticipated that subsequent to a business combination between a
Whitehall Entity or Whitehall Entities and Cambridge, Cambridge will change its
name to a name determined by Andrews in consultation with Mustari, will become a
domestic Florida corporation and will take the necessary steps to cause the
outstanding common stock of Cambridge to be listed in accordance with the NASDAQ
OTC Bulletin Board. Cambridge will continue the business presently conducted by
the Whitehall Entity or the Whitehall Entities.
Mustari and Andrews acknowledge that as of the date of this Agreement
and at times subsequent to the date of this Agreement Andrews has advanced and
will advance substantial sums in order to defray the various transactional costs
attendant to the preparation of the Purchase Agreement, the consummation of the
transactions called for by the Purchase Agreement and the intended business
combination of a Whitehall Entity or Whitehall Entities with Cambridge, as well
as the conduct of a limited and private offering of the equity securities of
Andrews and/or Cambridge, which expenditures presently are in the amount of
$5,000 but which are expected to reach the amount of approximately $25,000
through the preparation of the necessary documentation relating to the described
limited and private offering. Such $25,000 amount does not take into account the
obligations of Andrews to provide the initial increments of the Share
Consideration in the amounts of $5,000 and $20,000 prior to the time of the
closing of the acquisition by Andrews of the Cambridge Shares. Such $25,000
amount also does not take into account out-of-pocket expenses to be incurred and
paid by Andrews in connection with certain consulting and other fees payable to
certain persons and entities.
Mustari and Andrews wish, by means of this Agreement, to provide for
their respective obligations, both from a monetary point of view and with
respect to the going forward with the consummation of the Purchase Agreement
transactions, the limited and private offering of the equity securities of
Andrews and/or Cambridge and the business combination of Cambridge with a
Whitehall Entity or Whitehall Entities as well as the consulting services to be
provided by Andrews.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Mustari and Andrews agree as
follows:
1. Action by Andrews. Andrews will use its best diligent efforts to
proceed with all necessary action and preparation in order to permit the
consummation of the sale-purchase transaction provided for in the Purchase
Agreement, the conduct of the limited and private offering of the equity
securities of Andrews and/or Cambridge and the business
2
<PAGE> 3
combination of Cambridge with a Whitehall Entity or Whitehall Entities, which
action shall include the advancing of all necessary funds in order to pay legal
and other transactional costs attendant to such activity as described above,
including, without limitation, the obligation of Andrews as set forth in that
certain engagement letter dated December 8, 1998 by and between Andrews and
William T. Kirtley, P.A. and the obligation on the part of Andrews to provide
the initial two increments of the Share Consideration at the times provided in
the Purchase Agreement and in the aggregate amount of $25,000. Andrews will keep
complete and detailed records of his expenditures which are attendant to the
carrying out and completion of the transactions called for by the Purchase
Agreement and the other intended activities and will continually advise Mustari
of the status of such matters and the costs expended to date.
2. Reimbursement by Mustari. Contemporaneous with the date of this
Agreement, Mustari and/or a Whitehall Entity or Whitehall Entities shall
reimburse Andrews for the amounts advanced by Andrews to such date and which
relate to the consummation of the Purchase Agreement transactions and the other
activities earlier described in this Agreement which shall include the aggregate
$25,000 increment of the Share Consideration, which amount shall be shared
equally by Andrews and Mustari and/or a Whitehall Entity resulting in the record
and beneficial ownership of the Cambridge Shares being equally divided between
Andrews and Mustari and/or a Whitehall Entity. Mustari and/or a Whitehall Entity
shall also be jointly obligated each in the amount of 50% of the principal
amount of the Promissory Note to be given in connection with the consummation of
the sale-purchase transaction called for by the Purchase Agreement. Such
reimbursement may be in one or more installments as agreed to by Mustari and
Andrews. To the extent that the limited and private offering of the equity
securities of Andrews and/or Cambridge has been sufficiently accomplished,
reimbursement of Andrews may occur utilizing proceeds received by Andrews and/or
Cambridge as a result of the partial or complete successful completion of the
intended limited and private offering of the equity securities of Andrews and/or
Cambridge. The obligation of Mustari to reimburse Andrews pursuant to the
provisions of this Section 2 is absolute and is not conditioned in any manner
whatsoever on the consummation of the transactions called for by the Purchase
Agreement or the initiation and completion of the limited and private offering
of the equity securities of Andrews and/or Cambridge or the business combination
of a Whitehall Entity or Whitehall Entities with Cambridge.
3. The Business Combination. Mustari agrees that he will take all
necessary steps and action required to permit a business combination to be
consummated between Cambridge and a Whitehall Entity or Whitehall Entities on or
before a date which is sixty (60) days from the date of this Agreement upon such
terms as may be mutually determined. The terms of such business combination will
relate principally to the number of shares of the voting common stock of
Cambridge to be issued to Mustari and other beneficial holders of the
outstanding voting common stock of the Whitehall Entity or Whitehall Entities
combined with or to be combined with Cambridge which number of shares of voting
common stock of Cambridge issued in such exchange will vest voting control of
Cambridge
3
<PAGE> 4
in Mustari and persons or entities affiliated with him and is expected to
involve the conveyance of some or all of the Cambridge Shares acquired by
Andrews to Mustari and persons affiliated with him. It is acknowledged by
Mustari and Andrews that the business combination intended to be consummated and
as described in this Section 3 will utilize those procedures recommended by
legal counsel to Andrews, William T. Kirtley, P.A., Sarasota, Florida, which
business combination transaction will be accomplished in compliance with
applicable law, including, without limitation, the Florida Business Corporation
Act, the Colorado Corporation Act and applicable securities laws of the States
of Florida and Colorado and the Securities Act of 1933, as amended. At the time
of the consummation of the business combination between the Whitehall Entity or
Whitehall Entities and Cambridge, such Whitehall Entity or Whitehall Entities
shall become a co-maker and jointly and severally obligated with Cambridge and
Andrews on the promissory note or notes to be provided to the Holders at the
consummation of the purchase of Cambridge Shares by Andrews, which promissory
note is Schedule I to the Purchase Agreement.
4. Further Agreements and Transactions. Upon the consummation of the
transactions provided for by the Purchase Agreement and the combination of
Cambridge with one or more Whitehall Entities, Andrews shall continue to be
engaged as a consultant to Cambridge (as then constituted) under consulting
arrangements which will be for a term of five (5) years from the date of
commencement thereof with a three (3) year option on the part of Andrews to
continue such consulting arrangements for which Andrews will be compensated by
consulting fees in the amount of $115,000 per year payable in monthly
installments and by the issuance to Andrews of 1,000,000 Cambridge Shares. At a
point in time determined by Andrews and during the term of such consulting
arrangements, the principal of Andrews, J. S. Andrews, shall be appointed
Executive Vice President of Cambridge as then constituted and shall serve as an
officer of Cambridge pursuant to a written employment agreement which shall
continue the consulting compensation in the amount of $115,000 as executive
compensation under the Employment Agreement. Additionally, such Employment
Agreement shall provide for a term not less than the remaining term of the
consulting arrangements superseded by such employment arrangements and a monthly
car allowance of $500 to be paid to J. S. Andrews. Cambridge shall also provide
for health insurance to J. S. Andrews and his wife in a manner reasonably
satisfactory to J. S. Andrews. J. S. Andrews shall also participate in any
benefit plans then in place or adopted by Cambridge, including, without
limitation, bonus compensation, participation in stock option plans or profit
sharing plans, 401(k) Plans or plans and benefits of a similar type or nature.
J. S. Andrews, as Executive Vice President of the Company, shall perform those
duties and responsibilities usually incidental to such position.
5. Miscellaneous.
(A) Notices. All notices or other communications required or permitted
under this Agreement shall be in writing and shall be given by mail or by
facsimile transmission (in the event of facsimile transmission, a conforming
copy shall be mailed postage prepaid
4
<PAGE> 5
simultaneously therewith). If notice is to be given to Andrews, such notice
shall be deemed given when provided in the manner provided herein to Andrews in
care of William T. Kirtley, Esq., William T. Kirtley, P.A., 2940 South Tamiami
Trail, Sarasota, Florida 34239, 941/952-9750, facsimile 941/955-4027. If notice
is to be given to Mustari, such notice shall be deemed given when provided in
the manner provided herein to Mustari in care of the Whitehall Entities, 290
Cocoanut Avenue, Sarasota, Florida 34236.
(B) Applicable Law and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of Florida.
Jurisdiction with respect to the subject matter of this Agreement shall be
vested in the Circuit Court for the Twelfth Judicial Circuit in and for Sarasota
County, Florida.
(C) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs and representatives.
(D) Entire Agreement. This Agreement constitutes the entire
understanding on the part of the parties hereto, and all previous agreements and
understandings are superseded by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
/s/ Ronald Mustari
------------------------------
RONALD MUSTARI
ANDREWS & ASSOCIATES, INC.
By /s/ J. S. Andrews
------------------------------
Its President
5
<PAGE> 6
FIRST ADDENDUM TO
CONSULTING AGREEMENT
THIS FIRST ADDENDUM (the "First Addendum") is made to that certain
Consulting Agreement dated as of February 15, 1999 by and between RONALD
MUSTARI, an individual residing in Sarasota County, Florida, referred to in such
Consulting Agreement and herein as "Mustari" and ANDREWS & ASSOCIATES, INC., a
corporation organized and existing pursuant to the laws of the State of Florida
and having its principal place of business in the City of Sarasota, Florida,
referred to in such Consulting Agreement and herein as "Andrews".
B A C K G R O U N D
The Consulting Agreement referenced contains certain recitals relating
to the intentions of the Agreement Parties, Mustari and Andrews. The purpose of
this Addendum is to acknowledge that certain action which is contemplated by
such recitals set forth in the BACKGROUND section of the Consulting Agreement
has occurred, specifically (a) the consummation of the transactions called for
by that document referenced in the Consulting Agreement and referred to as the
Purchase Agreement, (b) the business combination of Cambridge Universal
Corporation (now known as Whitehall Limited, Inc.) by virtue of the exchange
transaction which has occurred between Cambridge Universal Corporation and
Mustari and his spouse, Joanne Mustari, all of which occurred on or about June
24, 1999, and (c) the performance of significant consulting services on behalf
of Whitehall Limited, Inc. by Andrews, which consulting services are on-going.
The purpose of this First Addendum is to reaffirm all of the
understandings and agreements reflected and memorialized in the Consulting
Agreement and to provide that Whitehall Limited, Inc. will also be a party to
the Consulting Agreement and be bound by the terms thereof.
Accordingly, in and for the original consideration and mutual promises
and covenants set forth in the Consulting Agreement dated as of February 15,
1999 and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Mustari, Andrews and Whitehall Limited, Inc.
(now a Florida Corporation and formerly known as Cambridge Universal
Corporation) agree that Whitehall Limited, Inc. shall be bound by the terms and
provisions of such Consulting Agreement to the extent that any of such terms and
conditions as are imposed upon Mustari remain yet to be completely performed. It
is further agreed that (a) Andrews is owed substantial consulting fees which are
unpaid and (b) in partial consideration of such consulting fees owing, Whitehall
Limited< inc. has issued to andrews 1,000,000 shares of its common stock, $.10
par value (the "Shares"), which Shares, for purposes of such payment, shall be
valued at such par value. Whitehall Limited, Inc. acknowledges that such Shares
are or will be beneficially owned by the holders of the outstanding voting
common stock of Andrews, to wit: Patrick J. Andrews, Gregory M. Andrews and
Jerome S. Andrews.
<PAGE> 7
This First Addendum is dated as of June 30, 1999.
/s/ Ronald Mustari
-------------------------------
RONALD MUSTARI
ANDREWS & ASSOCIATES, INC.
By /s/ J. S. Andrews
-------------------------------
Its President
WHITEHALL LIMITED, INC.
By /s/ Ronald Mustari
-------------------------------
Its President
2
<PAGE> 8
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment No.1 to the
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized.
WHITEHALL LIMITED, INC.
March 30, 2000 By /s/ Ronald Mustari
-------------------------------------
Ronald Mustari, President and Chief
Executive Officer
