UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 10, 2000
-----------------
Gibbs Construction, Inc..
---------------------------
(Exact name of issuer as specified in its charter)
Texas 1-14088 75-2095676
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (I.R.S.Employer
of incorporation) Number) Identification No.)
133 Carnegie Way, Suite 600, Atlanta, GA 30303
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code: (404) 525-1370
1855 Wall Street, Garland, TX 75041 (Former name, former address and former
fiscal year, if changed since last report)
Item 1. Change in Control.
On November 10, 2000, effective as of November 1, 2000, the registrant acquired
certain operating assets of Thacker Asset Management, L.L.C. in exchange for
4,000,000 shares of the registrant's common stock. This transaction is further
described under "Item 2. Acquisition or Disposition of Assets". TOC, Inc. holds
all of the voting rights and is entitled to 80% of the profits of Thacker Asset
Management, L.L.C. In addition, prior to the effective date, Thacker Resources,
Inc., which is also affiliated with TOC, Inc. acquired 1,500,000 shares of the
registrant's common stock. Of these 1,500,000 shares, 1,000,000 were acquired
from Tony Gibbs and 500,000 were acquired from Danny R. Gibbs. Accordingly, TOC,
Inc. or its affiliates now beneficially own 5,500,000 shares of the registrant's
common stock of the 8,561,000 shares of common stock issued and outstanding.
These 5,500,000 shares represent approximately 64.2% of the registrant's issued
and outstanding shares of common stock.
Item 2. Acquisition or Disposition of Assets.
On August 20, 2000, the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, confirmed the registrant's Plan of
Reorganization pursuant to Chapter 11 of the United States Bankruptcy Code. On
November 10, 2000, the court made that plan effective. On November 10, 2000, as
contemplated in the plan, the registrant agreed to issue 4,000,000 shares of its
Common Stock to Thacker Asset Management, L.L.C. to acquire that entity's
existing contracts, of which there was one, and work in progress together with
certain furniture fixtures and equipment.
Thacker Asset Management, L.L.C. provides engineering and construction
management services as a minority and women-owned business enterprise.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business acquired
The financial statements of Thacker Asset Management, L.L.C. are set
forth on pages F-1 through F-12 herein.
(b) Pro forma financial information.
The pro forma consolidating financial statements of Thacker Asset
Management, L.L.C. and Gibbs Construction, Inc. are set forth on pages
F-13 through F-20 herein.
THACKER ASSET MANAGEMENT, L.L.C
(Formerly Known as Benchmark Asset Management, L.L.C.)
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
F-1
Killman, Murrell & Company, P.C.
Certified Public Accountants
505 N. Big Spring, Suite 603 1931 E. 37th, Suite 14810 Le Grande Drive
Midland, Texas 79701 Odessa, Texas 79762 Addison, Texas 75001
(915) 686-9381 (915) 363-0067/550-4910 (972) 991-9324
Fax (915) 684-6722 Fax (915) 363-0376 Fax (972) 991-9323
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Members
Thacker Asset Management, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
Atlanta, Georgia
We have audited the accompanying balance sheets of Thacker Asset Management,
L.L.C. (formerly known as Benchmark Asset Management, L.L.C.) as of December 31,
1998 and 1999, and the related statements of operations, members' equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Thacker Asset Management,
L.L.C. (formerly known as Benchmark Asset Management, L.L.C.) as of December 31,
1998 and 1999, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
February 25, 2000
F-2
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
BALANCE SHEETS
ASSETS
December 31, September 30,
------------------------------
1998 1999 2000
------------- ------------- -----------
(Unaudited)
CURRENT ASSETS
Cash $ 4,334 $ 45,514 $ 31,689
Accounts Receivable - Trade 416,011 712,840 508,739
Prepaid Expenses 12,573 46,684 46,410
---------- ------------ ------------
TOTAL CURRENT ASSETS 432,918 805,038 586,838
---------- ------------ ------------
EQUIPMENT AND FURNITURE 73,676 99,252 101,668
Less Accumulated Depreciation (11,051) (28,396) (46,162)
---------- ------------- -------------
NET EQUIPMENT AND FURNITURE 62,625 70,856 55,506
---------- ------------ ------------
OTHER ASSETS
Member and Affiliate Receivables 238,680 893,752 2,247,216
Other Assets 398 398 398
---------- ------------ ------------
TOTAL OTHER ASSETS 239,078 894,150 2,247,614
---------- ------------ ------------
TOTAL ASSETS $ 734,621 $1,770,044 $ 2,889,958
========== ============ ============
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Notes Payable to Related Parties-Note 2 $ 575,656 $ 543,502 $ -
Current Portion of Long Term Debt-Note 2 - - 251,702
Accounts Payable 4,623 219,415 882,719
Accrued Liabilities - Note 4 51,607 271,792 194,120
---------- ------------- ------------
TOTAL CURRENT LIABILITIES 631,886 1,034,709 1,328,541
LONG TERM DEBT - Note 2 - - 524,679
COMMITMENTS - Notes 6 and 8 - - -
---------- ------------ ------------
TOTAL LIABILITIES 631,886 1,034,709 1,853,220
---------- ------------ ------------
MEMBERS' EQUITY
Contributed Capital 40,817 40,817 40,817
Members' Earnings 61,918 694,518 995,921
---------- ------------ ------------
TOTAL MEMBERS' EQUITY 102,735 735,335 1,036,738
---------- ------------ ------------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 734,621 $1,770,044 $ 2,889,958
========== ========== ============
See accompanying notes to financial statements
F-3
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
STATEMENTS OF OPERATIONS
Nine Months
Years Ended Ended
December 31, September 30,
-------------------------- -------------------------
1998 1999 1999 2000
------------- ------------ ------------ ----------
(Unaudited) (Unaudited)
REVENUES
Program/Construction Management Services
Revenues $ 1,420,838 $ 3,534,468 $ 2,757,701 $ 4,874,324
Related Party Service Revenues 17,345 - - -
------------ ------------ ------------ ------------
TOTAL REVENUES 1,438,183 3,534,468 2,757,701 4,874,324
SUBCONTRACT AND OTHER COSTS
OF REVENUES 547,646 1,908,957 1,464,270 3,249,541
------------ ------------ ------------ ------------
GROSS PROFIT 890,537 1,625,511 1,293,431 1,624,783
------------ ------------ ------------ ------------
GENERAL AND ADMINISTRATIVE EXPENSES
Salaries, Wages and Other Employee
Benefits 201,230 372,628 243,177 501,539
Depreciation 11,051 17,345 13,264 17,766
Other 335,964 446,313 307,462 777,007
------------ ------------ ------------ ------------
TOTAL GENERAL AND
ADMINISTRATIVE 548,245 836,286 563,903 1,296,312
------------ ------------ ------------ ------------
EXPENSES
INCOME BEFORE OTHER
INCOME (EXPENSE) 342,292 789,225 729,528 328,471
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest Income 1,440 6,245 3,250 3,035
Interest Expense (18,732) (75,131) (58,932) (30,103)
Related Party Technical Advisory Fee (263,082) (87,739) (87,739) -
------------ ------------ ------------ ------------
TOTAL OTHER INCOME
(EXPENSE) (280,374) (156,625) (143,421) (27,068)
------------ ------------ ------------ ------------
NET INCOME $ 61,918 $ 632,600 $ 586,107 $ 301,403
============ ============ ============ ============
See accompanying notes to financial statements
F-4
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
STATEMENTS OF MEMERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
Contributed Members'
Capital Earnings Total
----------- ------------- -----------
BALANCE, DECEMBER 31, 1997 $ 25,000 $ - $ 25,000
Member Contributions 15,817 - 15,817
1998 Income (Audited) - 61,918 61,918
--------- ---------- ----------
BALANCE, DECEMBER 31, 1998 40,817 61,918 102,735
1999 Income (Audited) - 632,600 632,600
--------- ---------- ----------
BALANCE, DECEMBER 31, 1999 40,817 694,518 735,335
2000 Income (Unaudited) - 301,403 301,403
--------- ---------- ----------
BALANCE, SEPTEMBER 30, 2000 (UNAUDITED) $ 40,817 $ 995,921 $ 1,036,738
========= ========== ==========
See accompanying notes to financial statements
F-5
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
STATEMENTS OF CASH FLOWS
Nine Months
Years Ended Ended
December 31, September 30,
----------------------------- -------------------------
1998 1999 1999 2000
------------- ------------ ------------ ----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 61,918 $ 632,600 $ 586,107 $ 301,403
Adjustments to Reconcile Net Income to Net
Cash from Operating Activities
Depreciation 11,051 17,345 13,264 17,766
Changes in Operating Assets and Liabilities
Accounts Receivable (416,011) (296,829) 407,088 204,101
Prepaid Expenses (12,573) (34,111) (41,639) 274
Related Party Receivables (232,680) (655,072) (1,385,994) (1,353,464)
Other Assets (398) - - -
Accounts Payable 4,623 214,792 196,257 663,304
Accrued Liabilities 51,607 220,185 129,533 (77,672)
Cash Overdraft - - 113,460 -
---------- ---------- ------------ -------------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (532,463) 98,910 18,076 (244,288)
---------- ---------- ------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of Equipment and Furniture (73,676) (25,576) (17,046) (2,416)
---------- ---------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable from Related
Parties 575,656 158,312 158,312 272,695
Payments on Notes Payable from Related
Parties - (190,466) (153,466) (39,816)
Member Contributions 15,817 - - -
---------- ---------- ------------ ------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 591,473 (32,154) 4,846 232,879
---------- ---------- ------------ ------------
NET (DECREASE) INCREASE IN CASH (14,666) 41,180 5,876 (13,825)
CASH AT BEGINNING OF PERIOD 19,000 4,334 4,334 45,514
---------- ---------- ------------ ------------
CASH AT END OF PERIOD $ 4,334 $ 45,514 $ 10,210 $ 31,689
========== ========== ============ ============
SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION
Cash Paid During the Period For:
Interest $ 125 $ 15,593 $ - $ 12,183
========== ========== ============ ============
Income Taxes $ - $ - $ - $ -
========== ========== ============== ============
See accompanying notes to financial statements
F-6
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(Including Notes Applicable to Unaudited Periods)
DECEMBER 31, 1998 and 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company Organization and Business
Two companies contributed $25,000 to a joint venture in December 1997, and
the joint venture, prior to commencement of business activity, was converted
to a Texas limited liability company on February 1, 1998, with the name being
changed to Thacker Asset Management, L.L.C. ("Thacker ")(formerly known as
Benchmark Asset Management, L.L.C.). The period of duration of the limited
liability company is thirty (30) years from February 1, 1998. The members of
Thacker are:
Ownership
Member Name Percentage
--------------------------------- ----------
TOC, Inc. ("TOC") 51%
The Benham Group, Inc. ("Benham") 49%
Thacker is managed by TOC, and TOC is the source of substantially all
revenues earned by Thacker. Due to this relationship, Thacker has been
accounted for as a subsidiary of TOC and is included in TOC's consolidated
financial statements.
On January 10, 1997, TOC and the engineering firm CH2M Hill, Inc. formed CH2M
Hill/TOC, a Joint Venture (the "Joint Venture"). On March 28, 1998, the Joint
Venture entered an agreement with the City of Atlanta, Georgia, to provide
architectural, engineering, construction management and other related
professional services for a three year period. This agreement sets forth the
applicable hourly fee rates for the professional services to be provided. The
City of Atlanta issues a contract task order and notice to proceed to the
Joint Venture for a certain project and the Joint Venture will either self
perform or obtain the necessary subcontractors to complete the project.
Included in the statement of operations for the years ended December 31, 1998
and 1999, and the nine months ended September 30, 2000, are the following
related party expenses:
Subcontract and Other
Costs of Revenues
----------------------------------------------
1998 1999 2000
---------- ------------ -----------
(Unaudited)
Benham $149,490 $ - $ -
TOC 180,026 - -
TOC'S Officer - - -
---------- ----------- ----------
$329,516 $ - $ -
========= ========== ==========
(Continued)
F-7
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(Including Notes Applicable to Unaudited Periods)
DECEMBER 31, 1998 and 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
General and Administrative Expenses
----------------------------------------------
1998 1999 2000
---------- --------- ------------
(Unaudited)
Benham $ - $ - $ -
TOC 287,434 - 353,579
TOC's Officer 2,000 - -
---------- --------- ----------
$ 289,434 $ - $ 353,579
========= ========== ===========
Technical Advisor Fees
---------------------------------------------
1998 1999 2000
---------- --------- ------------
(Unaudited)
Benham $ 263,082 $ 87,739 $ -
TOC - - -
TOC's Officer - - -
---------- --------- ----------
$ 263,082 $ 87,739 $ -
========== ========= ==========
Revenue Recognition
-------------------
Professional services and subcontract services are billed monthly based on
time expanded, plus allowable reimbursable expenses.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period and disclosures of contingent assets and liabilities.
Actual results could differ from those estimates.
The Company recognizes revenues from fixed-price construction contracts using
the percentage-of-completion method, measured by the percentage of cost
incurred to date to management's estimated total cost for each contract. That
method is used because management considers total cost to be the best
available measure of progress on the contracts. Because of the inherent
uncertainties in estimating costs, it is at least reasonably possible that
the estimates used will change within the near term.
Cash and Cash Equivalents
-------------------------
For financial reporting purposes, Thacker considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.
(Continued)
F-8
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(Including Notes Applicable to Unaudited Periods)
DECEMBER 31, 1998 and 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equipment and Furniture
-----------------------
Equipment and furniture are stated at cost. Maintenance and repairs are
charged to expense as incurred. Major betterments and improvements which
extend the useful life of the related item are capitalized and depreciated.
Depreciation is provided for over the estimated useful lives of the
individual assets using straight-line methods.
Equipment and furniture consisted of the following:
Useful
December 31, September 30, Lives
-------------------------------------
1998 1999 2000 (Years)
------------- ------------- ------------------ ----------
(Unaudited)
Leasehold Improvements $ - $ 9,731 $ 9,731 3
Equipment and Furniture 66,676 82,521 84,937 3-5
Vehicles 7,000 7,000 7,000 3
--------- -------- ---------
Total 73,676 99,252 101,668
Accumulated Depreciation (11,051) (28,396) (46,162)
------- -------- ----------
Leasehold Improvements,
Equipment and Furniture, Net $ 62,625 $ 70,856 $ 55,506
========= ========= =========
Accounting for Long-Lived Assets
--------------------------------
Thacker adopted Statement of Financial Accounting Standards No. 121,
"Accounting For The Impairment of Long-Lived Assets and For Long-Lived Assets To
Be Disposed Of." Thacker reviews long-lived assets, certain identifiable assets
and any goodwill related to those assets for impairment whenever circumstances
and situations change such that there is an indication that the carrying amounts
may not be recoverable. At December 31, 1999, Thacker believes that there has
been no impairment of its long-lived assets.
Income Taxes
------------
Thacker is treated as a partnership for federal income tax purposes.
Consequently, federal income taxes are not payable by Thacker. Members are
taxed individually on their shares of Thacker's earnings. Thacker's net
income or loss is allocated among the members in accordance with the
regulations of Thacker.
(Continued)
F-9
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
DECEMBER 31, 1998 and 1999 (AUDITED), AND SEPTEMBER 30, 2000 (UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
----------------------------
Thacker places its cash and temporary cash investments with high credit
quality financial institutions. At times such investments may be in excess of
FDIC insurance limits. At December 31, 1999, the deposits did not exceed FDIC
insurance limits.
Thacker grants unsecured credit to its customers which are located in Thacker
's market area which is Georgia. Management believes that its billing and
collection policies are adequate to minimize potential credit risks.
Substantially all revenues are derived from the Joint Venture's agreement
with the City of Atlanta.
Pension Benefit
---------------
The Thacker employees are covered by a deferred contribution profit sharing
plan [401 (K) Plan] established by a Member of the Company. This plan allows
both Thacker and Thacker's eligible employees to contribute to the plan.
Thacker's contributions to the plan for the years ended December 31, 1998 and
1999 were $9,558 and $21,137, respectively. For the nine month periods ended
September 30, 1999 and 2000, Thacker's contribution to the plan was $19,058
and $19,550, respectively.
NOTE 2: NOTES PAYABLE TO A MEMBER
At December 31, 1998, notes payable to a Member were composed of twenty-one
(21) separate notes with an interest rate of ten and one-half percent (10.5%)
due at staggered dates from March 10, 1999 to December 31, 1999, secured by
accounts receivable from the City of Atlanta. Interest on these notes for the
year ended December 31, 1998 was $18,607.
At December 31, 1999, notes payable to a Member were composed of thirteen
(13) separate notes with an interest rate of ten and one-half percent (10.5%)
due at staggered dates to April 16, 2000, secured by accounts receivables
from the City of Atlanta. Interest on these notes for the year ended December
31, 1999 was $68,501.
At June 30, 2000, the notes payable to a Member due at December 31, 1999 plus
additional borrowings of $194,542 and accrued interest of $78,153 were
consolidated into one long term note with an interest rate of nine percent
(9%). Payments in the amount of $25,955 including interest are due monthly
with the final payment due June 30, 2003. The first payment was due July 2,
2000. The balance of this note was $776,381 at September 30, 2000 with
current maturities being $251,702.
(Continued)
F-10
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(Including Notes Applicable to Unaudited Periods)
DECEMBER 31, 1998 and 1999
NOTE 2: NOTES PAYABLE TO A MEMBER (Continued)
Aggregate maturities of long-term debt as of September 30, 2000, are as
follows:
Year Amount
------ ---------
2001 $ 251,702
2002 275,423
2003 249,256
---------
$ 776,381
===========
NOTE 3: LEASE OBLIGATIONS
Thacker leases apartments and vehicles under operating leases that expire
over the next two (2) years. The following is a schedule by year of future
minimum rental payments required under the operating leases as of December
31, 1998:
Year Ending
December 31, Amount
------------ --------
2000 $ 9,241
2001 3,080
--------
$ 12,321
========
Operating lease expense was $28,786 and $9,241 for the years ended December
31, 1998 and 1999, respectively, and $6,901 and $6,931 for the nine months
ended September 30, 1999 and 2000, respectively.
NOTE 4: ACCRUED LIABILITIES
Accrued liabilities were composed of:
December 31, September 30,
------------------------------------
1998 1999 2000
--------- --------- ----------
(Unaudited)
Accrued Invoices $ - $ 95,000 $ 26,254
Interest 18,607 78,145 18,000
Payroll 18,000 64,204 92,054
401 (K) Contributions 10,000 18,372 14,972
Other 5,000 16,071 42,840
--------- --------- ----------
$51,607 $271,792 $ 194,120
======= ========= ==========
F-11
THACKER ASSET MANAGEMENT, L.L.C.
(Formerly Known As Benchmark Asset Management, L.L.C.)
NOTES TO FINANCIAL STATEMENTS
(Including Notes Applicable to Unaudited Periods)
DECEMBER 31, 1998 and 1999
NOTE 5: BACK LOG
The following schedule shows a reconciliation of back log by representing the
amount of revenue the Company expects to realize from work to be performed on
uncompleted contracts in progress at December 31, 1998 and 1999, and from
contractual agreements on which work has not yet begun:
Balance, December 31, 1998 $5,564,510
New Contracts, 1999 3,160,658
----------
8,725,168
Less: Contract Revenue Earned 1999 (3,534,468)
----------
Balance, December 31, 1999 $5,190,700
==========
NOTE 6: SUBSEQUENT EVENT
In November 2000, The Benham Group Inc.'s ownership in TAM was reduced to a
non-voting 20% ownership, and TOC's ownership interest increased to 80%.
F-12
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(Unaudited)
On April 20, 2000, Gibbs Construction, Inc. ("Gibbs") filed for protection under
Chapter 11 of the United States Bankruptcy Act. Mounting losses on several
construction projects led to the notification from Gibbs' bonding surety that it
would no longer provide completion and payment bonds for Gibbs' construction
projects precipitated this filing. Gibbs' increasingly difficult financial
position and lack of being able to secure additional bonding resulted in their
inability to contract for additional work. Given these events Gibbs negotiated
with its bonding surety, its largest creditor, to complete certain projects and
terminate others. Also during this time, the brother of Gibbs' president, a
director of the company, resigned to pursue other business interests. By
subcontracting the necessary labor and materials to complete the construction
work, all jobs in progress at the date of the bankruptcy filing have been either
completed or were near completion as of the date the plan of reorganization was
confirmed.
On November 10, 2000, Gibbs was discharged from bankruptcy pursuant to a plan of
reorganization by which Gibbs would acquire certain assets of Thacker Asset
Management, L.L.C. ("TAM"), a Texas limited liability company based in Atlanta,
Georgia, that focuses upon providing to governmental entities and private
corporations qualified minority businesses to fulfill engineering and
construction management services. Gibbs acquired the assets of TAM in exchange
for 4,000,000 shares of its $.01 par value common stock at which time the
management and stockholders of TAM gained actual and effective operating control
of Gibbs thereby affecting the accounting of the purchase as a reverse merger
and eventual name change to Thacker-Gibbs, Inc. This transaction is equivalent
to the issuance of stock by TAM (the private company) for the acquisition of
Gibbs' assets, accompanied by a recapitalization.
The unaudited Pro Forma Consolidating Statements of Operations for the year
ended December 31, 1999, and the nine months ended September 30, 2000, gives pro
forma effect to the acquisition of TAM (and other adjustments as described in
the accompany notes) as if it had occurred on January 1, 1999 and 2000,
respectively. The Pro Forma Statements of Operations are based on the historical
results of operations of Gibbs and TAM for the year ended December 31, 1999, and
the nine months ended September 30, 2000. The Pro Forma Consolidating Balance
Sheet as of September 30, 2000 gives pro forma effect to the acquisition of TAM
as if it had occurred on that date. The Pro Forma Consolidating Statements of
Operations and Pro Forma Consolidating Balance Sheet and the accompanying notes
should be read in conjunction with and are qualified by the historical financial
statements of Gibbs and TAM and notes thereto appearing elsewhere herein.
The Pro Forma Information is intended for informational purposes only and is not
necessarily indicative of the future financial position or results of operations
of Gibbs after the acquisition of TAM, or the financial position or the results
of operations of Gibbs that would have actually occurred had the acquisition of
TAM been effected as of the date or for the periods presented.
F-13
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
PRO FORMA CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS
Gibbs Thacker Asset Pro Forma
Gibbs Reorganization Construction,Inc. Management, Consolidating Pro Forma
Construction,Inc. Entries Post Reorganization L.L.C. Entries Total
----------------- -------------- ------------------- ------------ ------------- ---------
CURRENT ASSETS
Cash $ 475,729 $ (405,729)(A) $ 70,000 $ 31,689 $ (1,689)(F) $ 100,000
Temporary Investments 129 (129)(A) - - - -
Accounts Receivable
Trade 794,582 (794,582)(A) - 508,739 (508,739)(F) -
Costs and Estimated Earnings
in Excess of Billings on
Uncompleted Contracts 45,340 (7,543)(A) 37,797 - - 37,797
Prepaid Expenses 8,628 (8,628)(A) - 46,410 - 46,410
--------- -------- --------- ------- ---------- --------
TOTAL CURRENT ASSETS 1,324,408 (1,216,611) 107,797 586,838 (510,428) 184,207
--------- --------- --------- ------- ---------- --------
NET EQUIPMENT AND FURNITURE 158,619 - 158,619 55,506 (58,619)(H) 155,506
--------- -------- --------- ------- ---------- --------
OTHER ASSETS
Members and Affiliates Receivables - - - 2,247,216 (2,247,216)(F) -
Real Estate Investments 17,732 (17,732)(A) - - - -
Deferred Tax Asset - 1,752,000 (E) 1,752,000 - - 1,752,000
Other Assets - - - 398 - 398
--------- --------- --------- ------- ---------- ---------
TOTAL OTHER ASSETS 17,732 1,734,268 1,752,000 2,247,614 (2,247,216) 1,752,398
--------- --------- --------- --------- ---------- ---------
TOTAL ASSETS $1,500,759 $ 517,657 $2,018,416 $2,889,958 $(2,816,263) $2,092,111
========== ========== ========== ========== =========== ==========
The accompanying notes are an integral part
of these pro forma consolidating financial statements
F-14
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
PRO FORMA CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Gibbs Thacker Pro Forma
Gibbs Reorganization Construction, Asset Consolidat- Pro
Construction, Entries Inc.Post Management, ing Forma
Inc. Reorgan- L.L.C. Entries Total
ization
-------------- -------------- ------------ ----------- ----------- -------
CURRENT LIABILITIES
Current Portion of Long-Term Debt $ 4,226,755 $(4,226,755)(A) $ - $ 251,702 $ (251,702)(F) $ -
Current Portion of Capital Lease Obligation 29,054 (29,054)(A) - - - -
Accounts Payable 4,080,701 (4,080,701)(A) - 882,719 (882,719)(F) -
Accrued Liabilities 3,322,164 (3,322,164)(A) - 194,120 (194,120)(F) -
Billings in Excess of Costs and Estimated
Earnings on Uncompleted Contracts 11,241 (11,241)(A) - - - -
Payable to Stockholders 78,539 (78,539)(A) - - - -
----------- ----------- ---------- ---------- ---------- --------
TOTAL CURRENT LIABILITIES 11,748,454 (11,748,454) - 1,328,541 (1,328,541) -
LONG TERM DEBT - - - 524,679 (524,679)(F) -
----------- ----------- ---------- --------- --------- --------
TOTAL LIABILITIES 11,748,454 (11,748,454) - 1,853,220 (1,853,220) -
----------- ----------- ---------- --------- ---------- --------
STOCKHOLDERS' (DEFICIT) EQUITY
6% Designated Preferred Stock 200,000 (C) 200,000 - - 200,000
Common Stock 40,600 5,010 (B) 45,610 - 40,000 (G) 85,610
Additional Paid-In Capital 5,003,234 95,190 (B) 1,772,806 40,817 (904,424)(F)
(5,077,618)(D) (40,000)(G)
1,752,000 (E) (58,619)(H)
995,921 (I) 1,806,501
Retained Deficit (15,291,529) 10,213,911 (A) - - - -
5,077,618 (D)
Members' Earnings - - - 995,921 (995,921)(I) -
----------- ----------- ---------- --------- --------- ---------
TOTAL STOCKHOLDERS' (DEFICIT)
EQUITY (10,247,695) 12,266,111 2,018,416 1,036,738 (963,043) 2,092,111
----------- ----------- ---------- ---------- --------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY $ 1,500,759 $ 517,657 $2,018,416 $2,889,958 $(2,816,263) $2,092,111
=========== =========== ========== ========== =========== ==========
The accompanying notes are an integral part
of these pro forma consolidating financial statements
F-15
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000
(UNAUDITED)
Gibbs Thacker Pro Forma
Gibbs Construction, Asset Consolidat-
Construction, Reorganization Inc. Post Re- Management, ing Pro Forma
Inc. (M) Entries organization L.L.C. (L) Entries Total
------------- --------------- ------------- ----------- ------- ---------
REVENUES
Construction $ 6,042,047 $(6,042,047)(A) $ - $ - $ - $ -
Program/Construction Management Services - - - 4,874,324 - 4,874,324
---------- ----------- --------- ---------- -------- ---------
TOTAL REVENUES 6,042,047 (6,042,047) - 4,874,324 - 4,874,324
COSTS OF REVENUES 7,735,154 (7,735,154)(A) - 3,249,541 - 3,249,541
---------- ----------- --------- ---------- -------- ---------
GROSS PROFIT (1,693,107) 1,693,107 - 1,624,783 - 1,624,783
GENERAL AND ADMINISTRATIVE EXPENSES 2,017,525 (2,017,525)(A) - 1,296,312 - 1,296,312
---------- ----------- --------- ---------- -------- ---------
(LOSS) INCOME BEFORE OTHER
INCOME (EXPENSE) (3,710,632) 3,710,632 (A) - 328,471 - 328,471
OTHER INCOME (EXPENSE)
Gain on Disposal of Equipment 172,236 (172,236)(A) - - - -
(Loss) on Real Estate Held for Resale (45,548) 45,548 (A) - - - -
Interest Expense (196,488) 196,488 (A) - (30,103) - (30,103)
Interest Income and Other 6,410 (6,410)(A) - 3,035 - 3,035
---------- ----------- --------- ---------- ------- ---------
(LOSS) INCOME BEFORE BENEFIT OF
REORGANIZATION, PREFERRED STOCK DIVIDENDS,
AND INCOME TAX EXPENSES (3,774,022) 3,774,022 - 301,403 - 301,403
BENEFIT OF REORGANIZATION 10,514,111 (A)
(100,200)(B)
(200,000)(C)
- 10,213,911)(A) - - - -
PRO FORMA PREFERRED STOCK DIVIDEND - - - - (9,000)(J) (9,000)
PRO FORMA INCOME TAX EXPENSE - - - - (99,400)(K) (99,400)
---------- ----------- --------- --------- ------- ---------
NET (LOSS) INCOME $(3,774,022) $ 3,774,022 $ - $ 301,403 $(108,400) $ 193,003
=========== =========== ========= ========= ========= =========
(LOSS) INCOME PER SHARE $ (.93) $ .02
========== =========
PRO FORMA WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 4,060,000 8,561,000(L)
========== =========
The accompanying notes are an integral part
of these pro forma consolidating financial statements
F-16
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
Gibbs Thacker Pro Forma
Gibbs Reorganization Construction, Asset Consoli- Pro Forma
Construction, Entries Inc. Post Management, dating Total
Inc. (M) Reorganization L.L.C. (L) Entries
------------- -------------- -------------- ----------- --------- ------------
REVENUES
Construction $53,366,171 $(53,366,171)(A) $ - $ - $ - $ -
Program/Construction Management Services - - - 3,534,468 - 3,534,468
---------- ---------- --------- --------- -------- ----------
TOTAL REVENUES 53,366,171 (53,366,171) - 3,534,468 - 3,534,468
COSTS OF REVENUES 55,487,878 (55,487,878)(A) - 1,908,957 - 1,908,957
---------- ----------- --------- --------- -------- ----------
GROSS (LOSS) PROFIT (2,121,707) 2,121,707 - 1,625,511 - 1,625,511
GENERAL AND ADMINISTRATIVE EXPENSES 5,268,009 (5,268,009)(A) - 836,286 - 836,286
---------- ----------- --------- --------- -------- ----------
(LOSS) INCOME BEFORE OTHER
INCOME (EXPENSE) (7,389,716) 7,389,716 - 789,225 - 789,225
OTHER INCOME (EXPENSE)
Gain on Disposal of Equipment 5,000 (5,000)(A) - - - -
Gain on Temporary Investment Transactions 78,682 (78,682)(A) - - - -
Interest Income and Other 109,646 (109,646)(A) - 6,245 - 6,245
Interest Expense (206,832) 206,832 (A) - (75,131) - (75,131)
Related Party Technical Advisory Fee - - - (87,739) - (87,739)
----------- ---------- --------- --------- ------- ----------
(LOSS) INCOME BEFORE BENEFIT OF
REORGANIZATION,PREFERRED STOCK DIVIDENDS,
AND INCOME TAX EXPENSES (7,403,220) 7,403,022 - 632,600 - 632,600
PREFERRED STOCK DIVIDEND - - - - (12,000)(J) (12,000)
INCOME TAX EXPENSE 1,547,042 (1,547,042)(A) - - (215,000)(K) (215,000)
---------- ----------- --------- --------- -------- ---------
NET (LOSS) INCOME $(8,950,262) $ 8,950,262 $ - $ 632,600 $(227,000) $ 405,600
========== =========== ========= ========= ========= =========
(LOSS) INCOME PER SHARE $ (2.23) $ .05
========== =========
PRO FORMAWEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 4,018,462 8,519,462(L)
========== =========
The accompanying notes are an integral part
of these pro forma consolidating financial statements
F-17
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
NOTES TO PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(UNAUDITED)
(A) To record the transfer of assets and liabilities to a liquidating trust
as described in the Gibbs confirmed plan of reorganization and to
eliminate the revenues and expenses associated with Gibbs for the nine
months ended September 30, 2000.
(B) The plan of reorganization requires Gibbs to issue 501,000 shares of
Gibbs' $.01 par value common stock to the liquidating trust to be
subsequently issued to certain Gibbs' creditors in settlement of their
claims against Gibbs. This entry records the issuance of that stock.
Number of Shares 501,000
Estimated Fair Value Per Share
at November 10, 2000 X $.20
--------
100,200
Less: Par Value of 501,000 Shares at $.01 5,010
-----------
Paid-In Capital $ 95,190
===========
(C) To issue 1,000,000 shares of Gibbs' 6% Board Designated No Par Preferred
Stock at a negotiated value of $.20 per share (aggregate value $200,000)
to the liquidating trust in accordance with the confirmed plan of
reorganization. The trust subsequently issued these preferred shares in
settlement of the debt to the bonding surety.
(D) To reclassify Gibbs' retained deficit to paid-in capital as required by
reverse merger accounting rules.
(E) At December 31, 1999, Gibbs reported a valuation allowance equal to the
total value of the deferred tax asset. Upon discharge from bankruptcy,
Gibbs emerged with its net operating loss carryforward in tact. The
estimated value of the deferred tax asset generated by that tax net
operating loss carryforward is as follows:
Tax Net Operating Loss Carryforward $ 10,395,000
Tax Operating Loss for the Nine Months
Ended September 30, 2000 5,007,000
Relinquishment of Debt, net of assets
contributed to liquidating trust (10,250,000)
------------
5,152,000
Tax Rate X 34%
------------
Deferred Tax Asset $ 1,752,000
=============
Due to the acquisition of TAM, a deferred tax asset valuation allowance
is not needed since it is more likely than not that sufficient future
taxable income will exist to enable Thacker-Gibbs to realize the tax
benefits of the operating loss carryforward.
F-18
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
NOTES TO PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(UNAUDITED)
(F) Gibbs purchased only selected assets and assumed no liabilities of TAM in
connection with the acquisition. The assets and liabilities to remain in
TAM are itemized below:
Cash $ 1,689
Trade Accounts Receivable 508,739
Affiliates Receivables 2,247,216
Note Payable-Related Party (776,381)
Accounts Payable (882,719)
Accrued Liabilities (194,120)
------------
$ 904,424
(G) To issue 4,000,000 shares of Gibbs' $.01 par value common stock at its
estimated fair value on the date of confirmation of the plan of
reorganization (November 10, 2000) for the purchase of certain assets of
Thacker Asset Management. The assets purchased included cash, prepaid
expense, furniture, fixtures and equipment, existing contracts and work
in process. Gibbs acquired the assets of TAM in exchange for 4,000,000
shares of its $.01 par value common stock at which time the management
and stockholders of TAM gained actual and effective operating control of
Gibbs thereby affecting the accounting of the purchase as a reverse
merger and eventual name change to Thacker-Gibbs, Inc
The estimated fair value of Gibbs' stock was the asking price of the
stock on November 10, 2000.
TAM is owned 80% by TOC, Inc., an Atlanta, Georgia, based minority and
women-owned business enterprise providing engineering and construction
management services, and 20% by The Benham Group, Inc., an engineering
firm headquartered in Oklahoma City, Oklahoma.
(H) To reduce Gibbs' furniture and equipment to its estimated fair value at
November 10, 2000, date of purchase of TAM.
(I) To reclassify members' earnings to paid-in capital as this represents
untaxed earnings of TAM from its inception to the date of the merger.
(J) To record dividends on the 6% preferred stock as follows:
Preferred Stock $ 200,000
6% Dividend Rate X $.06
----------
Annual Dividend $ 12,000
==========
Nine Month Dividend $ 9,000
==========
(K) To record pro forma federal income tax expense at approximately 34%.
F-19
THACKER-GIBBS, INC.
(Formerly Known As Gibbs Construction, Inc.)
NOTES TO PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(UNAUDITED)
(L) Outstanding common stock is as follows:
December 31, September 30,
1999 2000
------------ -----------
Weighted Average Number of Common Shares 4,018,462 4,060,000
Shares Issued in Connection with Acquisition 4,000,000 4,000,000
Shares Issued to Liquidating Trust 501,000 501,000
---------- ----------
8,519,462 8,561,000
========== ==========
(M) The statements of operations for the nine month period ended September
30, 2000, include the nine month results of operations of both Gibbs and
TAM. The statements of operations for the year ended December 31, 1999,
reflect twelve month of results of operations for both companies.
F-20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf, thereby duly
authorized.
Date: February 9, 2001
Gibbs Construction, Inc
/s/ Walter R. Huntley, Jr.
--------------------------
Walter R. Huntley, Jr., President