<PAGE> 1
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 25, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File No. 000-30011
THRIFT MANAGEMENT, INC.
--------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0309540
----------------------- ----------
(State or Other Jurisdiction of ( I.R.S. Employer
Incorporation or Organization) Identification No.)
3141 W. Hallandale Beach Boulevard
Hallandale, Florida 33009
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(Address of Principal Executive Offices)
Issuer's telephone number, including area code: 954-985-8430
--------------
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practical date: At July 31, 2000, there were outstanding
2,547,210 shares of Common Stock, $.01 par value.
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE> 2
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 25, 2000 (unaudited) ......................... 3
Consolidated Statements of Operations for the Three Months and
the Six Months ended June 25, 2000 and June 27, 1999 (unaudited) ................. 4
Consolidated Statements of Cash Flows for the Six Months ended
June 25, 2000 and June 27, 1999 (unaudited) ...................................... 5
Notes to Consolidated Financial Statements (unaudited) ............................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................. 9
PART II - OTHER INFORMATION
Item 2. Changes in Securities ..................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders ....................... 13
Item 6. Exhibits and Reports on Form 8-K .......................................... 13
Signatures ......................................................................... 14
</TABLE>
2
<PAGE> 3
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 25, 2000
-------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 633,365
Merchandise inventories 545,818
Prepaid expenses 934,348
-----------
TOTAL CURRENT ASSETS 2,113,531
EQUIPMENT, FIXTURES AND IMPROVEMENTS, net 886,112
PREPAID EXPENSES - NON-CURRENT 101,164
DEFERRED TAX ASSET 311,000
OTHER ASSETS 87,491
-----------
TOTAL ASSETS $ 3,499,298
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 246,924
Accrued expenses 270,197
-----------
TOTAL CURRENT LIABILITIES 517,121
LONG-TERM LIABILITIES
7% Convertible Debentures 1,000,000
-----------
TOTAL LIABILITIES 1,517,121
STOCKHOLDERS' EQUITY
Preferred stock: $.01 par value, authorized 1,500,000
shares, issued and outstanding 250,000 shares 2,500
Common stock: $.01 par value, authorized 15,000,000
shares, issued and outstanding 2,347,210 shares 25,472
Additional paid-in capital 4,318,685
Accumulated deficit (2,364,480)
-----------
TOTAL STOCKHOLDERS' EQUITY 1,982,177
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,499,298
===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ---------------------------
June 25, 2000 June 27,1999 June 25, 2000 June 27,1999
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 2,153,701 $ 2,273,741 $ 4,602,997 $ 4,810,365
Cost of goods sold 1,367,259 1,439,039 2,826,881 3,005,168
----------- ----------- ----------- -----------
GROSS PROFIT 786,442 834,702 1,776,116 1,805,197
Selling, general and administrative
expenses 1,465,032 942,574 2,694,064 1,995,404
Officer's bonus incentive 21,528 22,702 46,254 48,559
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 1,486,560 965,276 2,740,318 2,043,963
----------- ----------- ----------- -----------
(LOSS) FROM OPERATIONS (700,118) (130,574) (964,202) (238,766)
Interest expense 17,453 -- 18,604 --
Interest income (17,304) (10,207) (22,525) (17,164)
----------- ----------- ----------- -----------
(LOSS) BEFORE INCOME
TAX (BENEFIT) (700,267) (120,367) (960,281) (221,602)
Income tax (benefit) -- (45,294) -- (83,389)
----------- ----------- ----------- -----------
NET (LOSS) $ (700,267) $ (75,073) $ (960,281) $ (138,213)
=========== =========== =========== ===========
(Loss) per share:
Basic:
Net (loss) $ (0.28) $ (0.03) $ (0.40) $ (0.06)
=========== =========== =========== ===========
Diluted:
Net (loss) $ (0.28) $ (0.03) $ (0.40) $ (0.05)
=========== =========== =========== ===========
Weighted average number of shares:
Basic: 2,497,210 2,185,700 2,430,781 2,185,700
=========== =========== =========== ===========
Diluted: 2,497,210 2,709,476 2,430,781 2,709,476
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ending
------------------------------------
June 25, June 27,
2000 1999
------------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (960,281) $ (138,213)
Adjustments to reconcile net (loss) to
net cash used in operating activities:
Depreciation and amortization 86,593 79,539
Amortization of prepaid consulting expenses paid
with common stock and warrants 376,166 --
Deferred income tax (benefit) -- (83,389)
Stock options issued to directors and a
consultant for services 117,757 --
Changes in assets and liabilities:
Decrease (Increase) in merchandise inventories 42,723 (45,813)
(Increase) Decrease in prepaid expenses and other assets (218,869) 63,860
(Decrease) in accounts payable (98,005) (122,220)
Increase (Decrease) in accrued expenses 118,801 (6,234)
Decrease in refundable income taxes -- 42,400
----------- -----------
Total adjustments 425,166 (71,857)
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES (535,115) (210,070)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (29,436) (139,563)
----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (29,436) (139,563)
----------- -----------
Cash flows from financing activities:
Advances to stockholder, net -- 31,578
Warrants exercised -- 16,050
Warrants redeemed -- (148,930)
Options exercised 11,250 --
Proceeds from Convertible Debenture 1,000,000 --
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,011,250 (101,302)
----------- -----------
NET INCREASE (DECREASE) IN CASH 446,699 (450,935)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 186,666 873,341
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 633,365 $ 422,406
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ -- $ --
=========== ===========
Income taxes $ -- $ --
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE> 6
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, such information reflects all adjustments (consisting solely of
normal recurring adjustments), which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the three and six months ended June 25,
2000 are not necessarily indicative of the results to be expected for the
full year.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Form 10-KSB for
the year ended December 26, 1999 of Thrift Management, Inc. (the
"Company" or "TMI").
(2) ORGANIZATION
The consolidated financial statements at June 25, 2000 and June 27, 1999
include the accounts of the Company, Hallandale Thrift Management, Inc.
("HTMI"), Thrift Shops of South Broward, Inc. ("TSSB"), Thrift Shops of
West Dade, Inc. ("TSWD"), Hallandale Thrift, Inc. ("HTI"), North Broward
Consignment, Inc. ("NBCI"), Thrift Shops of North Lauderdale, Inc.
("TSNL"), Thrift Retail, Inc. ("TRI"), Thrift Management Canada, Inc.
("TMCI"), Thrift Export, Inc. ("TEI"), Thrift Holdings, Inc. ("THI") and
Collectiblesandart.com, Inc. ("CACI"). (HTMI, TSSB, TSWD, HTI, NBCI,
TSNL, TRI, TMCI, TEI, THI and CACI are collectively referred to herein as
the "Subsidiaries"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
(3) STOCKHOLDERS' EQUITY
On November 28, 1999, TMI entered into an internet product development
agreement with BFW Advertising, Inc. whereby BFW Advertising will design
and prepare a specialized interactive web site for the purpose of
electronic commerce, marketing and promotion of TMI's subsidiary CACI.
This agreement provides for payment of fees in the form of cash and
shares of capital stock. The total contract price for project application
design and development is $84,960 (subject to price adjustments due to
change orders), of which $28,800 shall be paid in cash and $56,160 in
capital stock. The cash portion of the compensation is payable in three
installment payments of $12,000, $8,800 and $8,000 on the payment
milestones stated in the agreement and the $56,160 in capital stock shall
be issued in a single transaction upon final acceptance of the project,
at the then-market price of the shares so issued. Any future price
adjustments of the original contract price are payable 40% in cash and
60% in capital stock. The second cash payment of $8,800 related to this
agreement was made in the six months ended June 25, 2000.
On December 2, 1999, TMI entered into an investor relations agreement
with InsiderStreet.com, Inc. whereby InsiderStreet.com, Inc. provides TMI
with various consulting services including a listing on its home page,
development of a corporate profile with an investor inquiry function,
listing on "Companies to Watch" section and assistance with preparation
of press releases and corporate mentions. This agreement expires in 12
months and provides for a payment of $2,500 plus 125,000 restricted
shares of common stock. The cash payment of $2,500 was made in the 1999
fiscal year.
6
<PAGE> 7
On December 27, 1999 (fiscal year 2000), 125,000 restricted shares of
common stock were issued which were valued at $548,437, or 90%, of the
stock closing price on the effective date of the agreement. The Company
has recorded the issuance of the 125,000 restricted shares of common
stock as of December 26, 1999. Amounts related to this agreement are
being amortized over the 12-month period commencing December 27, 1999.
Amortization expense related to this agreement recorded in the three and
six months ended June 25, 2000 amounted to $137,110 and $274,219,
respectively.
During March 2000, a total 5,000 shares of common stock were issued as a
result of the exercise of stock options granted to employees under the
1996 Stock Option Plan. Total consideration received by the Company
amounted to $11,250.
On March 21, 2000, the Company completed a private placement of a 7%
convertible debenture with a principal amount of $1,000,000 (the
"Debenture"). The Debenture matures on March 21, 2003, and is
automatically convertible into shares of the Company's common stock at a
conversion rate equal to the lower of (i) 80% of the five-day average
closing bid price as reported for the five consecutive trading days prior
to the conversion date; or (ii) 80% of the five-day average closing bid
price as reported for the five consecutive trading days prior to the
issuance of the Debenture (the "Conversion Price") subject to adjustment
as provided in the Debenture. Interest on the Debenture is payable at the
time of conversion in cash or in shares of the Company's common stock, at
the Company's option.
The net proceeds to the Company from the sale of the Debenture totaled
$825,000. The placement agent received a cash commission of $130,000,
plus reimbursement of legal fees, and a five-year warrant to purchase
50,000 shares of the Company's common stock at an exercise price equal to
110% of the Conversion Price of the Debenture, subject to adjustment
under the terms of such warrant. The expenses related to this agreement
are being amortized over the 36-month period commencing March 21, 2000.
Amortization expenses recorded in the three and six months ended June 25,
2000 amounted to $959 and $15,503, respectively.
On April 13, 2000, TMI entered into a financial consulting agreement with
FAC Enterprises, Inc. whereby FAC Enterprises, Inc. provides TMI with
various consulting services including financial consulting and strategic
planning services. This agreement expires in 12 months and provides for
compensation in the form of 200,000 restricted shares of common stock
which were valued at $270,000, or 90%, of the stock closing price on the
date the agreement was executed. The Company has recorded the issuance of
the 200,000 restricted common shares as of April 13, 2000. The amounts
related to this agreement are being amortized over the 12-month
period commencing April 13, 2000. Amortization expenses related to this
agreement recorded in the three and six months ended June 25, 2000
amounted to $54,000.
On April 13, 2000, TMI entered into a consulting agreement with Lorden
International, Inc. whereby Lorden International, Inc. provides TMI with
various financial consulting and strategic planning services. This
agreement expires in 12 months and provides for compensation in the form
of five-year warrants to purchase an aggregate of 120,000 shares of the
Company's common stock at an exercise price of $1.50 per share. The
warrants were valued at $159,939, which is being amortized over the
12-month period commencing April 14, 2000. Amortization expenses
related to this agreement recorded in the three and six months ended June
25, 2000 amounted to $31,988.
On May 2, 2000, TMI entered into an investment banking agreement with
Donner Corporation International effective July 1, 2000 and continuing on
a month-to-month basis. This agreement provides for compensation for
services in the form of a one-time grant of warrants to purchase 25,000
shares of common stock at an exercise price of $4.00 per share during any
five business day consecutive period in which the stock price of TMI
closes at or above $6.00 per share; and of warrants to purchase 25,000
shares of common stock at an exercise price of $7.00 per share on any
five business day consecutive period in which the stock price of TMI
closes at or above $10.00 per share. The warrants expire on April 1,
2005. The warrants were valued at $107,877, which is being amortized over
the 12-month period commencing May 3, 2000. Amortization expenses related
to this agreement recorded in the three and six months ended June 25,
2000 amounted to $15,960.
7
<PAGE> 8
(4) CASH AND CASH EQUIVALENTS
At June 25, 2000, the Company had cash and investments in various bank
money market accounts and non-operating accounts with an aggregate value
of $633,365.
(5) STOCK OPTION PLAN
In 2000, the Company granted a total of 65,500 stock options to its
employees, outside directors and a consultant under the Company's 1996
Stock Option Plan at exercise prices equal to the fair market value of
the common stock on the dates of the grant. These options generally vest
next year and expire not later than 2010. The Company recognized
compensation expense amounting to $117,757 related to options issued to
non-employees in the three and six months ending June 25, 2000.
(6) COMMITMENTS
In January 1999, the Company's Board of Directors approved, over a two
year period, the prepayment of up to $155,266 of salary and bonus to be
paid to the Company's President. Such prepayment bears interest on the
amount prepaid at the annual rate of 8.0% until paid in full on or before
the due date of December 31, 2000. Prepaid expenses as of June 25, 2000
include $96,397 in prepaid bonus to the Company's President.
8
<PAGE> 9
THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is an analysis of the results of operations of Thrift Management,
Inc. and Subsidiaries (collectively, the "Company") and its liquidity and
capital resources. The Company cautions readers that certain important factors
may affect the Company's actual results and could cause such results to differ
materially from any forward-looking statements that may be deemed to have been
made in this Report or that are otherwise made by or on behalf of the Company.
For this purpose, any statements contained in this Report that are not
statements of historical fact may be deemed to be forward-looking statements
which involve risks and uncertainties. Without limiting the generality of the
foregoing, words such as "may," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements.
These risks include: risks of increases in the costs of the Company's
merchandise and the continued availability of suitable merchandise; the
Company's relationship with its suppliers, licensors and contributors; changes
in preferences of customers; competitive and general economic factors in the
markets where the Company sells and collects goods; the impact of and changes in
government regulations such as restrictions or prohibitions relating to the
contribution of charitable goods; and other factors discussed herein or from
time to time in the Company's other filings with the Securities and Exchange
Commission.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the related notes thereto of the Company
included elsewhere herein.
GENERAL
The Company currently operates six retail thrift stores that offer new and used
articles of clothing, furniture, miscellaneous household items and antiques. The
Company obtains its merchandise primarily from two sources: (i) purchase
contracts with charitable organizations, and (ii) various independent contract
collectors from whom the Company purchases merchandise in bulk. The Company is
registered with the State of Florida as a professional solicitor. Items from the
stores that remain unsold are sold in bulk to exporters, which ship the items to
countries throughout the Caribbean, Central and South America, and Eastern
Europe.
9
<PAGE> 10
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE 25, 2000 AND JUNE 27,
1999
Revenues for the three months ended June 25, 2000 and June 27, 1999 totaled
$2,153,701 and $2,273,741, respectively. Sales decreased $120,040, or 5.3%, for
the second quarter of 2000 compared to the second quarter of 1999. On May 9,
2000, the Pompano Beach store was closed which accounted for $73,974, or 62%, of
the sales decrease. The same-store sales for the three months decreased 3.4% as
compared to the 5.4% decrease in the first quarter. The Company continues to
adjust its pricing and promotional strategies in an effort to improve its sales.
The Company's gross profit for the second quarter of 2000 decreased $48,260, or
5.8%, to $786,442 from $834,702 for the second quarter of 1999. The decrease in
the gross profit margin from 36.7% in the second quarter of 1999 to 36.5% in the
second quarter of 2000 is attributable to the increase in the cost of goods sold
the result of aggressive retail price discounts associated with the inventory
liquidation of the Pompano Beach store which was closed. In the second quarter
of 2000, the gross profit margin of stores opened more than a year increased to
37.4% as compared to 37.1% in the second quarter of 1999. This increase was due
primarily to the continuing expansion of the Company's solicitation efforts. The
Company reduced its merchandise purchased from independent contract collectors
by 42% in the second quarter of 2000 as compared to the second quarter of 1999.
Operating expenses for the second quarter of 2000 increased an aggregate of
$521,284, or 54.0%, to $1,486,560 from $965,276 for the second quarter of 1999,
reflecting the impact of various special expenses incurred in the second quarter
of 2000, as described below:
Operating expenses for the three months ending June 25, 2000 include: $137,109
in amortization of investor relations consulting expenses paid with common
stock; $54,000 amortization of financial consulting expenses paid with common
stock; $47,948 amortization of consulting expenses paid with warrants to
purchase common stock; $76,827 in compensation expense related to stock options
issued to outside directors and a consultant for services; $14,544 in
amortization of debenture expenses; and $61,413 in start-up expenses of the
Company's new internet subsidiary, Collectiblesandart.com, Inc. These additional
$391,841 in operating expenses were offset by a decrease in store operating
expenses amounting to $13,934. In addition, there was an increase in corporate
overhead amounting to $143,377 primarily the result of higher professional fees
related to the Debenture transaction and higher corporate payroll. These
operating expenses in the second quarter of 2000, which are expected to continue
for about nine months, contributed to the Company's $700,267 net loss for the
quarter.
10
<PAGE> 11
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 25, 2000 AND JUNE 27, 1999
Revenues for the six months ended June 25, 2000 and June 27, 1999 totaled
$4,602,997 and $4,810,365, respectively. Sales decreased $207,368, or 4.3%, for
the second quarter of 2000 compared to the second quarter of 1999. The Pompano
Beach store was closed on May 9, 2000 and accounts for $108,035, or 52.1%, of
the decrease in revenues. The same-store sales for the six months of 2000
decreased 4.5% as compared to the 1999 period. The Company continues to adjust
its pricing and promotional strategies in an effort to improve its sales.
The Company's gross profit for the first six months of 2000 decreased $29,081,
or 1.6%, to $1,776,116 from $1,805,197 for the first six months of 1999. The
increase in the gross profit margin from 37.5% in the first six months of 1999
to 38.6% in the first six months of 2000 is attributable to the decrease in the
cost of goods sold. This increase was due primarily to the expansion of the
Company's solicitation efforts. The Company reduced its merchandise purchased
from independent contract collectors by 61% in the first six months of 2000 as
compared to the first six months of 1999.
Operating expenses for the first six months of 2000 increased an aggregate of
$696,355, or 34.1%, to $2,740,318 from $2,043,963 for the first six months of
1999, reflecting the impact of various special expenses incurred in the first
six months of 2000, as described below:
Operating expenses for the six months ending June 25, 2000 include: $274,219 in
amortization of investor relations consulting expenses paid with common stock;
$54,000 amortization of financial consulting expenses paid with common stock;
$47,948 amortization of consulting expenses paid with warrants to purchase
common stock; $117,757 in compensation expense related to stock options issued
to outside directors and a consultant for services; $15,503 in amortization of
debenture expenses; and $109,952 in start-up expenses of the Company's new
internet subsidiary, Collectiblesandart.com, Inc. These additional $619,379 in
operating expenses were offset by a decrease in store operating expenses
amounting to $64,272. In addition, there was increase in corporate overhead
amounting to $141,248 primarily the result of higher professional fees related
to the Debenture transaction and higher corporate payroll. These additional
operating expenses in the first six months of 2000, which are expected to
continue for about nine months, contributed to the Company's $960,281 net loss
for the first six months.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
At June 25, 2000, the Company had working capital of $1,596,410 as compared to
working capital of $923,350 at December 26, 1999.
Cash and cash equivalents at June 25, 2000 totaled $633,365 an increase of
$446,699, as compared to $186,666 at December 26, 1999. Net cash used in
operating activities totaled $535,115 for the six months ending June 25, 2000,
as compared to $210,070 net cash used in operating activities for the six months
ending June 27, 1999. The cash used in the purchase of property and equipment
totaled $29,436. The net cash provided by financing activities in the six months
of 2000 was $1,011,250, primarily the result of the issuance of the Debentures
whereas in 1999 the $101,302 net cash used in financing activities was primarily
the redemption of warrants partially offset by the exercise of warrants and
options and the repayment of advances to stockholder. The Company believes that
its current capital resources, together with the expected cash flow from its
operations, will be sufficient to meet its anticipated working capital
requirements through 2000. There can be no assurances, however, that such will
be the case.
The Company is currently seeking sources of additional capital for general
corporate purposes, as well as for the start-up of its Internet subsidiary,
Collectiblesandart.com, Inc. The Company is in the process of completing the
development of the auction and sales portion of the website, which is initially
expected to offer for sale directly or by auction existing inventories from the
Company's retail stores. Depending on demand by consumers and other users of
the site, the Company currently anticipates that this portion of the website may
generate revenues from the time of its launch.
Although the auction and sales portion of the website is in the final stages of
development, the Company may determine to delay the website's launch until an
additional component of the site, in which the Company proposes to offer to
third-party collectibles and antiques dealers "turn-key" website operations on
an application service provider basis, is completed and until the Company is
able to initiate its marketing efforts. The Company will require significant
additional capital in order to complete development of the site, to develop and
launch its advertising and marketing efforts and to build additional
inventories. There can be no assurances that the Company will be able to obtain
capital for these purposes, if at all, on terms that are satisfactory to the
Company or in an amount that is sufficient to accomplish this plan. Accordingly,
the Company cannot estimate at this time the anticipated launch date of its
website.
INFLATION AND SEASONALITY
Although the Company cannot accurately determine precisely the effects of
inflation, management does not believe that inflation currently has a material
effect on the Company's sales or results of operations.
The Company's operations are located in South Florida, which has numerous
part-time residents during the winter. The Company's results of operations
reflect the seasonable nature of this market, with donations and sales of
merchandise being higher in the winter months.
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
In the first six months of 2000, the Company granted options to purchase an
aggregate of 65,500 shares of the Company's common stock to the Company's
employees, outside directors and a consultant pursuant to the Company's 1996
Stock Option Plan. The options are exercisable at exercise prices equal to the
fair market value of the common stock on the dates of grant. The options expire
no later than 2010. These grants of options were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Company
did not pay fees or commissions in connection with these issuances.
12
<PAGE> 13
In December 1999, the Company also issued an aggregate of 125,000 shares of the
Company's common stock to an unaffiliated third party in exchange for consulting
services. The Company did not pay fees or commissions in connection with this
issuance. This issuance was exempt from registration pursuant to Section 4(2)
of the Securities Act.
In April 2000, the Company issued 200,000 shares of its common stock to an
unaffiliated third party in exchange for services to be rendered to the Company
over a one-year period. The Company did not pay fees or commissions in
connection with this issuance. The issuance was exempt from registration
pursuant to Section 4(2) of the Securities Act.
In April 2000, the Company also issued five-year warrants to purchase 120,000
shares of the Company's common stock at an exercise price of $1.50 to a business
consulting corporation in payment for services to be rendered to the Company
over a one-year period. The Company did not pay fees or commissions in
connection with this issuance. The issuance was exempt from registration
pursuant to Section 4(2) of the Securities Act.
In May 2000, the Company issued 59-month warrants to purchase 25,000 shares of
the Company's common stock at an exercise price of $4.00, and 25,000 shares of
the Company's common stock at an exercise price of $6.00 to a investment banking
consultant in payment for services to be rendered to the Company. The Company
did not pay fees or commissions in connection with this issuance. The issuance
was exempt from registration pursuant to Section 4(2) of the Securities Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's annual meeting of shareholders (the "Annual Meeting")
was held on Thursday, June 1, 2000.
(b) Each of the current members of the Company's Board of Directors
were reelected to serve as members of the Board until the annual meeting of
shareholders to be held in 2001 or until their successors are elected and
qualified.
(c) The shareholders voted to amend the Company's 1996 Stock Option
Plan to increase the number of shares reserved for issuance thereunder from
1,000,000 to 2,200,000 and to make certain clarifying and updating changes.
<TABLE>
<CAPTION>
VOTES AGAINST ABSTENTIONS AND
VOTES FOR OR WITHHELD BROKER NON-VOTES
<S> <C> <C>
3,559,100 8,000 0
</TABLE>
The shareholders also voted to ratify the appointment of Berkowitz Dick
Pollack & Brant LLP as the Company's independent public accountants for the 2000
fiscal year.
<TABLE>
<CAPTION>
VOTES AGAINST ABSTENTIONS AND
VOTES FOR OR WITHHELD BROKER NON-VOTES
<S> <C> <C>
3,567,100 0 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit Number Description
-------------- -----------
11 Statement re: computation of per share
earnings
27 Financial Data Schedule (for SEC use
only)
(b) Reports on Form 8-K: None
13
<PAGE> 14
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THRIFT MANAGEMENT, INC.
By: /s/ MARC DOUGLAS
-------------------------------------------
Marc Douglas, President and Chief Executive
Officer (Principal Executive Officer)
Date: August 8, 2000
By: /s/ STEPHEN L. WILEY
-------------------------------------------
Stephen L. Wiley, Chief Financial
Officer (Principal Financial Officer)
14
