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 June 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)
June 30,
1998
-----------
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 17,546
Accounts receivable ........................................ 85,623
Other current assets ....................................... 42,563
-----------
Total current assets ..................................... 145,732
Property and equipment, net ................................... 2,769,087
Intangible assets, net of amortization of $4,692 .............. 1,748,101
Other assets, net ............................................. 255,690
-----------
$ 4,918,610
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ........................................... $ 109,292
Accrued liabilities to related parties ..................... 110,608
Accrued liabilities ........................................ 119,079
Current portion of notes and royalty payable ............... 32,863
Deferred revenue ........................................... 17,532
-----------
Total current liabilities ................................ 389,374
-----------
Notes payable, less current portion and net
of discount of $451,667 .................................... 4,252,851
Royalty payable, less current portion and net
of discount of $912,241 .................................... 444,804
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 ........................................ (5,709,797)
-----------
Total stockholders' deficit .............................. (168,419)
-----------
$ 4,918,610
===========
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 six months ended
June 30, June 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues ...................... $ 163,099 $ 107,248 $ 234,914 $ 272,250
----------- ----------- ----------- -----------
Operating expenses:
Cost of services ............ 184 347 578 620
General and administrative .. 98,645 42,381 128,083 86,416
Depreciation and amortization 24,058 14,913 39,571 29,852
----------- ----------- ----------- -----------
Total operating expenses . 122,887 57,641 168,232 116,888
----------- ----------- ----------- -----------
Income from operations ........ 40,212 49,607 66,682 155,362
Interest expense .............. (86,383) (67,167) (141,727) (125,103)
Other income (expense) ........ (995) 4,801 215 4,801
----------- ----------- ----------- -----------
Net income (loss) ............. $ (47,166) $ (12,759) $ (74,830) $ 35,060
=========== =========== =========== ===========
Net income (loss) per common
share ....................... $ (.01) $ (*) $ (.01) $ *
=========== =========== =========== ===========
Weighted average common
shares outstanding .......... 7,637,096 7,471,350 7,637,096 7,471,350
=========== =========== =========== ===========
</TABLE>
- -------------------------
*less than $.01 per share
The accompanying notes are an integral part of these
consolidated financial statements.
SOONER HOLDINGS, INC.
Consolidated Statements of Cash Flows
(unaudited)
For the six months ended
June 30,
1998 1997
--------- ---------
Cash flows from operating activities:
Net income (loss) .................................. $ (74,830) $ 35,060
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization .................. 39,571 29,852
Changes in assets and liabilities:
Accounts receivable .......................... 1,667 832
Other current assets ......................... (2,317) (1,590)
Accounts payable ............................. (8,279) 11,003
Real estate taxes payable .................... 6,800 6,800
Accrued liabilities to related parties ....... 44,568 48,110
Accrued liabilities .......................... 67,596 10,004
Deferred revenue ............................. 2,630 (92,830)
--------- ---------
Net cash provided by operating activities ........ 77,406 47,241
--------- ---------
Cash flows from investing activities:
Sale of land ....................................... -- 1
Purchases of property and equipment ................ (134,791) (3,645)
--------- ---------
Net cash used in investing activities ............ (134,791) (3,644)
--------- ---------
Cash flows from financing activities:
Repayments of notes payable ........................ (16,670) (57,115)
Royalty payments ................................... (6,000) --
Borrowings on notes payable ........................ 76,781 --
Borrowings on notes payable to
related parties .................................. 16,338 13,000
--------- ---------
Net cash provided by (used in)
financing activities ........................... 70,449 (44,115)
--------- ---------
Net increase (decrease) in cash ...................... 13,064 (518)
Cash at beginning of year ............................ 4,482 2,649
--------- ---------
Cash at end of period ................................ $ 17,546 $ 2,131
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest ............. $ 104,149 $ 100,263
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
SOONER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and operations
- ---------------------------
Sooner Holdings, Inc., an Oklahoma corporation (the "Company"), operates
primarily through two of its subsidiaries. New Directions Acquisition 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 (the "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 June 30, 1998, the
Company has a shareholders' deficit of $168,419 and has a working capital
deficiency of $243,642. 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 to the 1997 financial
statements to conform to the 1998 presentation.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1998 is comprised of the following:
Land .................................. $1,311,400
Buildings and improvements ............ 1,818,852
Machinery and equipment ............... 64,968
Vehicles .............................. 42,531
----------
3,237,751
Less accumulated depreciation ......... 468,664
----------
Property and equipment, net ........... $2,769,087
==========
NOTE 3 - OTHER ASSETS
Other assets at June 30, 1998 is comprised of the following:
Loan commitment fee, less amortization of $750 ........ $ 28,690
Certificates of deposit ............................... 227,000
----------
Other assets, net ..................................... $ 255,690
==========
NOTE 4 - NOTES PAYABLE
Notes payable as of June 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. $ 927,009
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. 186,093
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. 424,597
Notes payable to related parties, interest ranging from 10% to
15% per annum, due January 1, 1999. 856,868
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. 76,781
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. 9,851
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 $451,667. 879,333
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. 614,196
Other notes payable to banks, interest rates ranging from 9.5%
to 9.75%, principal and interest due January 1999,
collateralized by vehicles. 27,908
-----------
4,280,759
Less current portion 27,908
-----------
Notes payable $ 4,252,851
===========
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 $1,362,000. A discount of $912,241 was imputed by management
using a 15% interest rate.
NOTE 6 - RELATED PARTIES
The Company's 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 amounts owed to related parties at June 30,
1998:
Notes Acounts Payable
Payable and Accrued Liabilities
----------- -----------------------
President and chairman $ 538,183 $ 39,228
Aztor Holdings, Inc. 310,685 60,041
NDLLC 879,333 11,339
CRI 8,000 -0-
---------- ----------
Total related party liabilities $1,736,201 $ 110,608
========== ==========
The president and chairman has personally guaranteed $1,753,513 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 Directions Centers of America, L.L.C. (New
Directions) related to the operation of a community correction business in
Oklahoma City, Oklahoma. 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 (the Note) and the assumption of approximately $1,464,000 of
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 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 - June 30, 1998 (unaudited) compared to June 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.
June 30, Dec. 31, 1997
1998 1997 (audited)
---- ---- ---------
Deficiency in working capital $(243,642) $(488,061) $(863,925)
========== ========== ==========
Although the Company's working capital remains negative, the Company has
been able to meet its obligations as a result of the financial support received
from certain of the Company's related parties. The Company's current working
capital, which has been provided in the form of notes payable, has been
primarily supplied by either the Company's chairman and president, or by Aztor
Holdings, Inc. ("Aztor"). Aztor has agreed to restructure a majority of its
liabilities as part of the NDAC acquisition.
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 subsequent to the quarter-end. 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 six months ended June 30, 1998
(unaudited) compared to the quarter and six months ended June 30, 1997
(unaudited)
The following table illustrates the Company's revenue mix:
Quarter ended Six months ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
Business Park revenue ...... $ 73,283 $ 85,737 $142,896 $173,581
NDAC revenue ............... 88,838 -0- 88,838 -0-
Other revenue .............. 978 21,511 3,180 98,669
-------- -------- -------- --------
Total revenue .............. $163,099 $107,248 $234,914 $272,250
======== ======== ======== ========
Total revenues for the quarter ended June 30, 1998 increased by $55,851
or 52% over the comparable period 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 month of June 1998 NDAC generated
$88,838 of revenues or 54% of the total revenues for the current period.
Business Park's revenues decreased $12,454 (15%) and $30,685 (18%) for
the quarter and six months ended June 30, 1998, compared to the same quarter and
six 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 six months ended June 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 increased $65,246 (113%) and $51,344 (44%) for
the quarter and six months ended June 30, 1998, compared to the same quarter and
six month periods in 1997. This increase is related to the acquisition of the
community correctional business in June 1998. The NDAC subsidiary accounted for
$60,852 or 93% 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
six months periods increased due to the acquisition of the community
correctional business in June 1998.
The Company recorded net loss for the quarter of $47,166 as compared to
a net loss of $12,759 for the comparable 1997 period. This increase in net loss
in 1998 was due solely to the acquisition of the community correctional business
in June 1998. The increase in revenues from NDAC was offset by an increase in
operating expenses also attributable to the NDAC subsidiary. Interest expense
was also up due to increased borrowings related to the acquisition.
Capital Expenditures and Commitments
During the quarter and six months ending June 30, 1998, the Company
spent approximately $62,000 on capital expenditures primarily for leasehold
improvements at the Business Park. The Company expects to spend an additional
$60,000 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 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.
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-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 17546
<SECURITIES> 0
<RECEIVABLES> 85623
<ALLOWANCES> 0
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<CURRENT-ASSETS> 145732
<PP&E> 3237751
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<TOTAL-ASSETS> 4918610
<CURRENT-LIABILITIES> 389374
<BONDS> 4697655
0
0
<COMMON> 8471
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74830)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
