ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2
HARP & EAGLE, LTD. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
June 30, 2002 December 31, 2001
------------- -----------------
ASSETS
Current assets
Cash and cash equivalents $ 368,623 $ 105,383
Accounts receivable - 3,639
Due from related party 39,871 16,883
Inventory 12,997 11,925
Prepaid expenses 116,213 25,106
---------- ----------
Total current assets 537,704 162,936
---------- ----------
Property and equipment
Land 214,464 218,750
Buildings and improvements 1,266,951 1,006,709
Furniture, fixtures and equipment 311,964 351,448
---------- ----------
1,793,379 1,576,907
Less accumulated depreciation 195,487 160,255
---------- ----------
Net property and equipment 1,597,892 1,416,652
---------- ----------
Other assets
Goodwill, net of accumulated amortization of $3,537 at
June 30,2002 and $3,101 at December 31,2001 13,901 14,337
Amounts receivable from shareholder 19,411 19,411
Costs of issuing stock - 201,396
Deferred tax asset 13,500 25,000
Investment in affiliated company 330,350 326,300
---------- ----------
Total other assets 377,162 586,444
---------- ----------
$2,512,758 $2,166,032
========== ==========
|
See notes to consolidated financial statements
3
(Unaudited)
June 30, 2002 December 31, 2001
------------- -----------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Notes payable - related parties $ 50,000 $ 112,700
Notes payable - other - 33,000
Current maturities of long-term debt 375,220 371,252
Accounts payable 66,540 152,910
Accrued liabilities:
Interest 19,400 17,135
Other 66,912 71,420
Customer deposits 350,080 123,134
----------- -----------
Total current liabilities 928,152 881,551
Long-term debt, less current maturities 548,182 508,102
----------- -----------
Total liabilities 1,476,334 1,389,653
----------- -----------
Commitments and contingencies
Stockholders' equity
Preferred stock - -
Common stock 215 195
Additional paid-in capital 1,277,446 1,185,175
Retained earnings (accumulated deficit) (179,095) (212,556)
Foreign currency translation adjustment (62,142) (196,435)
----------- -----------
Total stockholders' equity 1,036,424 776,379
----------- -----------
$ 2,512,758 $ 2,166,032
=========== ===========
|
See notes to consolidated financial statements.
4
HARP & EAGLE, LTD. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited) (Unaudited)
Three months ended June 30, Six months ended June 30,
2002 2001 2002 2001
---- ---- ---- ----
Sales $ 383,802 $ 468,662 $ 635,735 $ 678,159
Cost of sales 60,409 32,936 104,667 54,610
Operating expenses 278,323 374,755 457,559 562,341
--------- --------- --------- ---------
Income from operations 45,070 60,971 73,509 61,208
--------- --------- --------- ---------
Other income (expense)
Interest income 1,225 957 1,676 4,302
Interest expense (13,853) (17,616) (30,224) (34,327)
--------- --------- --------- ---------
Other expense, net (12,628) (16,659) (28,548) (30,025)
--------- --------- --------- ---------
Income before provision for income taxes 32,442 44,312 44,961 31,183
Income tax expense 8,500 3,897 11,500 391
--------- --------- --------- ---------
Net income $ 23,942 $ 40,415 $ 33,461 $ 30,786
========= ========= ========= =========
Net income per common share $ 0.03 $ 0.08 $ 0.05 $ 0.06
|
See notes to consolidated financial statements.
5
HARP & EAGLE, LTD. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Common
Preferred Shares Common
Stock Outstanding Stock
-------------- --------------- ------------
Balance December 31, 200l $ - $ 649,661 $ 195
Issuance of stock offering - 68,105 20
Comprehensive income:
Net income - - -
Foreign currency translation adjustment - - -
-------------- --------------- ------------
Total comprehensive income
Balance June 30,2002 $ - $ 717,766 $ 215
============== =============== ============
|
Common stock-par value of $.0003; 10,000,000 shares authorized, 717,766 and
649,661 shares issued and outstanding at June 30, 2002 and December 31, 2001,
respectively.
Preferred stock - 2,000,OOO shares authorized, no shares have been issued.
See notes to consolidated financial statements.
6
Retained Accumulated
Additional Stock earnings/ Other
Paid-In Subscriptions (Accumulated Comprehensive
Capital Receivable Deficit) Loss Total
---------- ------------ ------------ -------------- ----------
$1,185,175 $ - $ (212,556) $ (196,435) $ 776,379
----------
92,211 92,291
----------
- - 33,461 33,461
- - - 134,293 134,293
---------- -------- ---------- ---------- ----------
167,754
----------
$1,277,446 $ - $ (179,095) $ (62,142) $1,036,424
========== ======== ========== ========== ==========
7
HARP & EAGLE, LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30,2002
2002 2001
--------- ---------
Operating activities
Net income $ 33,461 $ 30,786
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Amortization of goodwill 436 581
Depreciation 34,966 16,268
Deferred tax expense 11,500 -
Noncash compensation of officer - 900
Decrease (increase) in
Accounts receivable 3,639 (863)
Inventory (1,072) (5,850)
Prepaid expenses (91,107) (62,385)
Increase (decrease) in:
Accounts payable 86,370 16,929
Accrued liabilities (2,243) (77,184)
Customer deposits 226,946 30,493
--------- ---------
Net cash provided (used) by
operating activities 130,156 (84,183)
--------- ---------
Investing activities
Purchases of property and
equipment (45,054) (201,048)
Investment in unconsolidated subsidiary (4,050) -
Decrease in amounts receivable
from shareholder (85,688) -
--------- ---------
Net cash used for investing
activities (134,792) (201,048)
--------- ---------
|
See notes to consolidated financial statements.
8
HARP & EAGLE, LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Unaudited)
Six months ended June 30,2002
2002 2001
-------------- --------------
Financing activities
Proceeds from long term debt $ - $ 248,577
Retirement of long term debt (64,770) (42,700)
Issuance of common stock 344,442 -
Costs of issuing stock (50,755) (39,573)
-------------- --------------
Net cash provided by financing activities 228,917 166,304
-------------- --------------
Effect of exchange rate changes
on cash 38,960 (17,848)
-------------- --------------
Cash and cash equivalents
Net increase (decrease) 263,240 (136,775)
Beginning of period 105,383 260,485
-------------- --------------
End of period $ 368,623 $ 123,710
============== ==============
Supplemental cash flow information
Cash paid for interest $ 27,959 $ 82,433
Cash paid for taxes $ - $ -
|
9
HARP & EAGLE, LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Notes 1-Basis of presentation
In management's opinion, the financial information, which is unaudited, reflects
all adjustments (consisting of normal recurring adjustments) necessary for a
fair presentation of the financial information as of and for the three month
periods ended June 30, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States of America. The financial statements
include the accounts of Harp & Eagle, Ltd. (Company), was formed in September
1999 under the laws of the state of Wisconsin for the purpose of acquiring all
of the issued and outstanding common stock of Castledaly Acquisition Corporation
(Castledaly). In 2000, the Company acquired approximately 63% of the outstanding
common stock of Castledaly in a series of transactions. The acquisition of
Castledaly has been accounted for in a manner similar to a pooling of interest
since it was acquired from a company under joint control and common management.
In 2001, the Company acquired the remaining 37% ownership interest of
Castledaly. Castledaly owns 100% of its subsidiary, Castledaly Manor Limited
(Manor), which owns and operates an Irish manor house inn located in the village
of Castledaly, Ireland. Operating results for the three-month period ended June
30, 2002 are not necessarily indicative of the results that may be expected for
future periods.
The business of the Company, accounting policies followed, and other information
are contained in the notes to the consolidated financial statements for the
Company as of and for the years ended December 31, 2001 and 2000, filed as part
of the Company's annual report on Form 10-KSB. These consolidated financial
statements should be read in conjunction with the annual consolidated financial
statements.
Note 2-Earnings per share
Earnings per share has been computed based on the weighted average shares
outstanding for the periods below:
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic income per common share:
Income available to common stockholders:
Three months ended June 30, 2002 $ 23,942 706,310 $ .03
============= ==========
Three months ended June 30, 2001 $ 40,415 504,339 $ .08
============= ==========
Six months ended June 30, 2002 $ 33,461 678,142 $ .05
============= ==========
Six months ended June 30, 2001 $ 30,786 504,339 $ .06
============= ==========
During December, 2000 the Company granted options to purchase approximately
33,332 shares of common stock to four individuals, all of whom are officers,
directors and/or employees of the Company. These options were granted pursuant
to a plan adopted by the board of directors. All of these options are
exercisable for a period of ten years, at the price of $3.00 per share; however,
such options will not become fully vested and exercisable until July 1, 2007.
The exercise price of these options was determined by the Company to reflect the
fair value of the common stock as of December 31, 2000. These options have been
cancelled
Note 3-Reclassification
For comparability, prior period figures have been reclassified, where
appropriate, to conform with the financial statement presentation used for the
second quarter 2002.
10
|