EXHIBIT 11
Computation of Earnings Per Share
UNAUDITED
Nine Months Ended
June 30,
2001 2000
----------- -----------
Shares Outstanding Beginning of Period 4,230,361 4,090,361
Shares Issued During Period: - -
March 6, 2000 140,000
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Total Outstanding 4,230,361 4,230,361
Weighted average number of shares outstanding 4,230,361 4,149,631
Shares deemed outstanding from assumed
exercise of stock options - -
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Total 4,230,361 4,149,631
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Earnings (loss) applicable to common shares $(1,280,817) $(2,201,971)
=========== ===========
Earnings (loss) per share of common stock $ (0.303) $ (0.531)
=========== ===========
Communities Corporation
Consolidated Statements of Operations
For the Nine months Ended June 30, 2001 and 2000
UNAUDITED
2001 2000
Revenues:
Sales $ 75,000 $ 36,000
Miscellaneous Income 8,325 3,706
Recognition of Deferred Land Sale Profit 118,726 -
Cost of Sales 10,278 7,758
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Gross Profit $ 191,773 $ 31,948
Operating Expenses:
General & Administrative
Expenses 326,037 1,273,641
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Net Income (Loss) Before
Other Income/Expense (134,264) (1,241,693)
Other Income (Expense)
Operations of Unconsolidated Investments (217,226) (147,309)
Interest Income 1,159 19,250
Interest Expense (930,486) (832,219)
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Total Other Income (Expense) (1,146,553) (960,278)
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Net Income (Loss) from continuing operations (1,280,817) (2,201,971)
Net Income (Loss) from discontinued operations - -
----------- -----------
Net Income (Loss) before Provision
for Income Taxes (1,280,817) (2,201,971)
Provision for Income Taxes - -
=========== ===========
Net Income (Loss) (1,280,817) (2,201,971)
=========== ===========
Net Income (Loss) per share (0.303) (0.531)
=========== ===========
Weighted average shares outstanding: 4,230,361 4,149,631
=========== ===========
Capitol Communities Corporation
Consolidated Statements of Operations
For the Three months Ended June 30, 2001 and 2000
UNAUDITED
2001 2000
Revenues:
Sales $ 75,000 $ 36,000
Miscellaneous 1,888 3,181
Income
Recognition of Deferred Land Sale Profit - -
Cost of Sales 10,278 7,758
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Gross Profit $ 66,610 $ 31,423
Operating Expenses:
General & Administrative
Expenses 104,293 283,763
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Net Income (Loss) Before
Other Income/Expense (37,683) (252,340)
Other Income (Expense)
Operations of Unconsolidated Investments (24,190) (39,614)
Interest Income 186 7,318
Interest Expense (307,717) (231,116)
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Total Other Income (Expense) (331,721) (263,412)
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Net Income (Loss) from continuing operations ($369,404) ($515,752)
Net Income (Loss) from discontinued operations - -
---------- ----------
Net Income (Loss) before Provision ($369,404) ($515,752)
for Income Taxes
Provision for Income Taxes - -
---------- ----------
Net Income (Loss) ($369,404) ($515,752)
========== ==========
Net Income (Loss) per share (0.087) (0.122)
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Weighted average shares outstanding: 4,230,361 4,230,361
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Capitol Communities Corporation
Statement of Changes in Stockholder's Equity
For the Nine Months Ended June 30, 2001
Unaudited
Common Additional Treasury Retained Total
Shares Stock Paid in Capital Stock Earnings Equity
- -----------------------------------------------------------------------------------------------------------------------------
Balance at 9/30/00 7,770,050 $ 77,700 $ 7,504,513 $ (4,795,851) $ (8,420,115) $ (3,292,265)
Additional Stock
Issued
Net Income (Loss) for the
nine months ending 6/30/2001 (1,280,817)
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Balance at 6/30/01 7,770,050 $ 77,700 $ 7,504,513 $ (4,795,851) $ (9,700,932) $ (6,914,570)
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Capitol Communities Corporation
Statements of Cash Flows
For the Nine Months Ended June 30, 2001 and 2000
UNAUDITED
2001 2000
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Cash Flows from Operating Activities:
Net Loss $ (1,280,817) $ (2,201,971)
Amortization - 685,622
Depreciation 1,634 5,492
Adjustments to Reconcile Income
to Net Cash Used for operating Activities
(Increase) Decrease in Receivables 4,515 (9,366)
(Increase) Decrease in Real Estate Holdings 10,278 10,251
(Increase) Decrease in Investments 98,500 147,309
(Increase) Decrease in PrePaid Assets (344) 966
Increase (Decrease) in Accrued Expenses 1,005,891 800,057
Liabilities Subject to Compromise (19,779)
Other
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Net Cash Used for Operations (180,122) (561,640)
Cash Flows from Financing Activities:
Collections of Notes Receivable 457,520 371,000
Loan Origination Fees (203,711)
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Net Cash Provided (Used) in Financing Activities 457,520 167,289
Cash Flows from Investing Activities:
Increase in Notes Payable 232,054
Payment of Notes Payable (321,056) (687,353)
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Net Cash Provided (Used) in Investing Activities (321,056) (455,299)
Net Increase (Decrease) in Cash (43,658) (849,650)
Beginning Cash 51,932 864,381
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Ending Cash $ 8,274 $ 14,731
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Capitol Communities Corporation
Consolidated Balance Sheet
June 30, 2001
UNAUDITED
June 30,
2001
Current Assets
Cash in Bank $ 8,274
Accounts Receivable 1,260
Notes Receivable-current
Prepaid Assets 1,627
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Total Current Assets 11,161
Plant property and equipment
Furniture and Equipment, net of accumulated depreciation of $9,450 6,809
Other Assets
Land and Real Estate Holdings 5,357,510
Investment in Trade Ark Properties 2,640,311
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Total Other Assets 7,997,821
Total Assets $ 8,015,791
===========
Current Liabilities
Notes Payable 11,690,253
Accounts Payable & Accrued Expenses 2,850,858
-----------
Total Current Liabilities 14,541,111
Non Current Liabilities -
Liabilities of Subsidiary Subject to Compromise 389,251
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Total Liabilities 14,930,362
Shareholders' Equity
Preferred stock-$.01 par value, none issued -
Common Stock-$.01 par value, 40,000,000 shares authorized
7,770,050 shares outstanding 77,700
Additional Paid in Capital 7,504,513
Treasury Stock (4,795,852)
Accumulated Deficit (9,700,932)
-----------
Total Shareholders' Equity (6,914,571)
Total Liabilities and
Shareholders' Equity $ 8,015,791
===========
$ 0
NOTE 1 -SIGNIFICANT ACCOUNTING POLICIES
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Background
The consolidated balance sheet at June 30, 2001 and the related statements
of operations and cash flows for the nine month period ended June 30, 2001,
include the accounts of Capitol Communities Corporation and its wholly
owned subsidiaries and are unaudited.
All inter-company accounts and transactions have been eliminated in
consolidation.
These unaudited interim consolidated financial statements should be read in
conjunction with the September 30, 2000 fiscal year end financial statements and
related notes. The unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary for a fair
statement of results for the interim periods presented and all such adjustments
are of a normal recurring nature. Interim results are not necessarily indicative
of results for a full year.
The Company was originally incorporated in the State of New York on
November 8, 1968 under the name of Century Cinema Corporation. In 1983, the
Company merged with a privately owned company, Diagnostic Medical Equipment
Corp. and as a result changed its name to that of the acquired company. By
1990, the Company was an inactive publicly held corporation. In 1993, the
Company changed its name to AWEC Resources, Inc. and commenced operations.
On February 11, 1994 the Company formed a wholly owned subsidiary AWEC
Development Corp, an Arkansas corporation, which later changed its name to
Capitol Development of Arkansas.
In February, 1994 Petro Source Energy Corporation transferred the majority
of its holdings in the common shares of the predecessor corporation, AWEC
Resources, Inc., to Prescott Investments Limited Partnership and Charlie
Corporation, both of which were then and currently are affiliates of
Michael Todd, Herbert Russell and John DeHaven, the beneficial owners of
the Company. These shares were transferred in consideration for public
relations services provided by Prescott Limited Partnership and Charlie
Corporation to Petro Source. Such services were deemed by Petro Source to
be integral and indispensable to the concurrent acquisition of
approximately 2,041 acres of land in Maumelle, Arkansas by the Company's
Operating Subsidiary. The Company was not a party to the transfer of
shares. The Company did not issue any new shares pursuant to the
acquisition of the land. Accordingly, the transfer of shares did not affect
the capitalization of the Company, and was non-diluted to all other
shareholders.
In order to effectuate a change in domicile and name change approved by a
majority of the Predecessor Corporation shareholders, the Predecessor
Corporation merged, effective January 30, 1996, into Capitol Communities
Corporation, a Nevada corporation formed in August 1995 solely for the
purpose of the merger. The Company is currently in the business of
developing and selling real estate properties.
On July 21, 2000 Capitol Development of Arkansas, Inc., a wholly owned
subsidiary, filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code.
Revenue Recognition
- -------------------
The full accrual method is used to determine the recognition of revenue.
In order to recognize revenue and profit under the full accrual method the
following criteria must be met. The profit from the sale must be
determinable, that is, the collectibility of the sales price is reasonably
assured, or any portion which may not be collectible can be reasonably
estimated. In addition, the earnings process must be complete, with no
significant activities required of the seller after the sale in order to
earn the profit from the sale.
Earnings/Loss Per Share
- -----------------------
Primary earnings per common share are computed by dividing the net income
(loss) by the weighted average number of shares of common stock and common
stock equivalents outstanding during the year. The number of shares used
for the nine months ended June 30, 2001 and 2000 were 4,230,361 and
4,149,631, respectively.
NOTE 2 -GOING CONCERN CONSIDERATIONS
----------------------------
The company has incurred significant losses from operations for the current
year, has a substantial accumulated deficit, has non-productive assets and
is highly illiquid. The Company is currently in default on a $3.4 million
mortgage as well as $6,717,740 of short term unsecured debt. No claim for
payment has been made for a $200,000 note due January 6, 1996. At the time
of this report the debt due to Bank of Little Rock has matured and not been
paid or extended. The debt due to First Arkansas Valley Bank had an
interest payment due on April 14, 2001 which has not been paid. Management
has begun implementation of plans to make the company more viable. The
ultimate outcome of these plans cannot be determined. Collection on all of
the these pre-petition debts, except for the short-term unsecured debt of
$6,717,710 has been stayed under the Bankruptcy Petition
filed by the Company's wholly-owned subsidiary, Capital Development of
Arkansas, Inc. on July 21, 2000.
Capitol Development of Arkansas, Inc., holds substantially all of the
Company's assets, filed a voluntary petition for relief under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy Court,
Eastern Division.
On November 16, 2000, the Operating Subsidiary filed a Disclosure Statement
and a Plan of Reorganization (the Plan) with the Bankruptcy Court to
satisfy its existing debts. The Plan has been presented to creditors for
acceptance or rejection. As of the date of this Report, the Bankruptcy
Court had scheduled a hearing to consider confirmation of the Plan. This
hearing was scheduled for February 21, 2001, but has been continued. The
specific hearing date has not been scheduled. The Bankruptcy Court has
approved the Operating Subsidiarys Disclosure Statement.
On December 7, 2000, Nathaniel S. Shapo, the Director of Insurance for the
State of Illinois, in his capacity as Liquidator (Liquidator) of Resure,
Inc. (Resure), filed a Motion to Dismiss (the Operating Subsidiary's
petition for bankruptcy), or in the alternative, Motion for the Appointment
of a Trustee. This motion is scheduled for hearing simultaneously with the
hearing for confirmation of the plan.
If the Plan is not confirmed, the Operating Subsidiary may be forced into
Chapter 7, at which point the Operating Subsidiary would be forced to
liquidate its assets to meet the obligations of the secured creditors and
if any funds are available thereafter to meet the obligations of the
unsecured creditors.
There can be no assurance the plan will be approved, or if approved it may
not be approved under the terms submitted. Accordingly, some of the amounts
presented in the financial statements may be subject to future adjustments
depending on Bankruptcy Court actions, further developments with respect to
disputed claims, determination as to the security of certain claims or
other events. The Company has continued to accrue interest on the Resure
debt and all other debt. The company has not adjusted the carrying value
of its real estate assets. In all cases the amount of secured debt exceeds
the carrying value of the land.
NOTE 3 -SUBSEQUENT EVENTS
-----------------
In July, 2001 the Liquidator for Resure, Inc. submitted to the Bankruptcy
Court a Competing Plan of Reorganization and a Disclosure Statement. The
Competing Plan provides for the liquidation of Capital Development of
Arkansas, Inc.'s assets. A hearing to confirm the Competing Plan has not
yet been scheduled.