UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to ________________.
Commission file number: 0-29027
Whitehall Limited, Inc.
(Exact name of small business issuer as specified in its charter)
Florida 84-1092599
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(State or other jurisdiction (IRS Employer
of incorporation or Identification No.)
organization)
290 Cocoanut Avenue, Sarasota, Florida 34236
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Address of principal executive offices
941-954-1181
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(Issuer's telephone number)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 9,179,420
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
Part I
Financial Information
ITEM 1. FINANCIAL STATEMENTS
See financial statements beginning on page F-1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Form 10-QSB, other than historical financial information, may consist of
forward-looking statements that include risks and uncertainties, including, but
not limited to, statements contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Such statements are based upon
many assumptions and are subject to risks and uncertainties. Actual results
could differ materially from the results discussed in the forward-looking
statements due to a number of factors, including, but not limited to, those
identified in this document and the company's other filings with the Securities
and Exchange Commission. The Company disclaims any intent or obligation to
update these forward-looking statements.
OVERVIEW:
The Company builds quality homes with custom features at moderate prices. The
homes are designed principally for the entry level or "moving up" home buyers'
market, as well as the retirement segment of such market. Residences constructed
and marketed by the Company generally range in size from 1,800 to 4,000 square
feet and have purchase prices ranging from $180,000 to $500,000. In the past,
certain of the Company's projects consisted of smaller units and were geared
more to the lower-end buyer. The company markets the residences through
commissioned employees and independent real estate brokers in the Company's
market area, which consists of the West Coast of the State of Florida,
primarily, Sarasota, Manatee, Collier, Pasco and Hillsborough Counties.
Residential unit sales are usually conducted from sales offices located in
furnished models in each subdivision where the Company is active. The Company
also typically constructs a limited number of speculative homes in each
residential subdivision in which it is active in order to enhance marketing and
sales activities.
2
Results of operations for the six and three months ended September 30, 2001 as
compared to the six and three months ended September 30, 2000:
The Company is presently engaged in the development of the following projects:
Estimated Number of Units closed Units closed
Average Units Six months Three months
Total Selling To close Ended Ended
Number of Price As of ------------------- -------------------
Project Units Per Unit 9/30/01 9/30/01 9/30/00 9/30/01 9/30/00
------- --------- -------- -------- ------- ------- ------- -------
Avalon at
The Villages
Of Palm Aire 114 $186,000 22 18 26 8 16
Beekman Place
& Village 148 165,000
Bermuda Club 30 200,000 3 1 2 1
Governor's Green 16 325,000
Heron Creek Golf
Country Club 112 250,000 38 11 7
Lake Jovita 60 240,000 59
Calumet Reserve (LELY) 55 205,000 54 1 1
Off Site 2 1
--- -- -- -- --
Total 176 31 30 16 18
=== == == == ==
3
Results of Operations
The following table sends forth operating data as a percentage of
revenue:
Six months ended Three months ended
September 30, September 30,
---------------- ------------------
2001 2000 2001 2000
---- ---- ----- ----
Revenues:
Home and lot sales 100% 98% 100% 98%
Other 2% 2%
---- ---- ----- ----
Total 100% 100% 100% 100%
---- ---- ----- ----
Costs and expenses:
Cost of sales 80% 76% 86% 78%
Selling 8% 7% 9% 6%
General and administrative 8% 10% 10% 11%
Interest 1% 3% 1% 3%
---- ---- ----- ----
Total 97% 96% 106% 98%
---- ---- ----- ----
Income (loss) before income taxes 3% 4% (6%) 2%
---- ---- ----- ----
Revenues:
Home and Lot Sales:
The Company's Home and Lot sales increased by approximately
$1,543,000 to approximately $7,450,000 for the six months ended
September 30, 2001 as compared to approximately $5,907,000 for
the six months ended September 30, 2000. The Company's Home and
Lot sales also increased by approximately $570,000 to
approximately $3,401,000 for the three months ended September 30,
2001 as compared to approximately $2,831,000 for the three months
ended September 30, 2000. The Company was able to take advantage
of the strong real estate markets, thereby increasing the average
base sales price per unit, as well as sell an increased number of
options per unit. In addition, the Company continued certain
phases of projects under development that contained the premium
or choice units thereby demanding a higher unit value. As a
result of the aforementioned, the average unit sales price on the
31 units closed during the six months ended September 30, 2001
was approximately $240,000 as compared to approximately $197,000
for the 30 units closed during the six months ended September 30,
2000. Although the average selling price increased, the Company
closed two less units in the quarter ending September 30, 2001 as
compared to the quarter ending September 30, 2000.
4
Other Revenue:
Other revenue consists of Management fee, interest, real estate
commissions and sundry income. During the six and three months
ended September 30, 2001, other revenue was approximately $25,000
and $2,000, respectively, as compared to approximately $109,000
and $47,000 for the six and three months ended September 30,
2000. The primary reason for the decrease is that the Company
earned management fees and real estate commissions during the six
months ended September 30, 2000 on projects that were completed
during the year ended March 31, 2001.
Costs and expenses:
Cost of sales:
Cost of sales increased by approximately $1,400,000 to
approximately $5,955,000 for the six months ended September 30,
2001 as compared to approximately $4,555,000 for the six months
ended September 30, 2000. Cost of sales also increased by
approximately $697,000 for the three months ended September 30,
2001 to approximately $2,941,000 from approximately $2,244,000
for the three months ended September 30, 2000. The primary reason
for the increase was due to the sales value during the year. The
cost as a percent of sales approximated 80% for the six months
ended September 30, 2001 as compared to 76% for the six months
ended September 30, 2000. The primary reason for the increase is
due to the fact that the selling prices did not increase
proportionally to the increase in cost charged by the vendors, as
well as the sales mix between homes and lots.
Selling, general and administrative:
Selling, general and administrative increased by approximately
$222,000 to approximately $1,262,000 for the six months ended
September 30, 2001 as compared to approximately $1,040,000 for
the six months ended September 30, 2001. Selling, general and
administrative increased by approximately $144,000 to
approximately $639,000 for the three months ended September 30,
2001 as compared to approximately $495,000 for the three months
ended September 30, 2000. The primary reason for this is that the
Company incurred increased selling expenses as a result of
commissions owed on sales and new projects being offered.
Selling, general and administrative costs as a percent of sales
were comparable for each of the six months ended September 30,
2001 and 2000.
Interest:
Interest decreased for the six months ended September 30, 2001 as
compared to the six months ended September 30, 2000 by
approximately $90,000. Although the total debt outstanding has
increased for the period, when compared to that of the prior
year, a larger amount of the debt for the current period relates
to projects under development. As a result, more of the interest
expense for the period is capitalized as opposed to expensed. In
addition, interest expense included shareholder interest of
approximately $46,000 for the six months ended September 30,
2000.
5
As a result of the aforementioned, the Company's net income (loss) was
approximately $120,000 ($.01 per share) and $159,000 ($.02 per share)
for the six months ended September 30, 2001 and 2000, respectively, and
$(127,000) ($(.01) per share) and $37,000 (less than $.01 per share) for
the three months ended September 30, 2001 and 2000, respectively.
Liquidity and Capital Resources:
As of September 30, 2001, the Company had net assets of approximately $2,356,000
including cash and cash equivalents of approximately $741,000. During the six
months ended September 30, 2001, the Company's cash position decreased by
approximately $209,000. Its operating activities utilized approximately
$1,958,000 of cash. This was primarily caused by an increase in inventories of
approximately $2,489,000, which were funded in part by the Company's net income
of approximately $120,000, and an increase in customer deposits of approximately
$404,000. The balance of the increase arose from the Company's financing
activities. The Company's financing activities provided approximately $1,749,000
of cash principally from the proceeds of its mortgages and notes payable of
approximately $6,594,000 off set by repayments of approximately $4,845,000. The
Company's principal source of financing has historically been provided from its
construction financing which is based on the value of the underlying projects.
6
Part II
Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
The Company issued 11,500 shares of common stock valued at $.18 per
share or a total of $2,070 to certain employees for services rendered.
The Company sold these shares under the exemption from registration
provided by Section 4(2) and Regulation D of the Securities Act of 1933
for transactions not involving any public offering. All of the shares
were issued directly by the Company, no underwriters were involved and
no commissions or fees were paid.
Item 3. Defaults Upon Senior Securities
Not applicable.
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
(a) Exhibits.
None.
(b) Reports on Form 8-K
We did not file any reports on Form 8-K during the quarter for which
this report is filed.
7
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Whitehall Limited, Inc.
November 12, 2001 /s/ Ronald Mustari
---------------------------------------------
Ronald Mustari, President and
Chief Executive Officer
(Principal Executive Officer)
November 12, 2001 /s/ Joanne Mustari
---------------------------------------------
Joanne Mustari, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
8
WHITEHALL LIMITED, INC. AND SUBSIDIARIES
I N D E X
PAGE
----
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001 (UNAUDITED) F-2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED) F-3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) F-4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) F-5
* * *
F-1
WHITEHALL LIMITED, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
ASSETS
Cash and cash equivalents $ 741,311
Inventories 9,785,542
Property and equipment, net 1,753,165
Other assets 42,300
-----------
Total $12,322,318
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages and notes payable $ 6,285,329
Accounts payable and accrued expenses 1,140,670
Customer deposits and advances 1,873,298
Income taxes payable 632,454
Deferred tax liabilities 34,736
-----------
Total liabilities 9,966,487
-----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.10 par value; 100,000,000 shares authorized;
2,061,946 shares issued and outstanding 206,195
Common stock, $.10 par value; 500,000,000 shares authorized;
9,179,420 shares issued and outstanding 917,942
Additional paid-in capital 906,387
Retained earnings 325,307
-----------
Total stockholders' equity 2,355,831
-----------
Total $12,322,318
===========
See Notes to Condensed Consolidated Financial Statements.
F-2
WHITEHALL LIMITED, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED)
Six Months Ended Three Months Ended
September 30, September 30,
------------------------- ---------------------------
2001 2000 2001 2000
----------- ---------- ------------ ----------
Revenue:
Home and lot sales $ 7,450,275 $5,907,277 $ 3,401,449 $2,830,768
Other 24,767 109,313 2,474 47,110
----------- ---------- ------------ ----------
Totals 7,475,042 6,016,590 3,403,923 2,877,878
----------- ---------- ------------ ----------
Costs and expenses:
Cost of sales 5,955,143 4,554,730 2,941,393 2,243,925
Selling 621,868 426,556 312,150 168,188
General and administrative 639,691 613,262 326,594 326,729
Interest 68,094 158,520 27,949 77,331
----------- ---------- ------------ ----------
Totals 7,284,796 5,753,068 3,608,086 2,816,173
----------- ---------- ------------ ----------
Income (loss) before income taxes 190,246 263,522 (204,163) 61,705
Provision (credit) for income taxes 69,800 104,221 (77,300) 24,688
----------- ---------- ------------ ----------
Net income (loss) $ 120,446 $ 159,301 $ (126,863) $ 37,017
=========== ========== ============ ==========
Basic earnings (loss) per share $ .01 $ .02 $ (.01) $ --
=========== ========== ============ ==========
Basic weighted average shares
outstanding 11,232,820 8,946,000 11,235,741 8,946,000
=========== ========== ============ ==========
See Notes to Condensed Consolidated Financial Statements.
F-3
WHITEHALL LIMITED, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED)
2001 2000
----------- -----------
Operating activities:
Net income $ 120,446 $ 159,301
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 13,891 19,664
Deferred income taxes (38,200)
Forgiveness of stockholders' interest 46,299
Cost of services paid through issuance of common stock 41,026
Changes in operating assets and liabilities:
Inventories (2,488,880) (1,128,008)
Due from affiliates (11,671)
Other assets 15,684 24,388
Accounts payable and accrued expenses (106,159) (165,485)
Customer deposits and advances 403,787 1,217,088
Income taxes payable 80,870 104,221
----------- -----------
Net cash provided by (used in) operating activities (1,957,535) 265,797
----------- -----------
Investing activities:
Investments (97,464)
Stockholders' loans (150,291)
-----------
Net cash used in investing activities (247,755)
-----------
Financing activities:
Proceeds from mortgages and notes payable 6,593,897 298,779
Repayments of mortgages and notes payable (4,845,056) (205,870)
----------- -----------
Net cash provided by financing activities 1,748,841 92,909
----------- -----------
Net increase (decrease) in cash and cash equivalents (208,694) 110,951
Cash and cash equivalents, beginning of period 950,005 675,299
----------- -----------
Cash and cash equivalents, end of period $ 741,311 $ 786,250
=========== ===========
Supplemental disclosure of cash flow data:
Interest paid, net of amount capitalized $ 68,094 $ 112,221
=========== ===========
See Notes to Condensed Consolidated Financial Statements.
F-4
WHITEHALL LIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of presentation:
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present fairly
the financial position of Whitehall Limited, Inc. and Subsidiaries
(the "Company") as of September 30, 2001, and its results of
operations for the six and three months ended September 30, 2001 and
2000 and cash flows for the six months ended June 30, 2001 and 2000.
Pursuant to the rules and regulations of the United States
Securities and Exchange Commission (the "SEC"), certain information
and disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the
United States of America have been condensed in or omitted from
these financial statements unless significant changes have taken
place since the end of the most recent fiscal year. Accordingly,
these unaudited condensed financial statements should be read in
conjunction with the audited financial statements as of and for the
year ended March 31, 2001 and the notes thereto (the "Audited
Financial Statements") and the other information included in the
Company's Annual Report on Form 10-KSB (the "Form 10-KSB") for the
year ended from March 31, 2001 that was previously filed with the
SEC.
The results of the Company's operations for the six and three months
ended September 30, 2001 are not necessarily indicative of the
results of operations for the full year ending March 31, 2002.
Certain amounts in the 2000 condensed consolidated financial
statements have been reclassified to conform to the 2001
presentation.
Note 2 - Earnings (loss) per common share:
The Company presents basic earnings (loss) per share and, if
appropriate, diluted earnings per share in accordance with the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"). Diluted per share amounts have
not been presented in the accompanying unaudited condensed
consolidated statements of operations for the six and three months
ended September 30, 2001 and 2000 because (1) in 2001 there were no
dilutive securities outstanding and (2) in 2000 there were no
additional shares derived from the assumed conversion of the note
payable - stockholder at fair value and the application of the
treasury stock method.
* * *
F-5