-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhGCyhg2OFrMkZNHrWZR4xIJJU4Sf5BYWKHDYJquIqrS13VDuCpAZUiXR55FLwuN II488owusE2ga3YAaTxBNQ== 0000098788-99-000006.txt : 19990720 0000098788-99-000006.hdr.sgml : 19990720 ACCESSION NUMBER: 0000098788-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTH ALUMINUM CORP CENTRAL INDEX KEY: 0000098788 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 720646580 STATE OF INCORPORATION: LA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07568 FILM NUMBER: 99666213 BUSINESS ADDRESS: STREET 1: HIGHWAY 18 RIVER ROAD STREET 2: P O BOX 250 CITY: VACHERIE STATE: LA ZIP: 70090 BUSINESS PHONE: 5042658181 MAIL ADDRESS: STREET 1: P O BOX 250 CITY: VACHERIE STATE: LA ZIP: 70090 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED ALUMINUM RESEARCH CORP DATE OF NAME CHANGE: 19740109 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended: May 31, 1999 Commission File Number: 0-7568 TOTH ALUMINUM CORPORATION (Exact name of registrant as specified in its charter) LOUISIANA 72-0646580 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) HIGHWAY 18 - RIVER ROAD, VACHERIE, LA 70090 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (225) 265-8181 Securities registered pursuant to Section 12(b) of the Act: NONE (Title of each class) Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, WITHOUT PAR VALUE (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Common stock, without par value 35,466,193 Class Outstanding at May 31, 1999 TOTH ALUMINUM CORPORATION INDEX TO FORM 10-Q For The Quarter Ended May 31, 1999 Page Part I Financial Information Balance Sheets - May 31, 1999 and August 31, 1998.............................. Statements of Operations - Nine Months Ended May 31, 1999 and May 31,1998............... Statements of Cash Flows - Nine Months Ended May 31, 1999 and May 31, 1998.............. Notes to Financial statements.................................... Management's Discussion and Analysis of the Financial Conditions and Results Of Operations.................................... Part II Other Information.............................. TOTH ALUMINUM CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) COMBINED BALANCE SHEETS (UNAUDITED) MAY 31, AUGUST 31, 1999 1998 ASSETS CURRENT ASSETS: Cash ............................... 378 918 Accounts receivable-other........... - - Total current assets................ 378 918 OTHER ASSETS: Property, Plant and Equipment - Net..................... 25,900 58,450 Investments in and Advances to Armant Partnership......... 25,854 45,354 Patents and Patent Rights (Net of accumulated amortization...... 110 320 Total Other Assets.................. 51,864 107,124 TOTAL ASSETS........................ $ 52,242 $ 108,042 MAY 31, AUGUST 31, 1999 1998 LIABILITIES CURRENT LIABILITIES: Notes payable-related parties....... $ 23,100 $ 23,100 Notes payable-bank.................. - - Notes payable-other................. 300,000 300,000 Accounts payable: Trade ......................... 547,700 498,300 Officers and employees......... 435,600 357,491 Accrued salaries.................... 2,541,495 2,246,955 Accrued expenses.................... 310,400 243,000 Accrued interest payable............ 2,599,209 1,855,552 Total current liabilities........... 6,757,504 5,524,398 DEFERRED CREDIT..................... - - Series AA-1" Convertible Promissory Note(1) Related Parties Principal...................... 7,398,265 7,398,265 Accrued Interest Payable....... 6,624,681 5,958,838 Non-Related Parties Principal...................... 5,978,421 5,978,421 Accrued Interest Payable....... 5,796,830 5,258,773 Total Series "A-1" Notes............ 25,798,197 24,594,297 CONVERTIBLE DEBENTURES PAYABLE (net of discounts, commissions, and offering costs of $1,563).. 20,437 20,437 STOCKHOLDERS' EQUITY: Common stock - no par value......... 38,258,096 38,258,096 Common stock subscribed............. 20,000 20,000 Paid in capital..................... 164,774 164,774 Deficit accumulated during the development stage.............. (70,966,766) (68,473,960) Total stockholders' equity.......... (32,523,896) (30,031,090) TOTAL LIABILITIES................... $ 52,242 $ 108,042
TOTH ALUMINUM CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF OPERATIONS (UNAUDITED) From Three Months Ended Nine Months Ended Inception May May May May To May 31, 31, 31, 31, 31, 1999 1998 1999 1998 1999 COSTS AND EXPENSES: Research and Development........ $ 4,440 $ 3,750 $ 11,850 $ 9,600 $ 7,744,810 Promotional, general and administrative..... 180,965 77,600 518,584 251,420 164782,822 Interest................ 662,519 991,362 1,947,557 2,341,180 16,608,582 Total................ 839,118 1,072,712 2,477,991 2,602,200 40,823,408 OTHER (INCOME) EXPENSE: Loss in Investment and advances to Armant............ 4,600 12,832 27,000 38,850 17,446,213 Equity in loss of Armant............ 7,800 27,841 35,162 92,821 12,688,339 NET LOSS............... $ 851,518 $1,113,385 $2,540,153 $2,733,871 $70,966,766 Loss Per Common Share.. $.02 $.03 $.07 $.08
See notes to financial statements. TOTH ALUMINUM CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS Nine Months Ended From Inception May 31, May 31, To May 31, 1999 1998 1999 OPERATING ACTIVITIES NET LOSS.......................... ($2,540,153) ($2,733,871) ($70,966,766) ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization................. 19,500 23,540 1,186,025 Amortization and write off of patents............... 210 590 440,768 Amortization of prepaid leases.... 302,424 Amortization of Financing......... 95,000 Loss on divestiture of Subsidiaries.............. 912,586 Losses from joint venture......... 35,432 92,821 11,176,055 Other............................. 111,616 Proceeds from royalty Prepayments.................. 172,760 Prepayment of Leases.............. (16,104) Disposition of Property, Plant, and Equipment......... 27,745 CHANGES IN OPERATING ASSETS AND LIABILITIES: Increase in accounts receivable................... 0 Decrease (Increase) in prepaid expenses............. - - (27,371) Increase in accounts payable and accrued expenses............. 1,233,106 538,380 14,591,912 Increase in notes payable......... 1,241,965 2,055,752 21,468,826 (9,940) (22,788) ($20,524,524) TOTH ALUMINUM CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS - (Continued) Nine Months Ended From Inception May 31, May 31, May 31, 1999 1998 1999 INVESTING ACTIVITIES: Purchase of property, plant and equipment........... (13,307) ($1,159,046) Acquisition of patents............. - - (443,375) Investment of Certificate of Deposit.................... (3,995,000) Cash investment in and Advances to TACMA............. (1,076,595) Cash investments in and Advances to Armant............ (17,600) (3,700) (20,785,927) Write off of Investment and Cash advances to Armant............ 27,000 38,850 17,122,172 Redemption of Certificates of Deposit.................... 3,995,000 Proceeds from sale of net Profit interest............... $ 50,000 9,400 22,966 (6,292,771) FINANCING ACTIVITIES: Stock issued or subscribed for cash...................... 18,481,076 Preferred stock issued for cash.... 266,400 Proceeds from long term Obligations................... 1,430,349 Proceeds from warrants Issued for cash............... 6,236,507 Common stock issuance cost......... (166,550) Issuance of convertible Debentures.................... 1,913,963 Cash received upon Conversion of debentures to Common Stock.................. 112,999 Payment of Long term Obligations................... (1,457,071) - - 26,817,673 INCREASE (DECREASE) IN CASH........ (540) (473) 378 CASH BEGINNING OF PERIOD........... 918 651 CASH END OF PERIOD................. $ 378 $ 178 378 See notes to financial statements
TOTH ALUMINUM CORPORATION (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of Toth Aluminum Corporation (the Company) as of May 31, 1999, and the results of its operations and changes in financial position for the three months then ended. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in Form 10- K, dated August 31, 1998. 2. The accompanying financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses from its inception in August 1966 through May 31, 1999, and August 31, 1998, of $70,966,766 and $68,473,960, respectively. Although the Company's investees (TACMA and Armant) have constructed facilities that will employ the Company's patented processes, TACMA has been inactive and Armant has not achieved continuous commercial production. The Company has determined that the operating plant of each investee will require further modifications before commercial production can be achieved. The Company's continuation in existence is dependent upon its ability to generate sufficient cash flow to meet its continuing obligations on a timely basis, to fund the operating and capital needs, and to obtain additional financing as may be required, and ultimately to attain successful operations. Should the Company be unable to obtain a joint venture partner(s), it may experience significant difficulty. These factors, among others, may indicate that the Company will be unable to continue in existence. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue in existence. 3. The Company has historically maintained investments in two affiliates, TACMA and Armant. The Company applies the equity method of accounting for its investment in Armant. The collectibility of the advances to and the recovery of the investment depends upon the affiliate achieving successful commercial operations. The investment in TACMA was expensed during 1988. Armant The Company is general partner in a limited partnership (Armant) formed in 1982 to construct and operate a metal chlorides plant in Vacherie, Louisiana. The plant, which through August 31, 1989, has cost approximately $23 million to construct, has been built on land (the Armant site) owned by Empresas Lince, S.A., (ELSA), a Central American corporation controlled by a former member of the Company's Board of Directors. Under the terms of the original partnership agreement, the Company was to have a 50% ownership interest in the partnership. In March 1983, the partnership agreement was revised to provide the Company a 2% ownership interest and under a separate license agreement, a royalty payment based on net positive cash flow of the partnership. The license agreement provides for royalty payments to the Company equal to 28.6% of net positive cash flow until each limited partnership unit has received $160,000 in cash, at which time royalty payments increase to 49% of net positive cash flow. The Company's capital contribution to Armant consisted of certain improvements to the property, a non-exclusive licensing agreement providing for Armant's use of the Company's carbo-chlorination processes for producing metal chlorides, and prepaid leases as described in Note 4. Contributions to Armant by the limited partners, on the basis of a single limited partnership unit, consisted of $25,000 in initial cash deposits, $75,000 in cash to be paid in equal monthly installments of $5,000 and either a $60,000 letter of credit or the purchase of $60,000 of the Company's restricted common stock. Armant has received subscriptions for all thirty-five limited partnership units. At August 31, 1984, Armant had received cash contributions of approximately $3,459,000. The Chairman of the Company's Board of Directors holds fifteen of the thirty-five units. During November 1984, the Company loaned $3,995,000 to Armant, resulting in the Company now having a receivable from Armant in the amount of $3,995,000 bearing interest at 13.5% per annum. As of August 31, 1989 the Company had made additional cash advances to the Armant Partnership totaling $17,409,000, bearing interest at 12% per annum. The Company has also liquidated $240,000 of Armant's notes payable plus accrued interest due to a corporation controlled by a member of the Company's Board of Directors by issuing 240,000 shares of the Company's restricted common stock. As a result the Company recorded a receivable from Armant of $276,000 bearing interest at 12% per annum. The Company had additional non-interest bearing receivables from Armant totaling $173,000 which were incurred in fiscal 1984, resulting from billing under a service agreement. Subsequent to that date all costs, including general and administrative cost, incurred by the Company related to the construction and operation of the Armant Plant, have been absorbed by the Company and expensed as incurred. The initial phase of construction of the Armant Plant was completed in December 1983. Since that time, numerous test runs have been performed in an effort to achieve continuous commercial production of market grade metal chlorides. Subsequent to the Company's 1986 fiscal year end, Armant determined additional funding would be required to sustain successful operations. Therefore, because of unexpected construction delays and the continued lack of commercial production at Armant, the Company elected to discontinue accruing interest income on the Armant receivable and reversed, in the fourth quarter of fiscal year 1986, all interest income previously accrued which totaled $1,164,000 of which $551,000 was accrued through August 31, 1986. Further, Armant elected to discontinue capitalizing plant start-up costs. The net loss recognized by Armant during the year ended August 31, 1987, which primarily resulted from expensing start-up costs, was first allocated to the partners' equity accounts based upon their respective percentage interests in the total partnership equity. To the extent that this loss exceeded the total limited partners' equity, all additional losses were allocated to the Company's equity interest in the partnership, since the Company is the sole general partner in the limited partnership and is at risk for these losses in the form of advances to Armant. After an extensive revaluation of the Armant Partnership, Management determined that the cost capitalized and deferred must be written down in accordance with Generally Accepted Accounting Practices. Costs capitalized and deferred by Armant consisted of the following: May 31, August 31, 1999 1998 Direct carbo-chlorination plant costs: Process equipment.................. $ 1,900,000 $ 2,950,000 Leasehold improvements............. 52,000 72,000 1,952,000 3,022,000 Self-construction and start-up costs: Salaries: Engineering........................ 21,000 40,000 Plant construction and operations..................... 510,000 702,000 Indirect labor and overhead....... 24,000 35,000 555,000 777,000 $ 2,507,000 $ 6,528,000 Presented below is summarized financial information of Armant. Beginning September 1, 1986, Armant elected to discontinue capitalizing costs not directly associated with plant construction. Further, Armant elected to discontinue capitalizing interest costs in 1988 and reversed all interest costs that had been capitalized in 1988. Prior to September 1, 1986, all costs were capitalized and deferred. May 31, August 31, 1999 1998 Assets: Plant and equipment.............. $ 2,473,000 $ 3,799,000 Other............................ 80,000 100,000 Total............................ $ 2,553,000 $ 3,899,000 Liabilities and Equity: Notes payable - Toth Aluminum Corporation.................... $ 3,640,000 $ 7,087,000 Payables - Toth Aluminum Corp.... 17,240,000 16,970,000 Other payables.............. 780,000 710,000 Equity - Toth Aluminum Corporation................. (18,312,000) (18,508,000) - Other.................... (13,000) (13,000) (18,327,000) (18,521,000) Total.......................... $ 2,553,000 $ 3,899,000 Nine Months Ended May 31, May 31, 1999 1998 Statement of Plant Expenses Write down of Capitalized costs.......... 8,000 Direct plant costs............... 26,000 18,000 Interest expense................. 229,000 155,000 General and administrative costs....... 57,000 66,000 Net loss $ 312,000 $ 247,000 May 31, August 31, 1999 1998 Payable to and Equity of Toth Aluminum Corporation: Notes payable...................... $ 19,970,000 $ 19,842,000 Payables........................... 4,750,000 5,240,000 Beginning equity of the Company...... (5,560,000) (5,560,000) Less: Loss from Armant......... (11,053,000) (11,650,000) Affiliates interest: Capitalized by Armant, but not accrued by the Company.... (5,620,000) (5,620,000) Expensed by Armant, but not accrued by the Company...... (2,513,000) (2,310,000) Investment in and advances to Armant......................... $ 26,000 $ 58,000 4. Notes payable consisted of the following: May 31, August 31, 1999 1998 Notes payable to bank, collateralized (A): At 12%...................... $ - $ - Demand notes payable to related parties, unsecured At 12%........ 23,100 23,100 Notes payable to other parties, secured (A) At 12%................ 300,000 300,000 Series AA-1" Convertible Promissory Notes Payable to related parties........ 7,398,265 7,398,265 Payable to others................. 5,978,421 5,978,421 13,376,686 13,376,686 Total.................................. $ 13,699,786 13,699,786 A) Collateralized by a pledge of personal assets owned by the Company's Chairman of the Board. 5. The financial statements are summarized and reference is made to the "NOTES TO FINANCIAL STATEMENTS" included in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources During the nine months ended May 31, 1999, total assets decreased to $52,242 from $108,042 at August 31, 1998, and current assets decreased from $918 to $378. The decrease in total assets is the results of the Company's decision to write down an additional $52,050 in capitalized cost carried by Armant Limited Partnership. This write down reduced the Company's Investments in and Advances to Armant from $45,354 as of August 31, 1998 to 25,854 on May 31, 1999. The recoverability of the Company's investment in and advances to Armant of $25,854 is dependent on the Armant Partnership achieving and sustaining sufficiently profitable commercial operations (see note 3 of Notes to Financial Statements). Total liabilities, including the Series "A-1" Convertible Promissory Note, increased from $30,139,132 to $32,576,138 during the same period. Working Capital Meeting Operating Needs and Commitments From inception, the Company has sustained its operations primarily through funds provided by private placements and public offerings of its common stock. Due to the length of its development stage activities, liquidity has always been a continuing concern. The Company has incurred net losses from its inception in 1966 through May 31, 1999, of approximately $70,966,766. Although the Company's investees (Armant and TACMA) have constructed facilities that employ the Company's patented processes, Armant has not achieved continuous commercial production, and the commercial viability of the processes has not been demonstrated. TACMA has not commenced commercial production and no such activities are currently planned. The recoverability of the Company's investments in and advances to Armant, is dependent on Armant achieving sufficiently profitable commercial operations. These factors, among others, may indicate that the Company will be unable to continue in existence. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue in existence. The Company's continuation in existence is dependent upon its ability to generate sufficient cash flow to meet its continuing obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain successful operations. Management believes that the plants constructed by Armant and TACMA demonstrate that the production of metal chlorides and aluminum intermediates through the Company's patented processes is possible. Further, the planned expansion of the Armant Plant should enable it to achieve continuous production of alumina as well as metal chlorides. Management believes that continuous production capabilities should enable it to attain successful operations. This will not occur at the TACMA facility unless and until the Company directs its efforts and resources toward TACMA. No such activities are currently planned at TACMA. Immediate Development Plans The Company's intention in the near-term is to focus its efforts and resources on completing a project to commercialize the Clay-to-Aluminum Process be undertaken in two steps. In the first step, which TAC has designated Phase 1, TAC proposes that a semi-commercial demonstration plant be built and operated. Operation of this semi-commercial plant will permit engineers to fine tune the design of the subsequent full commercial facility in Phase 2. Equally important, the Phase 1 plant will provide a hands-on training facility for commercial plant staff. Phase 2 of the project will comprise the design and construction of a full scale commercial Clay-to-Aluminum plant. Cost of Phase 1 is estimated to be $45 million and the cost of Phase 2 will be determined after Phase 1 has been completed. There will be two principal goals in executing Phase 1. The first goal is to refine TAC's clay chlorination procedures for implementation in commercial production facilities. TAC has already developed these procedures to an advanced stage in its pilot plant, but the design of that pilot plant did not permit long duration, continuous operation runs. Refinement of procedures will permit confident scale-up to full scale commercial plant capacity. The second goal will be generation of refined designs for full scale commercial smelting cells. This will be accomplished by constructing and operating a complete ACS smelting facility which will consume a portion of the aluminum chloride produced in clay chlorination. The balance of production will be marketed as high purity anhydrous aluminum chloride to generate revenues to help defray plant operating costs. Smelting specialists foresee rapid development of a final design for commercial cells in Phase 1, and anticipate that this will consume nine to twelve months of development time. The project will start as soon as TAC has secured the financing for Phase 1. Initial tasks includes detailed engineering design of clay chlorination and smelting facilities, and the selection of a suitable plant site. Construction will begin with site preparation, approximately nine months after the project start. After an initial run up period, the Phase 1 plant is expected to reach full design capacity within 36 months after project start. After confirmation of the economic viability of the Clay-to- Aluminum Process, work will begin on the second phase of the project, namely the design, construction and operation of a commercial Clay-to-Aluminum plant. TAC proposes that a modular design concept be adopted for Phase 2, such that the eventual full scale commercial plant will consist of a set of duplicate plant modules, operating in parallel. TAC estimates that the first plant module will be completed in the seventh year of the project, with additional modules constructed in parallel in subsequent years. Disclosure of Year 2000 Issues The Company is engaged in the commercialization of its patented carbo-chlorination processes for the production of aluminum, alumina and aluminum trichloride, silicon tetrachloride, titanium tetrachloride. At present the company has no ongoing manufacturing operation, therefore no revenues are derived from its operation. Recent market surveys indicate a continued growth and demand for these products beyond the year 2000. Management has conducted an extensive assessment of the Year 2000 issues, and has concluded there will be no material effects on the company's business, there will be no material effects on the results of operations, and there will be no material effects on its financial condition. The Company is in a 100% state of readiness for the year 2000. The Company has conducted extensive testing of its computer and other date related systems, and has determined that nearly all are year 2000 complainant. Those systems which are not year 2000 complainant, have been discarded. Furthermore, the Company has conducted an informal surveyed on its utility companies, telephone company, and its banking institutions to verify they are year 2000 complainant as well. The Company anticipates little to no ill effects from the Year 2000. The demand for its products continue to grow, thereby making the prospects of a future joint venture very pausable. The worst case scenario, would be a total collapse of the US Capital Markets where by funding for the Company's future commercialization of its process could not be achieved. The Company has prepared a contingency plan in the event of a disruption in its ability to continue funding of its ongoing operation. The Company has secured a personal commitment for its operating capital needs. However, in the event of a major disruption of the Financial Markets, the Company's continued existing would be in doubt. Results of Operations The Company had no operating revenues and reported net losses. The Company is considered to be a development stage enterprise; start-up activities have commenced, but the Company has received no revenue therefrom. The net loss for the nine months ended May 31, 1999, was $2,540,153 compared to $2,733,871 for the corresponding period in 1998. During the nine month period ending May 31, 1999, the company continues to write down a significant amount of its investment in the Armant Partnership which affected its net loss. The initial phase of construction of the Armant Plant was completed in December, 1983. Since that time, numerous test runs have been performed in an effort to achieve continuous commercial production of market grade metal chlorides. Subsequent to the Company's 1986 fiscal year end, Armant determined additional funding would be required to sustain successful operations. Therefore, because of unexpected construction delays and the continued lack of commercial production, Armant elected to discontinue capitalizing plant start-up costs as of August 31, 1986. The net loss recognized by Armant during the three months ended November 30, 1987, resulted primarily from expensing start- up costs. The net loss recognized by Armant during the year ended August 31, 1987, was first allocated to the partners' equity accounts based upon their respective percentage interests in the total partnership equity. To the extent that this loss exceeded the total partners' equity, all additional losses were allocated to the Company's equity interest in the partnership, since the Company is the sole general partner in the limited partnership and is at risk for these losses in the form of advances to Armant. The Company's equity in the loss of Armant for the nine months ended May 31,1999, was $27,841, which was a result of Armant losses in excess of total partnership equity and was recorded as a reduction in investment in and advances to Armant. PART II. Other Information Item 1. Legal Proceedings See Item 10 of the Company's Form 10-K for the year ended August 31, 1998, concerning legal proceedings. Item 6. Exhibits and reports on Form 8. On May 17, 1999, the Company filed a Form 8-k notifing the SEC of its Year 2000 readiness. The text of which is included in this filing under the Management's Discussion and Analysis of Financial Condition and Results of Operation. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TOTH ALUMINUM CORPORATION (Registrant) BY: Charles E. Toth Date: July 15, 1999 Charles E. Toth Treasurer BY: Charles Toth Date: July 15, 1999 Charles Toth Chairman of the Board of Directors Chief Executive Officer EX-27 2 ARTICLE 5. FIN. DATA SCHEDULE FOR 3RD QTR. 10-Q.
5 AUG-31-1999 SEP-01-1998 MAY-31-1999 9-MOS 378 0 0 0 0 378 1,232,821 1,159,032 52,242 6,757,504 20,437 0 0 38,258,096 0 52,242 0 0 0 0 592,596 0 1,947,557 0 0 0 0 0 0 (2,540,153) (.07) (.07)
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