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 March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 X NO
------- --------
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 April 30, 2000.
PART I. FINANCIAL INFORMATION
<PAGE>
Item 1. Financial Statements
SOONER HOLDINGS, INC.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
(unaudited)
March 31,
2000
-----------
ASSETS
Current assets:
<S> <C>
Cash and cash equivalents $ 78,632
Restricted Cash 44,823
Accounts receivable 154,099
Other current assets 28,365
-----------
Total current assets
Property and equipment, net 2,949,604
Intangible assets, net of accumulated amortization of $357,054 1,395,740
Other assets, net 480,512
-----------
$5,131,775
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $134,995
Accrued liabilities 172,123
Current portion of notes payable and royalty payable 137,217
Deferred revenue 19,485
------------
Total current liabilities 463,820
------------
Notes payable, less current portion and net of discount
of $174,149 5,056,250
Royalty payable, less current portion and net of discount
of $804,444 425,586
Commitments and contingencies -
Shareholders' deficit:
Preferred stock; undesignated, 10,000,000 shares authorized,
no shares issued and outstanding -
Common stock; $.001 par value, 100,000,000 shares authorized,
8,471,350 shares issued and outstanding 8,471
Additional paid-in-capital 5,532,907
Accumulated deficit (6,355,259)
------------
Total shareholders' deficit (813,881)
------------
$5,131,775
============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
2
<PAGE>
SOONER HOLDINGS, INC.
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
2000 1999
------------- -------------
Revenues:
<S> <C> <C>
Rental revenues $ 103,838 $ 77,781
Service revenues 341,383 389,337
------------- -------------
Total revenues 445,221 467,118
------------- -------------
Operating Expenses:
Cost of Services 201,327 191,498
General and administrative 148,333 99,468
Depreciation and amortization 76,817 70,956
------------- -------------
Total operating expenses 426,477 361,922
------------- -------------
Income from operations 18,744 105,196
Interest expense (149,724) (141,914)
Other income 1,881 940
------------- -------------
Net loss from continuing operations (129,099) (35,778)
Loss from discontinued operations (17,301)
------------- -------------
Net loss $ (129,099) $ (53,079)
============= =============
Basic and diluted loss per common share:
Net loss from continuing operations $ (0.02) $ (0.01)
Loss from discontinued operations - -
============= =============
Basic and diluted loss per common share $ (0.02) $ (0.01)
============= =============
Weighted average common shares outstanding 8,471,350 8,471,350
============= =============
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
3
<PAGE>
SOONER HOLDINGS, INC.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
For the three months ended
March 31,
2000 1999
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net loss $(129,099) $(53,079)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Net loss from discontinued operations - 17,301
Accretion of interest 41,194 49,642
Depreciation and amortization 76,817 70,956
Changes in assets and liabilities:
Accounts receivable (19,436) (42,913)
Other current assets 11,824 20,461
Other assets (13,987) -
Accounts payable (14,168) (52,271)
Accrued liabilities (29,322) (8,369)
Deferred revenue (16,621) -
------------ ------------
Net cash provided by (used in)
operating activities (92,798) 1,728
------------ ------------
Cash flows from investing activities:
Increase in restricted cash (8,414) -
Purchases of property and equipment (10,197) (138,406)
------------ ------------
Net cash used in investing activities (18,611) (138,406)
------------ ------------
Cash flows from financing activities:
Repayments of notes payable (11,496) (66,713)
Borrowings on notes payable 25,000 210,650
Borrowings on notes payable to related parties - -
Royalty payments (1,362) (18,000)
------------ ------------
Net cash provided by financing
activities 12,142 125,937
------------ ------------
Net increase in cash (99,267) (10,741)
Cash at beginning of year 177,899 76,792
------------ ------------
Cash at end of period $78,632 $66,051
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $94,110 $51,714
============ ============
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
4
<PAGE>
SOONER HOLDINGS, INC.
Consolidated Statements of Cash Flows
(unaudited)
Non-cash transactions:
In connection with settlement of the lawsuit discussed in Note 7,
$71,910 was transferred from accrued liabilities to notes payable for
the three months ended March 31, 2000.
5
<PAGE>
SOONER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2000
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 minimum security correctional facility 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.
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 principals 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, 1999 (the "1999 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
- ----------------
For the fiscal year ending December 31, 1999, the independent auditor's
report included an explanatory paragraph calling attention to a going concern
issue. The accompanying consolidated financial statements have been prepared
contemplating continuation of the Company as a going concern. The Company has
suffered recurring losses from operations, has a shareholders' deficit of
$813,881 and has a working capital deficiency of $157,901 at March 31, 2000. In
view of these matters, realization of a major portion of the Company's assets is
dependent upon the Company's ability to meet its financing requirements and the
success of its future operations. Management believes that its plans to revise
the Company's operating and financial requirements, as described more fully in
the 1999 Form 10-KSB, provide the Company the opportunity to continue as a going
concern. However, there can be no assurance that these plans will be successful.
6
<PAGE>
Principles of consolidation
- ---------------------------
The accompanying consolidated financial statements have been prepared on
the basis of generally accepted accounting principles and include the accounts
of Sooner Holdings, Inc. and all majority owned subsidiaries. All significant
intercompany transactions have been eliminated.
Reclassifications
- -----------------
Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentation.
NOTE 2 - Property and Equipment
Property and equipment as of March 31, 2000 is comprised of the
following:
<TABLE>
<S> <C>
Land $ 1,311,400
Buildings and improvements 2,141,435
Machinery and equipment 56,485
Vehicles 51,281
-------------
3,560,601
Less accumulated depreciation 610,997
-------------
Property and equipment, net $ 2,949,604
=============
</TABLE>
NOTE 3 - OTHER ASSETS
Other assets at March 31, 2000 is comprised of the following:
<TABLE>
<S> <C>
Receivable from New Direction Centers of America, LLC $ 101,607
Loan commitment fee, less amortization of $3,201 111,905
Certificates of deposit 267,000
=============
Other assets, net $ 480,512
=============
</TABLE>
NOTE 4 - NOTES PAYABLE
Notes payable as of March 31, 2000 consists of the following:
Installment note payable, interest at 8.8%, due August 1, 2009;
collateralized by first mortgage on real estate $2,489,968
Notes payable to president and CEO, interest at 10%, due after
June 30, 2001. Subordinate to first mortgage on correctional
facility. 614,944
7
<PAGE>
Note payable to stockholder, interest at 10%. Payable at
$5,000 per month, including principal and interest. Not
collateralized. Final payment due January 28, 2001. 46,618
Notes payable to stockholders, interest at 10%, due
concurrently with balloon promissory note discussed
below. Not collateralized. 300,000
Revolving line of credit from Bank, interest at prime plus
3.25%, currently 11.5%, matures May 5, 2005, collateralized
by accounts receivable. 35,000
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 $174,141. 1,156,859
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. Renewed April 20, 2000
until April 20, 2001. 544,108
--------------
5,187,497
Less current portion 131,247
==============
Notes payable $5,056,250
==============
In June 1999, the Company refinanced several notes payable that were due
to mature. A single note payable to a bank bearing an 8.8% interest rate and
maturing in June 2009 replaced these notes.
NOTE 5 - ROYALTY PAYABLE
As part of a business acquisition, 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 $1,336,000. A
discount of $804,444 was imputed by management at March 31, 2000 using a 15%
interest rate.
NOTE 6 - RELATED PARTIES
The Company's related parties are more fully described in the 1999 Form
10-KSB. The following table reflects amounts owed to related parties at March
31, 2000:
<TABLE>
<CAPTION>
Notes Accrued
Payable Liabilities
------------- -------------
<S> <C> <C>
President and Chairman $614,944 $123,570
Other Significant Stockholders 341,618 12,481
New Direction Centers of America, LLC 1,156,859 -
-------------- -------------
Total related party liabilities $2,113,421 $ 124,931
============== =============
</TABLE>
8
<PAGE>
In addition, the president and chairman has personally guaranteed
$544,108 of the Company's notes payable.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In February 1998, a lawsuit was filed by Talbot against the Company
related to the purchase of NDLLC. On January 18, 2000, a settlement was reached.
The terms of the settlement include a payment of $76,000 by NDAC. Part of the
terms of the settlement included a lump sum payment of $20,000 and an
installment note for $56,000 payable at $5,000 per month at 10%, which is
included in notes payable at March 31, 2000..
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 $267,000 of Certificates of Deposit and the
facility and equipment in which the business operates, 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. Management has discounted
the face value of the Note of $1,331,000 by $174,171 at March 31, 2000 using a
15% effective rate of interest.
NOTE 9 - SEGMENT INFORMATION
The Company operates in the following two segments: commercial leasing
and correctional facility operation. Information concerning the Company's
business segments is as follows as of and for the years ended March 31:
9
<PAGE>
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
---------- ----------
Revenues
<S> <C> <C>
Commercial leasing $ 103,838 $ 77,781
Correctional facility 341,383 389,337
---------- ---------
Total $ 445,221 $ 467,118
========= =========
Segment operations profit (loss)
Commercial leasing $ 21,617 $ (15,545)
Correctional facility (74,655) (12,817)
Corporate (76,061) (7,417)
--------- --------
Total $ (129,099) $ (53,079)
========= =========
Identifiable assets
Commercial leasing $ 2,587,934 $ 2,438,484
Correctional facility 2,504,997 2,595,862
Corporate 38,844 964
--------- ---------
Total $ 5,131,775 $ 5,035,310
========= =========
Depreciation and amortization
Commercial leasing $ 17,638 $ 12,603
Correctional facility 59,179 58,353
Corporate - -
---------- ----------
Total $ 76,817 $ 70,956
========== ==========
Capital expenditures
Commercial leasing $ 9,184 $ 130,102
Correctional facility 1,013 8,304
---------- ----------
Total $ 10,197 $ 138,406
========== ==========
Interest expense
Commercial leasing $ 57,240 $ 51,714
Correctional facility 79,859 83,885
Corporate 12,625 6,315
---------- ----------
Total $ 149,724 $ 141,914
=========== ==========
</TABLE>
Identifiable assets are those assets used in the Company's operations in
each area. Corporate income includes general and administrative costs and
corporate assets consist primarily of cash and other current assets.
10
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto included elsewhere in this Form
10-QSB. In addition, the discussion of the Company's expected Plan of Operation,
included in the 1999 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.
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 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 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
11
<PAGE>
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 - March 31, 2000 (unaudited) compared to March
31, 1999 (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
reported deficiencies in working capital for the periods presented.
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999 1999 (audited)
---------- ----------- ---------------
<S> <C> <C> <C>
Deficiency in working capital $(157,901) $(268,631) $ (96,224)
</TABLE>
Although the Company's working capital is 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. Current working capital, which has
been provided in the form of notes payable, has been primarily supplied by R.C.
Cunningham II, the Company's chairman and president.
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.
In June 1999, the Company refinanced the debt on the Business Park. The
debt was replaced by a single note in the amount of $2,500,000 payable to a bank
with interest at 8.8% that matures in June 2009.
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
mortgage payment on the facility. The Company also intends to continue the
12
<PAGE>
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 ended March 31, 2000 compared to the quarter
ended March 31, 1999
The following table illustrates the Company's revenue mix:
<TABLE>
<CAPTION>
Quarter ended
March 31,
-------------------------------
2000 1999
------------- -------------
<S> <C> <C>
NDAC revenue $ 341,383 $ 389,337
Business Park revenue 103,838 77,781
Other revenue - -
-------------
=============
Total revenue $ 445,221 $ 467,118
============= =============
</TABLE>
Correctional Facility revenues decreased by $47,954 or 12.3% during the
first quarter of 2000 as compared to the same period in 1999. Certain political
issues during the quarter not directly related to the Company served to reduce
the occupancy of the facility for approximately 45 days. These issues have been
resolved and, as of May 10, 2000, occupancy has increased above previous levels.
During this legislative session, the Governor signed S.B. 1241, which
requires all non-violent offenders due for release to serve at least 90 days in
a halfway house facility such as is operated by the Company. Management believes
this will increase and maintain occupancy at or near maximum levels for the
forseeable future.
Business Park revenues increased $26,057 (33.5%) during the first
quarter of 2000 as compared to the same period in 1999. This increase is
attributable to the renegotiated leases from one year leases to three to five
year leases at an average increase of $.49 per square foot. At March 31, 2000
the Business Park was 89% occupied. The Company is aggressively marketing the
property to increase the occupancy. The Company believes its long-term prospects
will improve with longer leases and higher rates. Losses of tenants in the
future could affect future operations and financial position because of the cost
of new leasehold improvements and lower revenue due to any prolonged vacancy.
There is no assurance the Company will return to its historically high occupancy
rate.
Total operating expenses for the three months ended March 31, 2000 were
$349,110 as compared to total operating expenses for the comparable 1999 period
of $290,966. The increase in the 2000 expenses was due primarily to the cost of
bringing the Company current with its audits and filings. For the three months
ended March 31, 2000, the NDAC subsidiary accounted for $278,809 or 80% of the
total operating costs. The amortization of the NDAC intangible assets represents
$48,689 of the total depreciation and amortization expense for the current
period.
Interest expense increased by $7,810 or 5.5% for the first quarter of
2000 as compared to the comparable period in 1999, primarily due to the NDAC
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<PAGE>
subsidiary. The amortization of the royalty payable and the purchase note in
connection with the NDAC acquisition represented $49,642 or 57% of this
increase. In addition, the Company assumed approximately $1,000,000 in
liabilities with the acquisition of the Correctional Business.
Loss from discontinued operations for the March 1999 period relates to
spin-off of the Company's subsidiary, Beverages.
The Company recorded net loss in the first quarter 2000 of approximately
$129,099 or less than $.02 per share, compared to a net loss in the first
quarter 1999 of $53,079, or less than $.01 per share. This increase in losses
was due primarily to the short-term reduction in occupancy at the Correctional
Facility and expenses incurred in connection with bringing the Company current.
Capital Expenditures and Commitments
During the first quarter ending March 31, 2000, the Company spent
approximately $10,197 on capital expenditures, primarily for leasehold
improvements at the Business Park.
The Company expects to spend an additional $60,000 for capital
expenditures, primarily for leasehold improvements, on its Correctional Facility
operations during the remainder of fiscal 2000.
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
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 obtain additional
debt at reasonable prices or rates, if at all.
Forward-Looking Statements
Certain statements and information contained in this Report concerning
future, proposed, and anticipated activities of the Company, certain trends with
respect to the Company's revenue, operating results, capital resources, and
liquidity or with respect to the markets in which the Company competes and other
statements contained in this Report regarding matters that are not historical
facts are forward-looking statements, as such term is defined in the Securities
Act. Forward-looking statements, by their very nature include risks and
uncertainties, many of which are beyond the Company's control. Accordingly,
actual results may differ, perhaps materially, from those expressed in or
implied by such forward-looking statements.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not aware of any litigation either pending, asserted,
unasserted or threatened to which the Company or any of its subsidiaries is a
party or of which any of their property is the subject, except as follows:
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. Part of the terms of
the settlement included a lump sum payment of $20,000 and an installment note
for $56,000 payable at $5,000 per month at 10%.
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
Exhibits
None
Form 8-K
None
15
<PAGE>
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.
Dated: May 12, 2000 SOONER HOLDINGS, INC.
(Registrant)
By: /s/R. C. Cunningham II
------------------------------------------
R. C. Cunningham II, President
(Chairman of the Board)
By: /s/M. T. Buxton, III
------------------------------------------
M. T. Buxton, III
(Chief Financial Officer)
16
