U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K-A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------
COMMISSION FILE No. 0-20922
Date of Report (Date of earliest event reported) May 10, 1999
------------
WHITEHALL ENTERPRISES, INC. (Exact name of registrant as
- --------------------------------------------------------------------------------
specified in its charter)
Delaware 75-2274730
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
801 Brickell Avenue, 9th Floor, Miami, Florida 33131 (Address of
- --------------------------------------------------------------------------------
principal executive offices) (Zip Code)
(904) 409-0200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Total World Telecommunications, Inc.
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
ITEM 2. Acquisition and Disposition of Assets
AGREEMENT FOR THE PURCHASE OF MBM
---------------------------------
On December 1, 1998, under conditions and terms prescribed to and
approved by the Bankruptcy Court in the Company's Chapter XI Reorganization
(United States Bankruptcy Court, Southern District of Florida, Case No.
97-36030-BKC-SHF), the Company entered into an agreement with 1299004 Ontario
Corporation ("129 Ontario") for the purchase of 100% of the issued and
outstanding stock of Mega Blow Moulding Limited ("MBM"), a Canadian company. As
a result thereof MBM became a wholly owned subsidiary of the Company. The
following table summarizes the more significant terms of the agreement:
o The Company issued 4 million preferred shares in the Company's capital
stock.
o 129 Ontario represented that MBM was not a party to or bound by any
agreement of guarantee, indemnification, surety, or similar commitments
of the obligations, liabilities (contingent or otherwise) or
indebtedness of any other person, corporation or partnership, except
for trade accounts payable incurred in the normal course of operations.
o Whitehall Enterprises, Inc. acknowledged that all assets owned by MBM
are subject to a security issued by MBM to the Royal Bank of Canada as
collateral for bank notes aggregating approximately $1,762,000.
o 129 Ontario has executed all necessary documents holding the Company
harmless of any liability pursuant to the stock purchase agreement and
in accordance with the Reorganization Plan approved by the Bankruptcy
Court.
As of December 31, 1998, and through the date of this report, the
transactions and events relative to the purchase of MBM were managed in the form
prescribed and approved by the Bankruptcy Court in the Plan. Proceeds from the
collection of loans receivable is expected by the end of the current fiscal
year.
A copy of the stock purchase agreement was filed as an Exhibit included
with Form 10-KSB for the year ended September 30, 1998 and is hereby
incorporated by reference.
2
<PAGE>
Since its formation in 1984, MBM has operated as a specialized custom molder or
manufacturer of plastic bottles and containers for use in the pharmaceutical,
health and beauty, household cleaner and food product industries. During fiscal
1997 and 1998, MBM's revenues were generated in the United States. MBM also has
a strong market presence in the Province of Ontario, Canada, which is the main
manufacturing center in Canada. Plastic is a disposable material which is in
high demand in today's environmentally friendly and industrialized world.
Management of MBM believes that demand will continue to grow significantly well
into the next century. With an estimated market in North America of over $15
billion for plastic products, management of MBM believes that MBM is well
positioned for growth.
MBM concentrates on manufacturing products for customers who are the end user of
the products and orders placed by manufacturer agents. Management of MBM
believes that MBM has an excellent reputation for quality and customer services
and prides itself on its ability to consistently maintain a zero percent defect
rate. MBM operates from a leased, 46,000 square foot manufacturing facility in
metropolitan Toronto, Canada. It is the intent of Whitehall management to use
MBM's assets and resources in the same manner as previously utilized.
The basis used in determining the amount of the consideration for the shares of
MBM was the fair value of the net assets of MBM, which approximated its book
value at the date of purchase. There was a business valuation report prepared by
independent chartered accountants that valued MBM at approximately US$6.825
million. This valuation was part of the Reorganization Plan that was negotiated
and approved by a majority of Whitehall's stockholders and by the Bankruptcy
Court.
Prior to the transactions described above, there was no material relationship
between the officers, directors or shareholders of MBM and the Company or any
director or officer of the Company or any associate of any such director or
officer. However, one of MBM's principals owned a small percentage of Whitehall
common stock which was sold in 1996.
The following are points of interest that serve to update the financial
information presented in the audited financial statements of MBM as of and for
the period ended November 30, 1998:
3
<PAGE>
A. The loan receivable discussed in Note 4 is fully collectible. These
funds will be utilized for future acquisitions and expansion upon their
receipt.
B. The bank loan discussed in Notes 6 and 10 is current as all payments
are up to date. The bank loan continues to be guaranteed by the former
owner of MBM. The seller has guaranteed to retire the full amount of
the bank loan. Its payment will release the amount to be collected on
the loan receivable discussed in A. above.
ITEM 7. Financial statements and exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The MBM Balance Sheets, as of November 30, 1998 and January
31, 1998, and the related Consolidated Profit and Loss
Accounts and Consolidated Cash Flow Statements for each of the
periods then ended April 30, 1998, and the report of
independent auditors, thereon, together with the notes
thereto, are located at pages 6 through 18 of this Report.
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma condensed combined balance sheet
(unaudited) as of September 30, 1998, and the pro forma
condensed combined statement of income (unaudited) for the
year then ended, and the notes thereto, are located at pages
19 through 24 of this Report.
(c) Exhibits.
Exhibit
Number Description of Exhibit
1. (10.45) Stock Purchase Agreement for the purchase of all
issued and outstanding shares of MBM from 129
Ontario. (1)
2. (10.46) Audited financial statements of business acquired.
Audited financial statements of MBM as of and for the
period ended November 30, 1998 is filed herewith.
3. (10.47) Pro-forma combined financial data. Unaudited pro
forma combined balance sheet and statements of
operations of the Company and MBM is filed herewith.
(1) Filed with Form 10-KSB for the year ended September 30, 1998.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
WHITEHALL ENTERPRISES, INC.
By: /s/ Luis Alvarez
------------------------
Luis Alvarez - President
Dated: May 10, 1999
5
MEGA BLOW MOULDING LIMITED
FINANCIAL STATEMENTS
NOVEMBER 30, 1998
<PAGE>
MEGA BLOW MOULDING LIMITED
NOVEMBER 30, 1998
CONTENTS
Page
Auditors' Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations and Retained Earnings 3
Notes to Financial Statements 4
Additional Information:
Auditors' Report on Additional Information 9
Statement of Cost of Goods Manufactured 10
Schedule of Operating Expenses 11
<PAGE>
AUDITORS' REPORT
To the Shareholders of
Mega Blow Moulding Limited
We have audited the balance sheet of Mega Blow Moulding Limited as at November
30, 1998 and the statement of operations and retained earnings for the period
then ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at November 30, 1998 and the
results of its operations for the period then ended in accordance with generally
accepted accounting principles.
Toronto, Ontario.
April 23, 1999. MINTZ & PARTNERS
CHARTERED ACCOUNTANTS
1.
<PAGE>
<TABLE>
<CAPTION>
MEGA BLOW MOULDING LIMITED
BALANCE SHEET
(US$)
AS AT November 30 January 31
1998 1998
================================================================================
<S> <C> <C>
A S S E T S
-----------
CURRENT
Accounts receivable $ 548,917 $ 602,344
Inventories (Note 3) 563,262 342,524
Sundry assets 83,961 71,342
------------ ------------
1,196,140 1,016,210
LOAN RECEIVABLE (Note 4) 1,112,931 1,173,670
CAPITAL ASSETS (Note 5) 557,736 582,401
DEFERRED FINANCING COSTS 43,563 --
------------ ------------
$ 2,910,370 $ 2,772,281
============ ============
L I A B I L I T I E S
CURRENT
Bank indebtedness (Note 6) $ 500,740 $ 494,566
Accounts payable and accrued liabilities 936,263 838,106
Current portion of long-term debt 125,140 145,283
------------ ------------
1,562,143 1,477,955
DEFERRED INCOME TAXES 41,915 49,883
LONG-TERM DEBT (Note 7) 674,968 610,927
------------ ------------
2,279,026 2,138,765
------------ ------------
S H A R E H O L D E R S' E Q U I T Y
------------------------------------
CAPITAL STOCK (Note 8) 157 165
CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENT (21,613) --
RETAINED EARNINGS 652,800 633,351
------------ ------------
631,344 633,516
------------ ------------
$ 2,910,370 $ 2,772,281
============ ============
</TABLE>
APPROVED ON BEHALF OF THE BOARD:
___________________________ (Director)
___________________________ (Director)
See Accompanying Notes
2.
<PAGE>
<TABLE>
<CAPTION>
MEGA BLOW MOULDING LIMITED
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(US$)
FOR THE PERIOD ENDED
================================================================================================================
November 30 January 31
Regular Sub-Contractor 1998 1998
------- -------------- ---- ----
(10 Months) (12 Months)
<S> <C> <C> <C> <C>
REVENUE $3,500,431 $173,905 $3,674,336 $6,070,856
---------- ---------- ------------ -------------
COST OF GOODS SOLD
Inventory of finished goods
- Beginning of period 168,750 11,004 179,754 190,001
Cost of goods manufactured
and sub-contracted 2,845,334 152,217 2,997,551 4,566,452
---------- ---------- ------------ -------------
3,014,084 163,221 3,177,305 4,756,453
Inventory of finished goods
- End of period 376,253 4,848 381,101 179,754
---------- ---------- ------------ -------------
2,637,831 158,373 2,796,204 4,576,699
---------- ---------- ------------ -------------
GROSS PROFIT 862,600 15,532 878,132 1,494,157
---------- ---------- ------------ -------------
EXPENSES
Warehouse and factory 330,045 563,131
General and administrative 175,051 203,240
Selling and delivery 151,719 153,876
------------- --------------
656,815 920,247
------------- --------------
INCOME FROM OPERATIONS - Before undernoted items 221,317 573,910
------------- --------------
Financial 82,466 87,574
Amortization 124,947 134,529
------------- --------------
207,413 222,103
------------- --------------
INCOME - Before income taxes and undernoted item 13,904 351,807
------------- --------------
Payments to parent company -- 511,602
Provision for income taxes 11,437 --
Recovery of income taxes due to loss carryforward (11,437) (19,545)
Recovery of deferred income taxes (5,545) (1,159)
(5,545) 490,898
------------- --------------
NET INCOME (LOSS) 19,449 (139,091)
RETAINED EARNINGS - Beginning of period 633,351 772,442
------------- --------------
RETAINED EARNINGS - End of period $652,800 $633,351
============= ==============
</TABLE>
See Accompanying Notes
3.
<PAGE>
MEGA BLOW MOULDING LIMITED
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
1. BASIS OF PRESENTATION AND COMPARATIVE INFORMATION
On December 1, 1998, the company underwent a change in control
resulting in a deemed year-end at November 30, 1998. Accordingly
financial statements, as at November 30, 1998 and for the ten months
then ended have been presented. As financial statements at November 30,
1997 and for the period then ended have not been prepared, previously
audited financial statements at January 31, 1998 and for the year then
ended, which have been reclassified in accordance with the current
presentation, are presented for comparative purposes only.
These financial statements are stated in the currency of the United
States of America.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Inventories
Raw materials are valued at the lower of cost and net
realizable value with cost being determined substantially on a
first-in, first-out basis.
Finished goods are valued at the lower of cost and net
realizable value with cost being determined by the retail
method.
b) Capital Assets
Capital assets are stated at cost less accumulated
amortization. Amortization is provided over the estimated
useful lives of the assets on the following basis:
<TABLE>
<CAPTION>
<S> <C> <C>
Leasehold improvements
straight-line over term of lease
Machinery and equipment 20% of diminishing balance
Moulds based on sales over the specific
contract
Office equipment 20% of diminishing balance
</TABLE>
c) Deferred Finance Costs
The deferred finance costs are stated at cost net of
amortization which is being charged on a straight-line basis
over 5 years.
d) Income Taxes
The company prepares its financial statements on the tax
allocation basis, and a provision is made for all taxes
currently payable as well as those deferred to future years as
a result of timing differences between the measurement of
income for tax purposes and for accounting purposes.
/Continued...
4.
<PAGE>
MEGA BLOW MOULDING LIMITED
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
2. SIGNIFICANT ACCOUNTING POLICIES - Continued
e) Translation of Foreign Currency
The accounts of the company have been translated to United
States dollars using the current rate method. Under this
method, assets and liabilities are translated at the exchange
rate in effect at the year-end and revenues and expenses at
the average rate for the year. Exchange gains or losses on
translation are deferred and included as a separate component
in shareholders' equity.
3. INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of: November 30 January 31
1998 1998
---- ----
<S> <C> <C>
Raw materials $148,844 $142,824
Packaging and skids 33,317 19,946
Finished goods 381,101 179,754
----------- ----------
$563,262 $342,524
=========== ==========
</TABLE>
4. LOAN RECEIVABLE
The loan, which as at November 30, 1998 was due from its parent, has no
fixed terms of repayment and bears interest at rates varying from 6.72%
and bank prime plus 2%. No interest was received from or charged to its
parent.
As a result of the change in control described in Note 1, this loan
will be due from an arm's length entity.
<TABLE>
<CAPTION>
5. CAPITAL ASSETS Net Carrying Amount
Accumulated November 30 January 31
Cost Amortization 1998 1997
---- ------------ ---- ----
<S> <C> <C> <C> <C>
Leasehold improvements $ 3,772 $1,878 $1,894 $2,329
Machinery and equipment 2,337,096 1,814,310 522,786 547,068
Office equipment 86,260 53,204 33,056 33,004
---------- ----------- ------------- ----------
$2,427,128 $1,869,392 $557,736 $582,401
========== =========== ============ ==========
</TABLE>
/Continued...
5.
<PAGE>
MEGA BLOW MOULDING LIMITED
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
6. BANK INDEBTEDNESS
The bank indebtedness includes operating loans, due on demand, of
$404,426. The operating loans bear interest at rates varying from prime
+ 1.25% to prime + 1.75%. The bank indebtedness is secured by a
registered general assignment of book debts and a general security
agreement, a guarantee and postponement of claim in the amount of
$1,402,445 by the parent company, assignment of all shares of the
company, postponement and assignment of all shareholder debt and an
assignment of Keyman insurance.
The company has violated certain covenants with respect to the
operating loans. While the bank has been advised of this, they have not
expressly waived the conditions.
7. LONG-TERM DEBT
The term loans are secured by a registered general security agreement
having a first charge over all assets other than real property, a
guarantee and postponement of claim in the amount of $1,402,445 by the
parent company, assignment of all shares of the company, postponement
of all shareholder debt and an assignment of Keyman insurance. The term
loans bear interest at bank prime plus 1.75%. Included in long-term
debt is a note payable in the amount of $163,075. The note payable
bears interest at 12% per annum.
The company has violated certain covenants with respect to the term
loans. While the bank has been advised of this, they have not expressly
waived the conditions.
Future payments of the term loans in each of the next five years are as
follows:
1999 $125,140
2000 125,140
2001 125,140
2002 125,140
2003 90,261
2004 and thereafter 209,287
--------
800,108
Less: Current portion 125,140
--------
$674,968
========
/Continued...
6.
<PAGE>
MEGA BLOW MOULDING LIMITED
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
<TABLE>
<CAPTION>
8. CAPITAL STOCK November 30 January 31
1998 1998
---- ----
<S> <C> <C>
Authorized
Class "A" shares, non-cumulative, non-voting, preference
shares Class "B" shares, non-cumulative, non-voting,
preference shares
Unlimited common shares Issued
240 Common shares $157 $165
========= =========
</TABLE>
9. LEASE COMMITMENTS
The minimum rentals payable under long-term operating leases, expiring
December 31, 2003, exclusive of certain operating costs for which the
company is responsible, are approximately as follows:
1999 $141,391
2000 141,391
2001 141,391
2002 141,391
2003 141,391
10. RELATED PARTY TRANSACTIONS
The bank indebtedness and the long-term debt are guaranteed by the
company's parent and a beneficial shareholder of the parent. The
shareholder has not charged a fee to this company for this guarantee.
11. INCOME TAX MATTERS
The company has a non-capital loss carry-forward of approximately
$97,621 which may be applied against future years' taxable income. The
loss carry-forward expires in 2006.
12. MEASUREMENT UNCERTAINTY
The company carries, as an asset, a loan receivable from a public
company, which, until November 30, 1998 was its ultimate parent, in the
amount of approximately $1,110,000. The shares of this public company
have been and are actively trading on the National Association of
Securities Dealers over the counter market and is solvent. Accordingly,
while there is uncertainty as to the fiscal realization of this amount,
the company does not believe the carrying value has been impaired.
/Continued...
7.
<PAGE>
MEGA BLOW MOULDING LIMITED
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
13. STATEMENT OF CHANGES IN FINANCIAL POSITION
A statement of changes in financial position has not been presented,
since it would not provide additional useful information beyond that
presented in these financial statements.
14. UNCERTAINTY DUE TO YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise is some systems, which use certain dates in
1999 to represent something other than a date. The effects of the Year
2000 issue may be experienced before, on, or after January 1, 2000,
and, if not addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is
not possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties will be fully resolved.
8.
<PAGE>
AUDITORS' REPORT
ON ADDITIONAL INFORMATION
To the Shareholders of
Mega Blow Moulding Limited
Our report on our audit of the basic financial statements of Mega Blow Moulding
Limited as at November 30, 1998 appears on Pages 1 to 8. That audit was
conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in Pages 10 and
11, is presented for purposes of additional analysis and is not a required part
of the basic financial statements. Such information has not been subjected to
the auditing procedures applied in the audit of the basic financial statements,
and accordingly, we express no opinion on it.
Toronto, Ontario.
April 23, 1999. CHARTERED ACCOUNTANTS
9.
<PAGE>
<TABLE>
<CAPTION>
MEGA BLOW MOULDING LIMITED
STATEMENT OF COST OF GOODS MANUFACTURED
(US$)
FOR THE PERIOD ENDED November 30 January 31
1998 1998
(10 Months) (12 Months)
=========================================================================================================
<S> <C> <C>
MATERIALS
Inventory of raw materials - Beginning of period $ 162,769 $ 165,476
Purchases 1,890,618 2,529,821
---------- ----------
2,053,387 2,695,297
Inventory of raw materials - End of period 182,161 162,769
---------- ----------
1,871,226 2,532,528
---------- ----------
DIRECT LABOUR
Factory wages 646,400 953,932
Factory employee benefits 116,915 140,372
Supervisory wages 70,948 89,295
---------- ----------
834,263 1,183,599
---------- ----------
PACKAGING 148,845 182,041
---------- ----------
COST OF GOODS MANUFACTURED $2,854,334 $3,898,168
========== ==========
</TABLE>
See Accompanying Notes
10.
<PAGE>
<TABLE>
<CAPTION>
MEGA BLOW MOULDING LIMITED
SCHEDULE OF OPERATING EXPENSES
(US$)
FOR THE PERIOD ENDED November 30 January 31
1998 1998
(10 Months) (12 Months)
=====================================================================================
<S> <C> <C>
WAREHOUSE AND FACTORY
Warehouse utilities $128,918 $177,373
Warehouse rent 98,723 134,199
Repairs and maintenance 60,181 191,349
Warehouse 32,116 49,211
Waste removal and cleaning 10,107 10,999
---------- ---------
$330,045 $563,131
========== =========
GENERAL AND ADMINISTRATIVE
Office salaries $ 58,242 $ 74,613
Property and business taxes 52,286 57,920
Professional fees 19,053 2,973
Office and general 12,314 23,282
Rent 12,128 14,908
Insurance 7,778 13,252
Telephone 7,708 7,597
Property maintenance 2,795 5,348
Directors insurance 2,747 3,347
---------- ---------
$175,051 $203,240
========== =========
SELLING AND DELIVERY
Quality control $ 78,910 $102,817
Freight 48,564 30,756
Automobile 16,078 8,840
Leasing 8,162 8,726
Commissions -- 2,737
---------- ---------
$151,714 $153,876
========== =========
FINANCIAL
Interest on long-term debt $ 75,115 $ 82,729
Interest and bank charges 7,351 4,845
---------- ---------
$ 82,466 $ 87,574
========== =========
</TABLE>
See Accompanying Notes
11.
PRO FORMA COMBINED FINANCIAL DATA
On December 1, 1998, under conditions and terms prescribed to and approved by
the Bankruptcy Court in the Company's Chapter XI Reorganization, the Company
entered into an agreement with 1299004 Ontario Corporation ("129 Ontario") for
the purchase of 100% of the issued and outstanding stock of Mega Blow Moulding
Limited ("MBM"). As a result thereof MBM became a wholly owned subsidiary of the
Company.
The following pro forma financial data of the Company consists of (i) a pro
forma condensed combined balance sheet (unaudited) as of September 30, 1998 (the
"Pro Forma Balance Sheet"), and (ii) a 1998 fiscal year pro forma condensed
combined statement of income (unaudited) (the 1998 Pro Forma Statement of
Income")and (iii) a 1999 six month pro forma condensed combined statement of
income (unaudited)(the "1999 Six Month Pro Forma Statement of Income")
(collectively, the "Pro Forma Statements").
The Pro Forma Balance Sheet reflects the combination of the balance sheet of the
Company as of September 30, 1998, and the balance sheet of MBM as of November
30, 1998, as adjusted for the MBM Acquisition. The Pro Forma Balance Sheet is
presented as if the MBM Acquisition was consummated on November 30, 1998. The
1998 Pro Forma Statement of Income reflects the combination of the income
statement of the Company for the year ended September 30, 1998, and the income
statement of MBM for the 10- month period ended November 30, 1998, as adjusted
for the MBM Acquisition. The 1998 Pro Forma Statement of Income is presented as
if the MBM Acquisition was consummated on September 30, 1998. The Pro Forma
Statements should be read in conjunction with the separate historical financial
statements of the Company and MBM and the notes thereto and with the
accompanying notes to the Pro Forma Statements. The Pro Forma Statements are
based upon currently available information and upon certain assumptions that the
Company believes are reasonable under the circumstances. The Pro Forma
Statements do not purport to represent what the Company's financial position or
results of operations would actually have been if the aforementioned transaction
in fact had occurred on such date or at the beginning of the period indicated or
to project the Company's financial position or the results of operations at any
future date or for any future period.
1
<PAGE>
<TABLE>
<CAPTION>
WHITEHALL ENTERPRISES, INC. AND MEGA BLOW MOULDING LIMITED
FORMERLY TOTAL WORLD TELECOMMUNICATIONS, INC.
Pro-Forma Condensed Combined Balance Sheet - Unaudited
September 30, 1998
HISTORICAL
-------------------------------------------------------------------------
ASSETS
Whitehall MBM
September 30, 1998 November 30, 1998 Combined
--------------------- --------------------- -----------------------
<S> <C> <C> <C>
Current Assets
Cash $22,695 - $22,695
Accounts receivable - 548,917 548,917
Inventories - 563,262 563,262
Sundry assets - 83,961 83,961
-------------------- -------------------- ----------------------
Total Current Assets 22,695 1,196,140 1,218,835
-------------------- -------------------- ----------------------
Loans Receivable - 1,112,931 1,112,931
Property and Equipment 53,620 2,427,128 2,480,748
Less Accumulated Depreciation (46,928) (1,869,392) (1,916,320)
-------------------- -------------------- ----------------------
Property and Equipment - Net 6,692 557,736 564,428
-------------------- -------------------- ----------------------
Other Assets
Deposits 500 - 500
Deferred financing costs - 43,563 43,563
-------------------- -------------------- ----------------------
TOTAL ASSETS $29,887 $2,910,370 $2,940,257
==================== ==================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Current portion of long term debt - 125,140 125,140
Notes payable - bank 500,740 500,740
Accounts payable - 936,263 936,263
-------------------- -------------------- ----------------------
Total Current Liabilities - 1,562,143 1,562,143
-------------------- -------------------- ----------------------
Deferred Income Taxes - 41,915 41,915
Long-Term Debt - 674,968 674,968
-------------------- -------------------- ----------------------
Total Liabilities - 2,279,026 2,279,026
-------------------- -------------------- ----------------------
Shareholders' Equity
Preferred stock, $.001 par value,
4,000,000 million shares authorized, issued
and outstanding at December 31, 1998 - - -
Common Stock, $.0001 par value,
200,000,000 shares authorized, 124,900,000
shares issued and outstanding 12,493 157 12,650
Additional Paid In Capital 17,394 0 17,394
Cummulative foreign currency
translation adjustment - (21,613) (21,613)
Retained Earnings - 652,800 652,800
-------------------- -------------------- ----------------------
Total Stockholders' Equity 29,887 631,344 661,231
-------------------- -------------------- ----------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $29,887 $2,910,370 $2,940,257
==================== ==================== ======================
(RESTUBBED TABLE)
PRO-FORMA
-------------------------------------------------------------
Adjustments for
Acquisition Combined
-------------- ----------------- ---------------------
ASSETS
Current Assets
Cash $22,695
Accounts receivable 548,917
Inventories 563,262
Sundry assets (b)&(c) 3,843 87,804
--------------------
Total Current Assets 1,222,678
--------------------
Loans Receivable 1,112,931
Property and Equipment 2,480,748
Less Accumulated Depreciation (1,916,320)
--------------------
Property and Equipment - Net 564,428
--------------------
Other Assets
Deposits 500
Deferred financing costs 43,563
--------------------
TOTAL ASSETS $2,944,100
====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Current portion of long term debt 125,140
Notes payable - bank 500,740
Accounts payable 936,263
--------------------
Total Current Liabilities 1,562,143
--------------------
Deferred Income Taxes (a) 41,915 -
Long-Term Debt 674,968
--------------------
Total Liabilities 2,237,111
--------------------
Shareholders' Equity
Preferred stock, $.001 par value,
4,000,000 million shares authorized, issued
and outstanding at December 31, 1998 (c) (4,000) 4,000
Common Stock, $.0001 par value,
200,000,000 shares authorized, 124,900,000
shares issued and outstanding (b) 157 12,493
Additional Paid In Capital 17,394
Cummulative foreign currency
translation adjustment (21,613)
Retained Earnings (a) (41,915) 694,715
--------------------
Total Stockholders' Equity 706,989
--------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,944,100
====================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
WHITEHALL ENTERPRISES, INC. AND MEGA BLOW MOULDING LIMITED
FORMERLY TOTAL WORLD TELECOMMUNICATIONS, INC.
Pro-Forma Condensed Combined Statement of Operations - Unaudited
For the Year Ended December 31, 1998
HISTORICAL
-----------------------------------------------------------------------
Whitehall MBM
September 30, 1998 November 30, 1998 Combined
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Revenues from Operations
Sales 26,996 3,674,336 3,701,332
Cost of Sales 2,796,204 2,796,204
-------------------- -------------------- --------------------
Gross Profit 26,996 878,132 905,128
-------------------- -------------------- --------------------
Operating Expenses
Sales, General and Administration 234,803 656,815 891,618
Depreciation 9,361 0 9,361
-------------------- -------------------- --------------------
Total Operating Expenses 244,164 656,815 900,979
-------------------- -------------------- --------------------
Net Income/Loss from Operations (217,168) 221,317 4,149
-------------------- -------------------- --------------------
Other Income
Forgiveness of debt income 27,091,064 27,091,064
Gain on disposal of assets 147,265 147,265
Other Income 6,496 6,496
-------------------- -------------------- --------------------
Total Other Income 27,244,825 27,244,825
-------------------- -------------------- --------------------
Other Expenses
Administrative claims and fees 303,466 303,466
Bankruptcy fees and expenses 13,693 13,693
Other expenses 207,413 207,413
-------------------- -------------------- --------------------
Total Other Expenses 317,159 207,413 524,572
-------------------- -------------------- --------------------
Income Before Taxes 26,710,498 13,904 26,724,402
-------------------- -------------------- --------------------
Payments to parent company 0 0
Provision for income taxes 11,437 11,437
Recovery of income taxes due to loss carryforward (11,437) (11,437)
Recovery of deferred income taxes (5,545) (5,545)
-------------------- -------------------- --------------------
NET INCOME $26,710,498 $19,449 26,729,947
==================== ==================== ====================
Earnings per common share $0.23 $0.00 $0.23
==================== ==================== ====================
(RESTUBBED TABLE)
PRO-FORMAL
----------------------------------------------------------------
Adjustments
for Acquisition Combined
-------------- --------------------- ---------------------
<C>
Revenues from Operations
Sales 3,701,332
Cost of Sales 2,796,204
--------------------
Gross Profit 905,128
--------------------
Operating Expenses
Sales, General and Administration 891,618
Depreciation 9,361
--------------------
Total Operating Expenses 900,979
--------------------
Net Income/Loss from Operations 4,149
--------------------
Other Income
Forgiveness of debt income 27,091,064
Gain on disposal of assets 147,265
Other Income 6,496
--------------------
Total Other Income 27,244,825
--------------------
Other Expenses
Administrative claims and fees 303,466
Bankruptcy fees and expenses 13,693
Other expenses 207,413
--------------------
Total Other Expenses 524,572
--------------------
Income Before Taxes 26,724,402
--------------------
Payments to parent company 0
Provision for income taxes 11,437
Recovery of income taxes due to loss carryforward (11,437)
Recovery of deferred income taxes (b) (41,915) (47,460)
--------------------
NET INCOME 26,676,942
====================
Earnings per common share $0.23
====================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
WHITEHALL ENTERPRISES, INC. AND MEGA BLOW MOULDING LIMITED
NOTES TO THE PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF AUGUST 31, 1998
(UNAUDITED)
(IN THOUSANDS)
(a) Reflects the estimated purchase accounting adjustments for the MBM
Acquisition based upon a preliminary appraisal of the assets and
liabilities assumed. For purchase accounting, MBM assets have been
recorded at estimated fair market value subject to adjustment based
upon the results of an independent appraisal. The estimated amounts
recorded for assets and liabilities acquired from MBM are not expected
to differ materially from the final assigned values. Purchase
accounting adjustments were recorded to eliminate MBM's capital stock
and deferred income tax liabilities for net operating loss carryovers
available in the Company.
The calculation of excess purchase cost over fair value of net assets acquired
is as follows:
Total Purchase Cost $ 673,249
Net Book Value of MBM (631,334)
Elimination of Deferred Taxes (41,915)
=---------
Excess of purchase cost over fair
Value of assets acquired and
Liabilities assumed -0-
==========
(b) Reflects the elimination of MBM's shareholder's equity.
4
