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 June 30, 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) 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 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 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE 11
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, December 31,
2000 1999
---------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 279,885 $ 373,398
Accounts receivable, net 188,610 141,012
Notes and loans receivable 157,984 167,169
Prepaid expense 94,957 117,949
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Total Current Assets 721,436 799,528
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PROPERTY, PLANT AND EQUIPMENT
Property and equipment, net 320,137 319,946
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OTHER ASSETS
Intangible assets, net 474,448 504,816
Security deposits 68,002 64,002
Notes and loans receivable, net of current portion 543,972 581,014
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Total Other Assets 1,086,422 1,149,832
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Total Assets $2,127,995 $2,269,306
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<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
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LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 63,067 $ 104,420
Deposits on franchise acquisitions 30,000 40,000
Income taxes payable 25,231 7,798
Notes payable 48,163 58,372
Deferred income -- 7,875
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Total Current Liabilities 166,461 218,465
----------- -----------
NON-CURRENT LIABILITIES
Notes payable, net of current portion 366,040 374,253
Income taxes payable - deferred 51,169 66,525
Security deposits 45,969 41,969
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Total Non-current Liabilities 463,178 482,747
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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) (62,573) 7,165
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1,518,356 1,588,094
Less: treasury stock - 40,000 shares, stated at cost 20,000 20,000
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Total Shareholders' Equity 1,498,356 1,568,094
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Total Liabilities and Shareholders' Equity $ 2,127,995 $ 2,269,306
=========== ===========
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
Quarter Ended Six Months Ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Initial franchise acquisition fees $ 25,000 $ 75,000 $ 50,000 $ 75,000
Area developer fees -- -- 50,000 --
Royalty fees 127,393 123,953 270,103 204,124
Sales from operation of company stores -- 45,090 -- 91,959
Sale of equipment purchased for resale 1,047 130,808 6,221 138,341
Advertising income 9,757 9,414 17,787 16,926
Rental income 49,006 -- 94,012 --
Miscellaneous income 2,257 2,534 3,857 3,030
------------ ------------ ------------ ------------
Total Revenue 214,460 386,799 491,980 529,380
------------ ------------ ------------ ------------
COST OF OPERATIONS
Broker's fees -- 8,500 6,000 11,134
Franchise development fees 20,006 16,704 45,051 29,478
Costs of operation of company stores 200 34,612 200 58,279
Costs of equipment for resale 3,605 130,180 9,113 135,204
Rent from realty corporations 31,431 -- 58,993 --
------------ ------------ ------------ ------------
Total Operating Costs 55,242 189,996 119,357 234,095
------------ ------------ ------------ ------------
Gross Profit 159,218 196,803 372,623 295,285
Selling, general and administrative expenses 203,415 239,863 446,562 464,118
------------ ------------ ------------ ------------
Income from operations before other
income and expenses (44,197) (43,060) (73,939) (168,833)
OTHER INCOME (EXPENSES)
Gain on sale of assets -- 224,875 -- 224,875
Interest income 10,284 9,307 24,459 14,777
Interest expense (9,029) (12,054) (20,258) (17,481)
Total other income (expenses) 1,255 222,128 4,201 222,171
------------ ------------ ------------ ------------
Income (loss) before income taxes (42,942) 179,068 (69,738) 53,338
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net Income (Loss) $ (42,942) $ 179,068 $ (69,738) $ 53,338
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE
Basic (0.005) 0.019 (0.007) 0.006
============ ============ ============ ============
Diluted (0.005) 0.017 (0.007) 0.005
============ ============ ============ ============
DIVIDENDS DECLARED PER COMMON SHARE N/A N/A N/A N/A
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 9,450,903 9,325,258 9,450,903 8,905,676
============ ============ ============ ============
Diluted 9,450,903 10,622,777 9,450,903 10,176,717
============ ============ ============ ============
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
----------------------
June 30, June 30,
2000 1999
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<S> <C> <C>
CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES
Net income $ (69,738) $ 53,338
Noncash items deducted from (included in) income :
Depreciation and amortization 34,893 31,308
Provision for bad debt 60,296 24,500
Stock issued for services rendered -- 10,125
(Increase) decrease in:
Accounts receivable (59,144) (45,546)
Prepaid expenses 22,992 24,125
Security deposits (4,000) 645
Increase (decrease) in:
Accounts payable and accrued expenses (41,339) (38,235)
Deposits on franchise acquisitions (17,875) 85,000
Payroll and other taxes payable 2,063 (27,164)
Deferred income -- 12,000
Security deposits 4,000 18,000
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Net Cash Provided by (Required for) Operating Activities (67,852) 148,096
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CASH PROVIDED BY (REQUIRED FOR) INVESTING ACTIVITIES
Issuance of notes and loans receivable -- (308,900)
Repayment of notes and loans receivable (2,523) 27,744
Purchase of intangible asset -- (229,502)
Purchase of property and equipment (4,716) --
Proceeds on sale of equipment -- 40,898
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Net Cash Provided by (Required for) Investing Activities (7,239) (469,760)
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CASH PROVIDED BY (REQUIRED FOR) FINANCING ACTIVITIES
Proceeds on notes payable 150,000 --
Repayment of notes payable (168,422) (60,752)
Proceeds on stock issuance, net of issue costs -- 613,750
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Net Cash Provided by (Required for) Financing Activities (18,422) 552,998
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Net Increase (decrease) in Cash (93,513) 231,334
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 $ 279,885 $ 683,458
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid 20,258 17,481
Income taxes paid 569 5,314
</TABLE>
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 June 30, 2000 vs Three Months Ended June 30, 1999
Revenue decreased to $214,000 in the second quarter of 2000 from
$387,000 in the second quarter of 1999, representing a 45% decrease. The
decrease in revenue during the second quarter of 2000 was predominately
attributed to 1) the greater level of equipment sales to franchisees during the
second quarter of 1999, and 2) the absence of retail sales of Company owned
stores during the year 2000, which while owned during the second quarter of
1999, generated revenue during that period.
Operating costs decreased to $55,000 in the second quarter of 2000 from
$190,000 in the second quarter of 1999, a 71% decrease. As a percentage of
revenue, operating costs decreased to 26% in the second quarter of 2000 from 49%
in the second quarter of 1999. The decrease is primarily attributable to
equipment sales in 1999. This equipment was sold to franchisees at minimal gross
profit. Accordingly, these sales, amounting to $131,000, increased revenues with
an equal corresponding increase in cost of sales. This resulted in a decrease in
the Company's overall gross profit percentage.
Selling, general and administrative expenses decreased to $203,000 in
the second quarter of 2000 from $240,000 in the second quarter of 1999, a 15%
decrease. This decrease is primarily due to decreases in the cost of operations
of Company owned stores of $22,000, salaries of $24,000 and loss on sale of
subsidiaries of $17,000 offset by increases in bad debt expense of $18,000 and
consulting expenses of $7,000. The decrease in the cost of operations of Company
owned stores was due to the sale of two stores during the second and third
quarter of 1999. The loss on sale of subsidiaries corresponds to the sale of a
subsidiary during July of 1999. The decrease in salaries was primarily due to
personnel hired in 1999 in connection with Company owned stores. Upon the sale
of these stores, such personnel were discontinued. The increase in bad debt
7
<PAGE>
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 consulting expense in 2000 was due to a
consultant engaged by the Company for training and assisting of franchisees.
Six Months Ended June 30, 2000 vs Six Months Ended June 30, 1999
Revenue decreased to $492,000 through the second quarter of 2000 from
$529,000 through the second quarter of 1999, representing a 7% decrease. The
decrease in revenue during the first six months of 2000 was predominately
attributed to 1) the greater level of equipment sales to franchisees through the
second quarter of 1999, and 2) the absence of retail sales of Company owned
stores during the year 2000, which while owned during the second quarter of
1999, generated revenue during that period. These decreases were significantly
offset by increases in all other areas of revenue, including area development
fees, royalties and rental income.
Operating costs decreased to $119,000 during the first six months of
2000 from $234,000 during the same period of 1999, a 49% decrease. As a
percentage of revenue, operating costs decreased to 24% during the first six
months of 2000 from 44% during the same period of 1999. The decrease is
primarily attributable to equipment sales in 1999. This equipment was sold to
franchisees at minimal gross profit. Accordingly, these sales, amounting to
$138,000, decreased revenues with an equal corresponding decrease in cost of
sales. This resulted in a decrease in the Company's overall gross profit
percentage.
Selling, general and administrative expenses decreased to $447,000 for
the first six months of 2000 from $464,000 during the first six months of 1999,
a 4% decrease. This decrease is primarily due to decreases in the cost of
operations of Company owned stores of $63,000, and loss on sale of subsidiaries
of $53,000 offset by increases in professional fees of $49,000, bad debt expense
of $36,000 and consulting expense of $9,000. The decrease in the cost of
operations of Company owned stores was due to the sale of two Company owned
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
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 the Company's change to
a more conservative policy in evaluating receivables, as well as to an increase
in the volume of receivables generated from royalty income. The increase in
consulting expense in 2000 was due to a consultant engaged by the Company for
training and assisting of franchisees.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 2000 was $555,000, compared to working
capital of $581,000 at December 31, 1999. The ratio of current assets to current
liabilities was 4.3:1 at June 30, 2000 and 3.7:1 at December 31, 1999. Cash flow
used for operations through the second quarter of 2000 was $67,000, compared to
cash flow provided by operations through the second quarter of 1999, of
$148,000.
Accounts receivable - trade increased to $277,000 at June 30, 2000 from
$199,000 at December 31, 1999.
8
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Accounts payable decreased to $63,000 at June 30, 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 June 30, 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
On May 22, 2000 the Company granted 9 of its officers and key employees
5 and 10 year options to purchase an aggregate of 1,445,000 shares of the
Company's common stock, par value $.0005 per share, at an exercise price of $.10
per share. Such options were granted as compensation for services rendered to
the company by such officers and key employees. Such options were issued under
an exemption for offerings not involving a public offering pursuant to Section
4(2) of the Securities Act of 1933.
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 June 30, 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
---------------------------------
Robert Baskind
Chairman of the Board, President,
and Chief Executive Officer
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