UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0001027484
TILDEN ASSOCIATES, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 11-3343019
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1325 Franklin Avenue, Suite 165 Garden City, NY 11530
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(Address of principal executive offices)
(516) 746-7911
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(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) 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 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 [ ]
The number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: November 9, 2000, was 9,519,028
shares of Common Stock - $.0005 par value.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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Table of Contents for Form 10-QSB
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet 3
Consolidated Statement of Income 5
Consolidated Statement of Cash Flows 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURE 10
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31 December 31,
2000 1999
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 280,732 $ 373,398
Accounts receivable, net 199,603 141,012
Notes and loans receivable 167,967 167,169
Prepaid expense 101,675 117,949
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Total Current Assets 749,977 799,528
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PROPERTY, PLANT AND EQUIPMENT
Property and equipment, net 322,411 319,946
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OTHER ASSETS
Intangible assets, net 489,634 504,816
Security deposits 64,502 64,002
Notes and loans receivable,
net of current portion 562,704 581,014
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Total Other Assets 1,116,840 1,149,832
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Total Assets $2,189,228 $2,269,306
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<TABLE>
<CAPTION>
March 31 December 31,
2000 1999
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 73,976 $ 104,420
Deposits on franchise acquisitions 30,000 40,000
Income taxes payable 7,091 7,798
Notes payable 47,093 58,372
Deferred income -- 7,875
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Total Current Liabilities 158,160 218,465
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NON-CURRENT LIABILITIES
Notes payable, net of current portion 378,492 374,253
Income taxes payable - deferred 69,309 66,525
Security deposits 41,969 41,969
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Total Non-current Liabilities 489,770 482,747
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SHAREHOLDERS' EQUITY
Common stock, $.0005 par value; 30,000,000
shares authorized 9,450,903 shares issued
and outstanding in 2000 and 1999 4,725 4,725
Additional paid in capital 1,576,204 1,576,204
Retained earnings (deficit) (19,631) 7,165
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1,561,298 1,588,094
Less: treasury stock - 40,000 shares, stated at cost 20,000 20,000
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Total Shareholders' Equity 1,541,298 1,568,094
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Total Liabilities and Shareholders' Equity $ 2,189,228 $ 2,269,306
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</TABLE>
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CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
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March 31, March 31,
2000 1999
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<S> <C> <C>
REVENUES
Initial franchise acquisition fees $ 25,000 $ --
Area developer fees 50,000 --
Royalty fees 142,710 80,171
Sales from operation of company stores -- 46,869
Sale of equipment purchased for resale 5,174 7,533
Advertising income 8,030 7,512
Rental income 45,006 --
Miscellaneous income 1,600 496
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Total Revenue 277,520 142,581
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COST OF OPERATIONS
Broker's fees 6,000 2,634
Franchise development fees 25,045 12,774
Costs of operation of company stores -- 23,667
Costs of equipment for resale 5,508 5,024
Rent from realty corporations 27,562 --
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Total Operating Costs 64,115 44,099
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Gross Profit 213,405 98,482
Selling, general and administrative expenses 243,147 224,255
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Income from operations before other income and expenses (29,742) (125,773)
OTHER INCOME (EXPENSES)
Interest income 14,175 5,470
Interest expense (11,229) (5,427)
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Total other income (expenses) 2,946 43
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Income (loss) before income taxes (26,796) (125,730)
Income taxes -- --
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Net Income (Loss) $ (26,796) $ (125,730)
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NET INCOME (LOSS) PER SHARE
Basic (0.003) (0.015)
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Diluted (0.003) (0.015)
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DIVIDENDS DECLARED PER COMMON SHARE N/A N/A
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WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 9,450,903 8,649,418
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Diluted 9,450,903 8,649,418
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</TABLE>
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CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
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March 31, March 31,
2000 1999
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<S> <C> <C>
CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES
Net income $ (26,796) $ (125,730)
Noncash items deducted from (included in) income :
Depreciation and amortization 17,438 15,495
Provision for bad debt 28,009 10,500
Stock issued for services rendered -- 10,125
(Increase) decrease in:
Accounts receivable (49,639) (7,341)
Prepaid expenses 16,274 12,407
Security deposits (500) --
Increase (decrease) in:
Accounts payable and accrued expenses (38,305) (57,871)
Deposits on franchise acquisitions (10,000) 16,270
Payroll and other taxes payable 2,063 (25,501)
Deferred income -- 12,000
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Net Cash Provided by (Required for) Operating Activities (61,456) (139,646)
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CASH PROVIDED BY (REQUIRED FOR) INVESTING ACTIVITIES
Issuance of notes and loans receivable -- (11,000)
Repayment of notes and loans receivable (19,449) 10,527
Purchase of intangible asset (4,720) (229,395)
Proceeds on sale of quipment -- 1,083
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Net Cash Provided by (Required for) Investing Activities (24,169) (228,785)
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CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds on notes payable 150,000 --
Repayment of notes payable (157,041) (8,408)
Proceeds on stock issuance, net of issue costs -- 613,750
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Net Cash Provided by (Required for) Financing Activities (7,041) 605,342
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Net Increase (decrease) in Cash (92,666) 236,911
Cash and cash equivalents
investments at beginning of the period 373,398 452,124
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Cash and cash equivalents at end of the period $ 280,732 $ 689,035
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid 11,229 5,470
Income taxes paid 569 5,314
</TABLE>
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The following discussion and analysis of financial condition and
results of operations should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere herein.
The statements disclosed herein include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. The Company's actual results
could differ materially from those projected in the forward-looking statements
as a result of certain risks and uncertainties, including, but not limited to,
the Company's historical lack of profitability, the Company's need for
additional financing, competition in the finance industry for franchising
companies and retail automobile and truck repair service, and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
OVERVIEW
Tilden Associates, Inc. (the "Company") is a Delaware Corporation. Its
principal business is to sell automotive franchises and to administer and
support full service automotive repair centers carrying its trademarks. The
Company's operations are based at 1325 Franklin Avenue, Suite 165, Garden City,
New York, 11530.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 vs Three Months Ended March 31, 1999
Revenue increased to $278,000 in the first quarter of 2000 from
$143,000 in the first quarter of 1999, representing a 95% increase. The increase
in revenue during the first quarter of 2000 was attributable to; the sale of new
area and individual franchises, a significant increase in royalty income, and
rental income from owned and sublet properties, offset by a reduction in income
from Company owned stores. This reduction was the result of the absence of
retail sales from Company owned stores during the year 2000, which generated
revenue while owned during the first quarter of 1999.
Operating costs increased to $64,000 in the first quarter of 2000 from
$44,000 in the first quarter of 1999, a 46% increase. As a percentage of
revenue, operating costs decreased to 23% in the first quarter of 2000 from 31%
in the first quarter of 1999. This decrease was primarily attributable to the
increase in franchise and area development fees, which have lower costs
associated with them.
Selling, general and administrative expenses increased to $243,000 in
the first quarter of 2000 from $224,000 in the first quarter of 1999, an 8%
increase. This increase is primarily due to increases in professional fees of
$45,000, bad debt expense of $18,000, salaries of $18,000 and advertising
expense of $10,000 offset by decreases in the cost of operations from Company
owned stores of $40,000 and loss on sale of subsidiaries of $36,000. The
decrease in the cost of Company owned stores during 2000 was due to the sale of
two stores during the second and third quarters of 1999. The loss on sale of
subsidiaries corresponds to the sale of a subsidiary during July of 1999. The
increase in professional fees was primarily due to greater than anticipated
7
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costs in connection with the audit of the Company's 1999 financial statements
and preparation of Form 10 to become a reporting entity in compliance with SEC
regulations. The increase in bad debt expense was due to a more conservative
policy toward evaluating the Company's receivables, as well as to an increase in
the volume of receivables generated from royalty income. The increase in
salaries was due to the Company's hiring of personnel to develop a stronger
infrastructure to support expansion and future acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 31, 2000 was $592,000, compared to working
capital of $581,000 at December 31, 1999. The ratio of current assets to current
liabilities was 4.8:1 at March 31, 2000 and 3.7:1 at December 31, 1999. Cash
flow used for operations during the first quarter of 2000 was $61,000, compared
to cash flow used for operations during the first quarter of 1999, of $140,000.
Accounts receivable - trade increased to $276,000 at March 31, 2000
from $199,000 at December 31, 1999.
Accounts payable decreased to $74,000 at March 31, 2000 from $104,000
at December 31, 1999.
Although the Company plans to continue to expand to the extent that
resources are available, the Company has no firm commitments for capital
expenditures in other areas of its business.
The Company believes that it may not have sufficient liquidity to meet
its operating cash requirements for the current level of operations during the
remainder of 2000. Accordingly, the Company may require additional financing.
There can be no assurance that financing will be available, or if available, on
terms acceptable to the Company. If the Company is unable to fund its operating
cash flow needs, the Company may be required to substantially curtail
operations.
The Company currently has a bank line of credit amounting to $200,000.
At March 31, 2000, all of the credit line was available.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
March 31, 2000.
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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.
TILDEN ASSOCIATES, INC.
Date: November 14, 2000
/s/ ROBERT BASKIND
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Robert Baskind
Chairman of the Board, President,
and Chief Executive Officer
