FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-18344
SOONER HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1275261
(State or other jurisdiction of (IRS employer
incorporation or organization) Identification No.)
2680 W. I-40, Oklahoma City, OK 73108
(Address of principal executive offices)
Issuer's telephone number, including area code: (405) 236-8332
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [ ] NO [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 8,471,350 shares of
common stock as of March 15, 2000.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOONER HOLDINGS, INC.
Consolidated Balance Sheet
(unaudited)
Sept. 30,
1998
-----------
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 101,594
Accounts receivable ........................................ 118,459
Other current assets ....................................... 41,802
-----------
Total current assets ..................................... 261,855
Property and equipment, net ................................... 2,805,074
Intangible assets, net of amortization of $18,770 ............. 1,734,024
Other assets, net ............................................. 255,315
-----------
$ 5,056,268
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ........................................... $ 131,788
Accrued liabilities to related parties ..................... 181,564
Accrued liabilities ........................................ 118,761
Current portion of notes payable and royalty payable ....... 61,053
Deferred revenue ........................................... 17,032
-----------
Total current liabilities ................................ 510,198
-----------
Notes payable, less current portion and net of
discount of $438,667 ....................................... 4,412,588
Royalty payable, less current portion and net of
discount of $900,186 ....................................... 438,859
Commitments and contingencies ................................. --
Stockholders' deficit:
Preferred stock; undesignated, authorized 10,000,000
shares, no shares issued and outstanding ................ --
Common stock; $.001 par value, authorized 100,000,000
shares, 8,471,350 shares issued and outstanding ......... 8,471
Additional paid-in-capital ................................. 5,532,907
Accumulated deficit ........................................ (5,846,755)
-----------
Total stockholders' deficit .............................. (305,377)
-----------
$ 5,056,268
===========
The accompanying notes are an integral part of this consolidated balance sheet.
SOONER HOLDINGS, INC.
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the quarter ended For the nine months ended
September 30, September 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues ......................... $ 360,987 $ 91,539 $ 595,901 $ 363,789
----------- ----------- ----------- -----------
Operating expenses:
Cost of services .............. 97 279 675 899
General and administrative .... 327,379 41,069 455,462 127,485
Depreciation and amortization . 39,559 15,001 79,130 44,853
----------- ----------- ----------- -----------
Total operating expenses .... 367,035 56,349 535,267 173,237
----------- ----------- ----------- -----------
Income (loss) from operations .... (6,048) 35,190 60,634 190,552
Interest expense ................. (132,593) (51,249) (274,320) (176,352)
Other income ..................... 1,684 39,000 1,899 43,801
----------- ----------- ----------- -----------
Net income (loss) ................ $ (136,957) $ 22,941 $ (211,787) $ 58,001
=========== =========== =========== ===========
Net income (loss) per common share $ (.02) $ * $ (.03) $ *
=========== =========== =========== ===========
Weighted average common shares
outstanding ...................... 7,819,236 7,471,350 7,819,236 7,471,350
=========== =========== =========== ===========
</TABLE>
* less than $.01
The accompanying notes are an integral part of these
consolidated financial statements.
SOONER HOLDINGS, INC.
Consolidated Statements of Cash Flows
(unaudited)
For the nine months ended
September 30,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income (loss) .................................. $(211,887) $ 58,001
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization .................. 79,130 44,853
Stock received for payment of fees ............. -- (39,000)
Changes in assets and liabilities:
Accounts receivable ........................... (31,169) (988)
Other current assets .......................... (1,556) (838)
Accounts payable .............................. 14,215 5,062
Real estate taxes payable ..................... 10,200 10,200
Accrued liabilities to related parties ........ 115,524 67,895
Accrued liabilities ........................... 63,978 7,019
Deferred revenue .............................. 2,130 (99,830)
--------- ---------
Net cash provided by operating activities ....... 40,565 52,374
--------- ---------
Cash flows from investing activities:
Sale of land ....................................... -- 1
Purchases of property and equipment ................ (183,830) (8,875)
--------- ---------
Net cash used in investing activities ........... (183,830) (8,874)
--------- ---------
Cash flows from financing activities:
Repayments of notes payable ........................ (50,229) (54,198)
Royalty payments ................................... (24,000) --
Borrowings on notes payable ........................ 155,287 --
Borrowings on notes payable to related parties ..... 159,319 13,300
--------- ---------
Net cash provided by (used in)
financing activities .......................... 240,377 (40,898)
--------- ---------
Net increase in cash ................................. 97,112 2,602
Cash at beginning of year ............................ 4,482 2,649
--------- ---------
Cash at end of period ................................ $ 101,594 $ 5,251
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest .......... $ 191,964 $ 141,043
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
SOONER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and operations
- ---------------------------
Sooner Holdings, Inc., an Oklahoma corporation (Company), operates
primarily through two of its subsidiaries. New Directions Acquisitions Corp.
(NDAC) owns and operates a community correction business in Oklahoma City,
Oklahoma and Charlie O Business Park Incorporated (Business Park) is engaged in
the ownership and rental of a business park in Oklahoma City, Oklahoma. The
Company also owns 100% of Charlie O Beverages, Inc. (Beverages) which operates
the original in-home soda fountain business and SD Properties, Inc. (SDPI) which
acts as a marketing representative for construction contractors to develop
business opportunities for those contractors for a fee. Effective June 1, 1998,
the Company completed the acquisition of the community correctional business in
Oklahoma City, Oklahoma (see Note 8).
Basis of presentation
- ---------------------
The unaudited consolidated financial statements presented herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations for interim financial information and the instructions to Form
10-QSB and Regulation S-B. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. These unaudited
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997 (1997 Form 10-KSB).
In the opinion of management, the unaudited consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals only) which are
necessary to present fairly the consolidated financial position, results of
operations, and changes in cash flow of the Company. Operating results for
interim periods are not necessarily indicative of the results which may be
expected for the entire year.
Management Plans
- ----------------
The unaudited consolidated financial statements have been prepared
contemplating continuation of the Company as a going concern. The Company has
sustained recurring operating losses in recent years and is expected to need
additional amounts of working capital for its operations. At September 30, 1998,
the Company has a shareholders' deficit of $305,377 and has a working capital
deficiency of $248,343. In view of these matters, realization of a major portion
of the assets is dependent upon continued operations of the Company, which in
turn is dependent upon the Company's ability to meet its financing requirements
and the success of its future operations.
The Company acquired a community correctional facility effective June 1,
1998 and has implemented plans to improve its liquidity and performance. These
measures, among other items, include refinancing of long-term debt and reduction
of operating and administrative expenses. Management seeks to expand its
correctional service operations and believes that this segment will ultimately
result in future growth and profitability of the Company; however, there can be
no assurance that these plans will be successful.
Principles of consolidation
- ---------------------------
The unaudited consolidated financial statements have been prepared on
the basis of generally accepted accounting principles and include the accounts
of Sooner Holdings, Inc. and its subsidiaries. All significant intercompany
transactions have been eliminated.
Reclassifications
- -----------------
Certain reclassifications have been made in the 1997 financial
statements to conform with the 1998 presentation. These reclassifications do not
have a material effect on the consolidated financial statements.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1998 is comprised of the
following:
Land ........................ $1,311,400
Buildings and improvements .. 1,853,860
Machinery and equipment ..... 90,998
Vehicles .................... 42,531
----------
3,298,789
Less accumulated depreciation 493,715
----------
Property and equipment, net . $2,805,074
==========
NOTE 3 - OTHER ASSETS
Other assets at September 30, 1998 is comprised of the following:
Loan commitment fee, less amortization of $1,125 $ 28,315
Certificates of deposit ........................ 227,000
--------
Other assets, net .............................. $255,315
========
NOTE 4 - NOTES PAYABLE
Notes payable as of September 30, 1998 consists of the following:
Installment note payable to bank, interest at prime plus 3%
per annum, due June 20, 1999, personally guaranteed by a
shareholder, officer and director. Secured by real estate.
Paid off during 1999 as part of debt refinancing. $ 924,812
Installment note payable to bank, interest at prime plus 3%
per annum, due June 20, 1999, personally guaranteed by a
shareholder, officer and director. Secured by real estate.
Paid off during 1999 as part of debt refinancing. 185,711
Oklahoma Industrial Finance Authority (OIFA) loan, variable
interest and payments, maturing August 1, 2004, interest
at 3% over the Oklahoma Industrial Finance Authority's
cost of capital, not to fall below 10% or exceed 14%,
guaranteed by a shareholder, officer and director. Secured
by real estate and equipment. Paid off during 1999 as part
of debt refinancing. 411,975
Notes payable to related parties, interest ranging from 10%
to 15% per annum, due January 1, 1999. 999,849
Installment note payable to bank, interest at prime plus 3%
per annum, due May 20, 1999, personally guaranteed by a
shareholder, officer and director. Secured by real estate.
Paid off during 1999 as part of debt refinancing. 77,013
Note payable to individuals, no stated interest rate, due
on demand. Secured by real estate. Paid off during 1999 as
part of debt refinancing. 139,090
Note payable to bank, payment of interest only due monthly,
interest at prime pus .5%, due September 1, 1999,
personally guaranteed by a shareholder, officer and
director. Paid off during 1999 as part of debt
refinancing. 98,800
Note payable to bank, payments of interest only due
quarterly, interest at prime, due September 1, 1999,
personally guaranteed by a shareholder, officer and
director. Paid off during 1999 as part of debt
refinancing. 40,233
Note payable to bank, payable in monthly installments of
$500, interest at prime plus 1%, due June 24, 1999,
secured by inventory. Paid off during 1999 as part of debt
refinancing. 8,589
Balloon promissory note payable to related party (see Note
8), 10% stated interest per annum, 15% effective interest
rate, principal and interest due June 1, 2001;
collateralized by a second mortgage on land and facility
owned by the Company, net of discount of $438,667. 892,333
Note payable to bank, interest at New York prime plus 2%,
due April 20, 2000, collateralized by a first mortgage on
land and facility owned by the Company. 599,183
Revolving line of credit with Bank One, interest payable
monthly at 3.25% over bank's prime rate, principal payable
May 2005. 35,000
Other notes payable to banks, interest rates ranging from
9.5% to 9.75%, principal and interest due January 1999,
collateralized by vehicles. 56,098
-----------
$ 4,468,686
Less current portion 56,098
-----------
Notes payable $ 4,412,588
===========
During 1999, the Company refinanced several of the above notes payable
that were due to mature during 1999. These notes were replaced by a single note
payable to a bank bearing an 8.8% interest rate and maturing in June 2009.
Accordingly, these amounts have been classified as noncurrent.
NOTE 5 - ROYALTY PAYABLE
As part of a business acquisition (see Note 8), the Company assumed a
royalty payable to an individual. The agreement calls for monthly payments of
the greater of $6,000 or 6% of the total gross monthly income of NDAC. The
agreement expires on April 30, 2017. Future minimum payments under this
agreement total $1,344,000. A discount of $900,186 was imputed by management
using a 15% interest rate.
NOTE 6 - RELATED PARTY OBLIGATIONS
Related parties are discussed in the 1997 Form 10-KSB. In addition, the
following are related parties:
New Direction Centers of America, L.L.C. As part of the business
acquisition (see Note 8), the Company issued a note payable to New Direction
Centers of America, L.L.C. (NDLLC) which is owned 24% by the Company's president
and chairman.
Management Agreement. The management of the operation of the
correctional facility is subcontracted to C & R Investments L.L.C. (CRI). The
owner of CRI owns approximately 3% of the Company's common stock.
The following table reflects the related party obligations as of
September 30, 1998:
Notes Accrued
Payable Liabilities
------- -----------
President and chairman ........ $ 674,381 $ 56,170
Aztor(theta) and affiliates ... 310,685 80,039
NDLLC ......................... 892,333 45,355
CRI ........................... 14,783 -0-
---------- ----------
Total related party liabilities $1,892,182 $ 181,564
========== ==========
In addition, the president and chairman of the Company has personally
guaranteed $1,738,544 of the Company's notes payable.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In February 1998, a lawsuit was filed by one of the owners of NDLLC
against the Company relating to the purchase of New Directions (see Note 8).
Subsequent to quarter-end, a settlement was reached which includes a payment of
$76,000.
The Company is involved in certain other administrative proceedings
arising in the normal course of business. In the opinion of management, such
matters, including the lawsuit described above, will be resolved without
material effect on the Company's results of operations or financial condition.
NOTE 8 - ACQUISITION
Effective June 1, 1998, The Company completed the acquisition of all the
assets and certain liabilities of New Direction Centers of America, L.L.C. (New
Directions) and Horizon Lodges of America, Inc. (HLA) (together the "Sellers").
The Sellers' assets relate to the operation of a community correction business
in Oklahoma City, Oklahoma. The purchase price for the assets acquired was
$1,000,000 (the Note), the assumption of a "royalty" fee for the next 20 years
of at least $6,000 per month due to the original permitting owner, 1,000,000
shares of common stock of the Company, and approximately $1,000,000 in
liabilities.
The acquisition of these assets was accounted as a purchase in
accordance with Accounting Principles Board Opinion No. 16, with the cost
allocated to the net assets acquired based on their estimated fair values. The
operations of the New Directions business have been included in the financial
statements of the Company from the date of acquisition.
The assets acquired included a $227,000 Certificate of Deposit and the
facility and equipment which the business operates from which is zoned for use
as a community correction center valued at $450,000. Approximately $1,753,000 of
the purchase price was allocated to contract rights acquired. The contract
rights relate to an annually renewable contract with the Oklahoma Department of
Corrections. This asset is being amortized over a nine-year period which is
management's estimate of the expected life of the contract.
The promissory note issued to New Directions bears interest of 10% per
annum with principal and interest due in three years. The face value of the Note
of $1,331,000 has been discounted by management by $451,667 using a 15%
effective rate of interest.
Item 2. Management's Discussion and Analysis or Plan of Operation
Introduction
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto included elsewhere in this Form
10-QSB report. In addition, the discussion of the Company's expected Plan of
Operation, included in the 1997 Form 10-KSB, is incorporated herein in its
entirety as the discussion of the Plan of Operation as required by Item 303(a)
of Regulation S-B.
Plan of Operation
Effective June 1, 1998, NDAC completed the acquisition of the assets and
certain liabilities of New Directions related to the operation of a community
correction business. NDAC runs a community correction center, commonly known as
a halfway house, that currently has approximately 140 beds available but is
licensed to provide up to 300 beds. NDAC operates under a contract with the
Oklahoma Department of Corrections, which provides clients to NDAC.
The assets acquired included a $227,000 Certificate of Deposit and the
facility and equipment which the business operates from which is zoned for use
as a community correction center valued at $450,000. Approximately $1,753,000 of
the purchase price was allocated to contract rights acquired. The contract
rights relate to the annually renewable contract with the Oklahoma Department of
Corrections. This asset is being amortized over a nine-year period which is
management's estimate of the expected life of the contract.
With the NDAC acquisition, the Company intends to shift its growth focus
to the community corrections business and either liquidate or totally
de-emphasize its other operating subsidiaries.
The Community Correction Business
The facility operated by NDAC is a non-secure residential facility for
adult male and female offenders transitioning from institutional to independent
living. Offenders are eligible for these programs based upon the type of offense
committed and behavior while incarcerated in prison. Offenders generally spend
the last six months of their sentence in a community corrections program. The
goal and mission of NDAC's community corrections business is to reduce the
likelihood of an inmate committing an offense after release by assisting in the
reunification process with family and the community. Offenders must be employed,
participate in substance abuse programs, submit to frequent random drug testing,
and pay a predetermined percentage of their earnings to the government to offset
the cost of the program. The Company supervises these activities and also
provides life skills training, case management, home confinement supervision and
family reunification programs at its facilities.
NDAC's facility has recently received accreditation from the American
Correctional Association (the ACA), the governing body for accreditation. The
ACA has 25 mandatory standards and 263 non-mandatory standards regarding staff
working conditions and correctional facility living conditions. A community
correction facility that is ACA accredited can take private clients as well as
Federal clients.
Business Strategy
The Company's business strategy is to be come a leading developer and a
manager of a quality privatized community correction facilities, initially in
Oklahoma and then expanding interstate. Management intends on seeking a larger
community corrections business by expanding into other zoned facilities, either
internally and through acquisitions. The Company intends on obtaining and
maintains ACA accreditation for all of its facilities.
The Company will operate each facility under its management. The Company
will also either directly or through subcontractors, provide health care and
food service. In the future, the facilities may offer special rehabilitation and
educational programs, such as academic or vocational education, job and life
skills training, counseling and work and recreational programs.
Liquidity and Capital Resources - September 30, 1998 (unaudited) compared to
September 30, 1997 (unaudited).
The Company has had severe liquidity problems for the last several
years. The Company's liquidity is reflected in the table below, which shows
comparative deficiencies in working capital. Current working capital has been
primarily supplied by the Company's chairman and president, by Aztor(theta)
Holdings, Inc. (Aztor(theta)), a Phoenix, Arizona investment company or by
Aztor(theta)'s other affiliated companies.
September 30, Dec. 31, 1997
1998 1997 (audited)
---- ---- ---------
Deficiency in working capital ..... $(243,642) $(505,949) $(863,925)
========= ========= =========
Exclusive of funds required for debt repayment, the Company believes
that it can borrow any additional funds from its related parties to maintain its
operations, although there can be no assurance that such funds will be available
when needed. In the event that the Company cannot refinance, or obtain
forbearance on its current liabilities or on its long-term liabilities as they
come due, the Company will undoubtedly face further severe liquidity problems
which may lead to litigation, the inability to transact business, and/or
foreclosure actions being initiated against a majority of the Company's assets.
As discussed above, the Company acquired certain assets related to the
operation of a community correction business. The purchase price for the assets
acquired was the issuance of 1,000,000 shares of common stock of the Company,
$1,000,000 in a note payable and the assumption of approximately $1,464,000 of
liabilities. The note issued to New Directions bears interest of 10% per annum
and is due in three years.
The Company believes the operations of the community corrections
business will be cash flow positive and be profitable and that the cash flow
from the new business will be sufficient to service the debt payments under the
note and the mortgage payment on the facility. The Company also intends to
continue the rehabilitation of the facility in order to bring the inmate
occupancy up to 300 beds. In the event that cash flow is insufficient to satisfy
the Company's needs, management believes that it can borrow any additional funds
from its related parties to maintain its operations.
Results of Operations - The quarter and nine months ended September 30, 1998
(unaudited) compared to the quarter and nine months ended September 30, 1997
(unaudited)
The following table illustrates the Company's revenue mix.
Quarter ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
Business Park revenue ...... $ 73,047 $ 84,053 $215,943 $257,634
NDAC revenue ............... 287,192 -0- 376,030 -0-
Other revenue .............. 748 7,486 3,928 106,155
-------- -------- -------- --------
Total revenue ........... $360,987 $ 91,539 $595,901 $363,789
======== ======== ======== ========
Total revenues increased $269,448 (294%) and $232,112 (16%) for the
quarter and nine months ended September 30, 1998 compared to the same quarter
and nine-month periods in 1997. This increase was related to the Company's NDAC
subsidiary. In June 1998 the Company acquired through NDAC a community
correctional facility. For the quarter ended September 30, 1998 NDAC generated
$287,192 of revenues or 80% of the total revenues for the current period.
Business Park's revenues decreased $11,006 (13%) and $41,691 (16%) for
the quarter and nine months ended September 30, 1998, compared to the same
quarter and nine month periods in 1997. This decrease is primarily attributable
to the loss of one tenant in November 1997 that accounted for 24% of total
revenues for Business Park. However, the lost revenues from one tenant was
offset by revenues generated from renegotiated leases during the latter part of
1997 from one year to three to five year leases at an average increase of $.39
per square foot. Losses of tenants in the future could affect future operations
and financial position due to the cost of new leasehold improvements to attract
new tenants, increased leasing fees or lower rent revenue due to vacancy. There
is no assurance the Company will return to its historically high occupancy rate.
Other revenues for the quarter and nine months ended September 30, 1997
came from SDPI's recognition of approximately $100,000 of deferred revenues
related to the expiration of warranty services provided by SDPI for one year
from completion of its 1996 contracts. SDPI ceased doing business in early 1998.
Total operating expenses for the quarter and nine months ended September
30, 1998 were $367,035 and $535,256, respectively, as compared to total expenses
for the comparable 1997 periods of $56,267 and $173,237, respectively. This
increase is related to the acquisition of the community correctional business in
June 1998. The NDAC subsidiary accounted for $356,933 or 67% of the increase in
total operating expenses for the current period. The amortization of the NDAC
intangible asset resulted in an increase in depreciation and amortization
expense in the 1998 periods over the comparable 1997 periods. In addition
general and administrative expense for the quarter and nine month periods
increased due to the acquisition of the community correctional business in June
1998.
Interest expense increased $81,344 (159%) for the quarter ended
September 30, 1998 over the 1997 period. This increase arose from the assumption
by the Company in June 1998 of approximately $600,000 in loans from the
acquisition of New Directions and the issuance of the $1,000,000 acquisition
note.
The Company recorded net loss for the nine-month period of 1998 of
$211,787 as compared to net income of $58,001 for the comparable 1997 period.
The increase in net loss in 1998 was due primarily to the acquisition by the
Company of the community correction business in June 1998.
Capital Expenditures and Commitments
During the quarter and nine months ending September 30, 1998, the
Company spent approximately $61,000 on capital expenditures primarily for
leasehold improvements at the correctional facility. The Company expects to
spend an additional $30,000 for leasehold improvements on its Business Park and
correctional facility.
Factors that may affect future results
A number of uncertainties exist that may affect the Company's future
operating results. These include the uncertain general economic conditions, the
ongoing support of the related parties, the ability of the Company to refinance
its notes payable on satisfactory terms, and the Company's ability to acquire
sufficient funding to sustain its operations and develop new businesses. A
majority of these issues directly or indirectly relate to the Company's ability
to sell additional equity or debt. The Company and all its subsidiaries have had
unsuccessful operating histories and have been consistently unprofitable and if
this trend continues the Company, or any subsidiary, may have to seek formal
court protection from creditors.
Forward-looking statements
This Form 10-QSB, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Form 10-QSB (and in documents
incorporated by reference), including without limitation, statements under
"Management's Discussion and Analysis or Plan of Operation" regarding the
Company's financial position, business strategy and plans and objectives of
management of the Company for future operations, are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In February 1998, a lawsuit was filed by one of the owners of New
Direction Centers of America, L.L.C. against the Company relating to the
purchase of the community correctional business. On January 18, 2000, a
settlement was reached which includes a payment of $76,000. The Company believes
it has no liability under this claim due to various defenses which it intends to
vigorously assert. As a result, no accrual has been made in the unaudited
consolidated financial statements presented herein.
The Company's Business Park operation occasionally has disputes with
tenants regarding its lease agreements. In the opinion of management, such
matters will be resolved without material effect on the Company's results of
operations or financial condition.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
The Company has filed the following reports on Form 8-K.
Date filed
----------
Letter re: change in certifying accountant May 11, 1999
Letter re: change in certifying accountant June 16, 1999
Purchase and Sale Agreement June 23, 1999
SIGNATURES
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 thereunto duly authorized.
SOONER HOLDINGS, INC.
------------------------------
(Registrant)
Dated: March 15, 2000
-------------------------
By: R. C. Cunningham II
-----------------------------
R. C. Cunningham II, Chairman
and President
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<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
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0
0
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