U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------
COMMISSION FILE No. 0-20922
Date of Report (Date of earliest event reported) February 1, 2000
------------------
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)
--------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. Changes in Control of Registrant N/A, No change of control of
registrant.
ITEM 2. Acquisition and Disposition of Assets
Agreement For The Purchase Of Alternative Lending Group, Inc.
-------------------------------------------------------------
On January 22, 2000 Whitehall Enterprises, Inc. closed on the purchase of
Alternative Lending Group, Inc. an Illinois corporation from R. Jeffrey Mertz.
Alternative Lending Group is engaged in the mortgage banking and mortgage
brokerage business. Their principal office is located in Phoenix, Arizona. The
following table summarizes the more significant terms of the agreement:
* Whitehall Enterprises, Inc. acquired 100% of the shares of common stock
of Alternative Lending Group in exchange for $950,000 as working
capital and 8,000,000 shares of Whitehall's common stock, which is
equivalent to 4% of their 200,000,000 issued shares.
* If Whitehall Enterprises, Inc. common shares exceeds 200,000,000 shares
prior to one year to the date of closing, a proportional adjustment
shall be made to Alternative Lending Group.
* Alternative Lending Group represents that they are not a party to or
bound by any agreement of guarantee, indemnification, surety, or
indebtedness of any other person, corporation or partnership, except
for trade accounts payable incurred in the normal course of operations.
* Alternative Lending Group has executed all necessary documents holding
Whitehall Enterprises, Inc. harmless of any liability pursuant to the
purchase agreement.
Business
Since its formation six years ago, Alternative Lending Group has grown from a
single-city mortgage company based in Chicago - with $38 million first year
gross business - to a mortgage bank covering nine states, with $93,592,399 of
mortgage loans originated and closed in 1999. Alternative Lending Group has
focused its mortgage origination through a consumer direct marketing channel and
has maintained steady growth and profitability by providing mortgage loans to
fit all types of consumers' needs. This coupled with the added control that
mortgage banking provides, Alternative Lending Group is able to make loans
simultaneously profitable and competitive because of the reduction in sales
commissions and expenses associated with conventional mortgage brokerage firms.
2
<PAGE>
Alternative Lending Group recently created two new divisions, the Wholesale
Division and the Internet Online Mortgage Division. The new divisions will
augment its present operation, which provides hands-on service to customers who
request it through its traditional offices located in the Midwest and Southwest
regions, and help establish the company's national presence and substantially
increase gross production over the next twelve months. Additionally, the company
has developed a new state-of-the art web-site Alternativelending.com, and
business plan. The focus of the plan is to increase its market share over the
next twelve months, from nine states to a national level. Since Alternative
Lending Group is a mortgage bank it can provide a superior Internet online
mortgage service, compared to those companies that still operate under the
mortgage broker laws. Alternative Lending Group will have more flexibility with
pricing, underwriting, closing times/locations and customer commination. All of
this will place Alternative Lending Group in a strong position to compete
directly with online leaders E-Loan and Mortgage.com, offering a superior
product, and providing low cost mortgage options to all customers regardless of
credit history.
Mortgage financing has traditionally been a lengthy ordeal, lasting weeks or
sometimes even months. Alternative Lending Group offers the convenience of
applying for all types of loans via the Internet. They utilize the Internet as a
referral source for the past three years , and maintain a two million dollar
monthly average loan volume from its previous web-site.
Now, with its new state-of-the-art web-site, Alternative Lending Group can
quickly and efficiently allow its customers to find a product, choose the rate
they want, and apply for a loan, all in about ten minutes and from the comfort
of their own home computer. This feature allows Alternative Lending Group to
have more control over its Internet Online Mortgage loans since they make the
determination to approve the customer or supply them with alternative loan
products, which might meet the customers needs. This is in contrast to other
sites which simply approves or denies a customer.
With Alternative Lending Group's Wholesale Division the company will not only be
marketing its Internet online mortgages, but also its mortgage banking services
to other mortgage brokers. The Wholesale Division has allowed Alternative
Lending Group to make every loan more profitable, thus allowing improved
customer service, more competitive rates, costs and closing times.
ITEM 3. Bankruptcy or Receivership
None; not applicable.
3
<PAGE>
ITEM 4. Changes in Registrant's Certifying Accountant
None; not applicable.
ITEM 5. Other Events
See item 2
ITEM 6. Resignation of Directors and Executive Officers
None; not applicable.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The Alternative Lending Group, Inc. balance sheet, as of
December 31, 1999 and related statements of income and retained earnings and
cash flows for the year then ended and the report of independent auditors Eide
Bailly LLP, certified public accountants and consultants thereon, together with
the notes thereto, are located at pages 7 through 18 of this Report.
Audited Financial Statements of Alternative Lending Group, Inc.. for the period
ended December 31, 1999.
* Accountant's Report
* Balance Sheet
* Statement of Income and Retained Earnings
* Statement of Cash Flows
* Notes to Financial Statements
4
<PAGE>
(b) Pro Forma Financial Information.
The Pro Forma Condensed Combined Balance Sheet (unaudited) as
of September 30, 1999 and the Pro Forma Condensed Combined Statement of
Operations (unaudited) for the year then ended and the notes thereto, are
located at pages 19 through 22 of this report.
o Pro Forma Condensed Combined Financial Statements
o Pro Forma Condensed Combined Balance Sheet (unaudited)
o Pro Forma Condensed Combined Statement of Operations (unaudited)
o Notes to Pro Forma Condensed Combined Financial Statements
(c) Exhibits.
Exhibit
Number Description of Exhibit
(10.48) Stock Purchase Agreement for the purchase of all
issued and outstanding shares of ALG from R. Jeffrey
Mertz. (1)
(1) Filed with Form 10-QSB for the period ended December 31, 1999.
ITEM 8. Change in Fiscal Year
None; not applicable.
ITEM 9. Sale of Equity Securities pursuant to Regulation S.
None; not applicable.
5
<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 hereto duly authorized.
Whitehall Enterprises, Inc.
By: /s/ Luis Alvarez
----------------------------
Luis Alvarez - President
6
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
Financial Statements
December 31, 1999
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
AUDITOR'S DATA
DECEMBER 31, 1999
--------------------------------------------------------------------------------
Audit Firm: Eide Bailly LLP
Consultants and Certified Public Accountants
7107 East Highland, Suite 100
Phoenix, Arizona 85016
(602)264-5844
Federal Identification Number: 45-0250958
Lead Auditor: Thomas Hartzler, CPA
Partner
(602)264-5844
7
<PAGE>
Eide Bailly LLP
Consultants * Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
--------------------------------------------------------------------------------
The Shareholders
Alternative Lending Group, Inc.
Phoenix, Arizona
We have audited the accompanying balance sheet of Alternative Lending Group,
Inc. as of December 31, 1999, and the related statements of income and retained
earnings, and cash flows for the year then ended. These financial statements are
the responsibility of the Corporation'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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alternative Lending Group, Inc.
as of December 31, 1999, and the changes in its net assets and its cash flows
for the nine month period then ended in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The computation of adjusted net worth, (shown on
page 8) is presented for the purposes of additional analysis and is not a
required part of the basic financial statements of Alternative Lending Group,
Inc. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Phoenix, Arizona
March 26, 2000
8
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
BALANCE SHEET
DECEMBER 31, 1999
--------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 199,814
Accounts receivable 34,543
Prepaids and deposits 18,574
Loan inventory 1,101,382
Property and equipment 45,783
Other assets 122,203
-----------
$ 1,522,299
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Advance from related party $ 150,000
Accounts payable 18,172
Capital lease liability 17,143
Warehouse line of credit 1,094,203
Other liabilities 1,425
Deferred income taxes 18,000
-----------
1,298,943
------------
STOCKHOLDERS EQUITY
Common stock, no-par value, issued and outstanding;
500,000 shares class A voting stock 1,000
500,000 shares class B non-voting stock 333
Additional paid in capital 300,307
Retained earnings 222,356
-----------
523,996
Treasury stock, 500,000 shares class B, at cost (300,640)
-----------
223,356
-----------
$ 1,522,299
===========
See Notes to Financial Statements
9
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
INCOME
Mortgage origination fees $1,831,710
----------
Other income
Gain on the sale of loan inventory 199,978
Underwriting fees 61,693
Interest 20,921
Miscellaneous income 18,935
----------
301,527
----------
2,133,237
----------
OPERATING EXPENSES
Selling, general and administrative 2,108,603
Interest 5,852
----------
2,114,455
----------
INCOME BEFORE PROVISION FOR INCOME TAXES 18,782
PROVISION FOR INCOME TAX 3,000
----------
NET INCOME 15,782
RETAINED EARNINGS, BEGINNING OF YEAR 207,574
----------
RETAINED EARNINGS, END OF YEAR $ 223,356
==========
See Notes to Financial Statements
10
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 15,782
-----------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 6,889
(Increase) decrease in
Accounts receivable 23
Loan inventory (1,101,382)
Prepaid expense and deposits 4,834
Other assets (51,632)
Increase (decrease) in
Accounts payable 18,172
Accrued liabilities 1,425
Deferred income taxes 3,000
Income taxes payable (7,226)
Warehouse line of credit 1,094,153
-----------
Total adjustments (31,744)
-----------
Net cash used in operating activities (15,962)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (21,428)
Decrease in notes receivables - officer 16,168
-----------
Net cash used in financing activities (5,260)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advanced from related party 150,000
Principal payments under capital lease (798)
Principle payments to notes payable - employee (20,000)
-----------
Net cash provided by financing activities 129,202
-----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 107,980
CASH AND CASH EQUIVALENT, beginning of year 91,834
-----------
CASH AND CASH EQUIVALENTS, end of year $ 199,814
===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Property and equipment acquired with capital lease $ 17,941
===========
Cash paid for interest $ 4,427
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE>
ALTERNATIVE LENDING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
NOTE 1 - NATURE OF OPERATIONS
The company was incorporated in 1993 in Illinois to originate, broker and fund
residential loans to individuals in the metropolitan Phoenix and Chicago areas.
In 1998, the Company became a HUD approved loan correspondent, which allows the
Company to originate and close HUD/FHA insured loans. As a certified HUD lender,
the Company is required to comply with the provisions of HUD regulations and
other requirements of the Secretary of HUD.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Corporation considers all highly liquid assets having a maturity of three
moths or less to be cash equivalents.
REVENUE RECOGNITION
Origination fees for warehoused loans are recognized as revenue when the loans
are made to the extent they represent reimbursement of loan origination costs.
Revenues in the form of origination points, service release premiums and other
fees are recognized upon the funding of the mortgage loan by the ultimate
lender. Sales of loan inventory are generally without recourse and are recorded
when the proceeds are received by the Company. Other types of revenue are also
recognized as income when earned.
LOAN INVENTORY
Loan inventory consists of mortgages originated or purchased which are held for
sale to customers. Loan inventory consists primarily of sub-prime mortgages.
Inventory is recorded at the lower of cost or market value. Market value is
determined using quoted market prices. Gains and losses on the sale of loan
inventory are determined using the specific-identification method.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost with depreciation and amortization
being provided over the estimated useful lives of the respective assets using
the straight-line method.
12
<PAGE>
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus any deferred taxes.
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carry forwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases, primarily cash
basis reporting for income tax purposes. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
ADVERTISING COSTS
In addition to the advertising expenses incurred as a result of normal
operations, the Company participates in various advertising and promotion
programs. All costs related to advertising and promotion are expensed in the
period incurred. Costs for advertising and promotion programs totaled
approximately $300,000 for the year ended December 31, 1999.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1999:
Furniture and equipment $ 69,669
Capital lease equipment 17,941
--------
87,610
Accumulated depreciation and amortization (41,827)
--------
$ 45,783
========
Equipment under capital lease (included in Property and Equipment) consisted of
the following at December 31, 1999:
Computer equipment $ 17,941
Accumulated amortization (798)
--------
$ 17,143
========
Amortization of equipment under capital leases, $798, is included with
depreciation expense.
13
<PAGE>
Minimum future annual lease payments under capital leases are as follows at
December 31, 1999:
2000 $ 7,844
2001 7,652
2002 5,780
--------
Total minimum lease payments 21,276
Amount representing interest (4,133)
--------
Present value of minimum lease payments $ 17,143
========
NOTE 4 - NOTES PAYABLE UNDER WAREHOUSE LINE OF CREDIT
The Company has a $2,500,000 warehousing line of credit from a financial
institution and the institution has the right to reduce this limit with 30 days
notice. The interest rate for the line of credit is prime plus 2% and is
collateralized by assignment of mortgage notes and deeds of trust of the
respective loans. At December 31, 1999, $1,094,203 was outstanding under this
agreement.
Total loans warehoused and sold $12,869,133
===========
Number of mortgages warehoused and sold 136
===========
Total loan inventory $ 1,101,382
===========
Number of mortgages in loan inventory 12
===========
NOTE 5 - OPERATING LEASE COMMITMENTS
The Corporation leases office space, vehicles, two copiers, and office furniture
under noncancelable operating leases, which have initial terms in excess of one
year. Future minimum annual lease payments under these operating lease are as
follows at December 31, 1999:
2000 $113,137
2001 97,628
2002 97,675
2003 89,402
2004 59,601
--------
$457,443
========
Total expense under these leases was approximately $101,700 for the year
December 31, 1999.
14
<PAGE>
NOTE 6 - NET WORTH REQUIREMENTS
The Company, as a HUD approved loan correspondent, is required to maintain a
minimum adjusted net worth, as defined, of $75,000. At December 31, 1999, the
Company has an adjusted net worth for HUD requirement purposes of $223,356.
NOTE 7 - SUBSEQUENT EVENTS
In 1999, the Company and its stockholders entered into a purchase agreement with
Whitehall Enterprises for the sale of all the outstanding common stock of the
Company to Whitehall Enterprises, this transaction closed in January 2000. As
part of this agreement, Whitehall Enterprises agreed to provide Alternative
Lending Group working capital of one hundred fifty thousand dollars ($150,000)
in December 1999. This advance has been reflected as an advance from related
party at December 31, 1999.
In March 2000, the Company acquired Direct Financial LLC, a Michigan mortgage
broker/lender, in exchange for 2,125,000 shares of restricted Whitehall stock
which was valued at $1.00 per share upon closing.
# # # # #
15
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA
On January 22, 2000 Whitehall Enterprises, Inc. closed on the purchase of
Alternative Lending Group, Inc. ("ALG") an Illinois corporation. Alternative
Lending Group is engaged in the mortgage banking and mortgage brokerage
business. As a result thereof ALG 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, 1999 (the
"Pro Forma Balance Sheet"), and (ii) a 1999 fiscal year pro forma condensed
combined statement of operations (unaudited) (the 1999 Pro Forma Statement of
Operations"), (collectively, the "Pro Forma Statements").
The Pro Forma Balance Sheet reflects the combination of the balance sheet of the
Company as of September 30, 1999, and the balance sheet of LAG as of December
31, 1999, adjusted for the ALG Acquisition. The Pro Forma Balance Sheet is
presented as if the ALG Acquisition was consummated on September 30, 1999. The
1999 Pro Forma Statement of Operations reflects the combination of the income
statement of the Company for the year ended September 30, 1999, and the income
statement of ALG for the year ended December 31, 1999, as adjusted for the ALG
Acquisition. The 1999 Pro Forma Statement of Income is presented as if the MBM
Acquisition was consummated on September 30, 1999. The Pro Forma Statements
should be read in conjunction with the separate historical financial statements
of the Company and ALG 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.
16
<PAGE>
WHITEHALL ENTERPRISES, INC. AND ALTERNATIVE LENDING GROUP, INC.
Pro-Forma Condensed Combined Balance Sheet - Unaudited
September 30, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO-FORMA
-------------------------------------- -----------------------------------
ASSETS
Whitehall ALG Adjustments
September 30, December 31, for
1999 1999 Combined Acquisition Combined
----------- ----------- ----------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current Assets
Cash $ 2,264 $ 199,814 $ 202,078 $202,078
Accounts receivable 577,477 34,543 612,020 612,020
Inventories 448,361 - 448,361 448,361
Prepaid expenses 73,949 18,574 92,523 92,523
---------- ---------- ---------- ----------
Total Current Assets 1,102,051 252,931 1,354,982 1,354,982
---------- ---------- ---------- ----------
Loans Receivable 1,608,853 1,101,382 2,710,235 2,710,235
Deferred Financing Costs 279,337 - 279,337 279,337
Property and Equipment 2,662,553 87,610 2,750,163 2,750,163
Less Accumulated Depreciation (2,142,371) (41,827) (2,184,198) (2,184,198)
---------- ---------- ---------- ----------
Property and Equipment - Net 520,182 45,783 565,965 565,965
---------- ---------- ---------- ----------
Investments in ALG - - - -
Other Assets
Patents 350,000 - 350,000 350,000
Deposits 1,166 - 1,166 1,166
Other - 122,203 122,203 122,203
Goodwill - - - (a) 176,644 176,644
---------- ---------- ---------- ----------
Total Other Assets 351,166 122,203 473,369 650,013
---------- ---------- ---------- ----------
TOTAL ASSETS $3,861,589 $1,522,299 $5,383,888 $5,560,532
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Current portion of long term debt $ 536,510 - $ 536,510 $536,510
Advance from related party - $ 150,000 150,000 (c) (150,000) 0
Notes payable - bank 525,624 - 525,624 525,624
Income taxes payable 30,413 - 30,413 30,413
Accounts payable 995,585 18,172 1,013,757 1,013,757
Other liabilities - 1,425 1,425 1,425
---------- ---------- ---------- ----------
Total Current Liabilities 2,088,132 169,597 2,257,729 2,107,729
---------- ---------- ---------- ----------
Deferred Income Taxes 54,171 18,000 72,171 72,171
Capital lease liability - 17,143 17,143 17,143
Warehouse line of credit - 1,094,203 1,094,203 1,094,203
Long-Term Debt 629,771 - 629,771 629,771
---------- ---------- ---------- ----------
Total Liabilities 2,772,074 1,298,943 4,071,017 3,921,017
---------- ---------- ---------- ----------
Shareholders' Equity
Preferred stock, $.001 par value,
4,000,000 million shares authorized, issued
and outstanding at December 31, 1998 4,000 - 4,000 4,000
Common Stock, $.0001 par value,
200,000,000 shares authorized, 124,900,000
shares issued and outstanding 12,493 - 12,493 (a) 800 13,293
Common stock, no-par value,
issued and outstanding;
500,000 class A voting stock; - 1,000 1,000 (a) (1,000) 0
500,000 class B nonvoting stock - 333 333 (b) (333) 0
Additional Paid In Capital 998,653 300,307 1,298,960 (a),(b) & (c) 248,893 1,547,853
Retained Earnings 74,369 222,356 296,725 (a) (222,356) 74,369
Treasury stock, 500,000 shares class B at cost - (300,640) (300,640) (b) 300,640 0
---------- ---------- ---------- ----------
Total Stockholders' Equity 1,089,515 223,356 1,312,871 1,639,515
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,861,589 $1,522,299 $5,383,888 $5,560,532
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
WHITEHALL ENTERPRISES, INC. AND ALTERNATIVE LENDING GROUP, INC.
Pro-Forma Condensed Combined Statement of Operations - Unaudited
For the Year Ended September 30, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO-FORMAL
-------------------------------------------- ------------------------------------
Whitehall ALG Adjustments
September 30, December 31, for
1999 1999 Combined Acquisition Combined
------------- ------------- ------------- ----- ----------- -------------
<S> <C> <C> <C> <C>
Revenues from Operations
Sales $ 4,170,370 $ 1,831,710 $ 6,002,080 $ 6,002,080
Cost of Sales 3,282,274 - 3,282,274 3,282,274
------------- ------------- ------------- -------------
Gross Profit 888,096 1,831,710 2,719,806 2,719,806
------------- ------------- ------------- -------------
Operating Expenses
Sales, General and Administration 709,230 2,108,603 2,817,833 2,817,833
Depreciation 199,932 - 199,932 199,932
------------- ------------- ------------- -------------
Total Operating Expenses 909,162 2,108,603 3,017,765 3,017,765
------------- ------------- ------------- -------------
Income/Loss from Operations (21,066) (276,893) (297,959) (297,959)
------------- ------------- ------------- -------------
Other Income
Gain on sale of loan inventory - 199,978 199,978 199,978
Underwriting fees - 61,693 61,693 61,693
Miscellaneous income - 18,935 18,935 18,935
Unrealized income current translation 1,801 - 1,801 1,801
Interest 242,589 20,921 263,510 263,510
------------- ------------- ------------- -------------
Total Other Income 244,390 301,527 545,917 545,917
------------- ------------- ------------- -------------
Other Expenses
Interest expense 95,839 5,852 101,691 101,691
------------- ------------- ------------- -------------
Total Other Expenses 95,839 5,852 101,691 101,691
------------- ------------- ------------- -------------
Income taxes
Currently payable 29,709 3,000 32,709 32,709
Deferred 23,406 - 23,406 23,406
------------- ------------- ------------- -------------
Total Income Taxes 53,115 3,000 56,115 56,115
------------- ------------- ------------- -------------
Net income $ 74,370 $ 15,782 $ 90,152 $ 90,152
============= ============= ============= =============
Net income per common share 0.0006 0.0020 0.0007 0.0007
============= ============= ============= =============
Number of shares used in computation 124,900,000 8,000,000 132,900,000 132,900,000
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
WHITEHALL ENTERPRISES, INC. AND ALTERNATIVE LENDING GROUP, INC.
NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999
(UNAUDITED)
(a) Reflects the estimated purchase accounting adjustments for the ALG
Acquisition based upon a preliminary appraisal of the assets and
liabilities assumed. For purchase accounting, ALG 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 ALG are not expected
to differ materially from the final assigned values. Purchase
accounting adjustments were recorded to eliminate ALG's capital stock
and retained earnings at December 31, 1999.
The calculation of excess purchase cost over the estimated fair value of assets
acquired and liabilities assumed is summarized as follows:
Total purchase cost $ 400,000
Current assets 1,354,313
Property and equipment 45,783
Other assets 122,203
Current liabilities (169,597)
Warehouse line of credit - bank (1,094,203)
Obligations under capital leases (17,143)
Deferred income taxes (18,000)
-----------
$ 223,356
-----------
Excess of purchase cost over fair
Value of assets acquired and
liabilities assumed $ 176,644
===========
(b) Reflects the elimination of ALG's Class B nonvoting common stock and
the related treasury stock.
(c) Reflects the classification of advances from related party to paid in
capital. The $150,000 represented the initial working capital
contribution referred to in the stock purchase agreement.
19
