SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1998
COMMISSION FILE NO. 2-70345-NY
TimeOne, Inc.
(Exact name of Registrant as specified in its Charter)
Nevada 88-0182534
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6500 South State Street
Murray, Utah 84107-7219
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(801) 268-9280
Former Address:
n/a
Former Name, Former Address, and Former Fiscal Year,
if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filled by Section 13 or 15(d) of the Securities 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.
(1) Yes: X No:
(2) Yes: X No:
Number of Shares Outstanding at the End of the Fiscal Quarter:
8,354,900 shares of common stock
(Indicate Number of Shares Outstanding of Each Class of Common
Stock as of the end of the Quarter
Page 1 of 13
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
TimeOne, Inc. ("Registrant" or "Company") files herewith an unaudited
balance sheet of the Registrant as of June 30, 1998 and the related statements
of income and cash flows for the three and six month periods ended June 30, 1998
and June 30, 1997. The unaudited financial statements included in this report on
Form 10-QSB have been prepared by the Company and have not been the subject of
independent review. In the opinion of the management of the Company, the
financial statements fairly present the financial condition of the Company.
Page 2 of 13
<PAGE>
TimeOne, Inc.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS June 30,1998
-----------------------------
<S> <C>
Cash $ 289,493
Receivables (Note E) 48,464
Marketable Securities (Note A) 535,736
Inventory (Note A) 21,940
Prepaid Expenses & Supplies 101,926
-----------------------------
Total Current Assets 997,559
PROPERTY, PLANT AND EQUIPMENT (at cost)
Building 1,494,000
Building Improvements 202,691
Furniture, Fixture & Equipment 891,032
Land 581,000
-----------------------------
3,168,723
Less Accumulated Depreciation (886,446)
-----------------------------
Total Property, Plant & Equipment 2,282,277
OTHER ASSETS
Q Lube Joint Venture 21,641
Startup Costs 9,739
Deposit 2,076
Montana Property 75,453
Deferred Tax Asset 17,000
-----------------------------
Total Other Assets 125,909
-----------------------------
TOTAL ASSETS $3,405,745
=============================
</TABLE>
Page 3 of 13
<PAGE>
TimeOne, Inc.
LIABILITIES AND STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
CURRENT LIABILITIES June 30, 1998
------------------------------
<S> <C>
Accounts Payable, Payroll and Sales Tax $ 87,842
Loan Payable - Bank One 40,608
Loans Payable - Related Parties 163
------------------------------
Total Current Liabilities 128,613
LONG TERM LIABILITIES
Long Term Liabilities - Bank One 1,673,193
------------------------------
Total Long Term Liabilities 1,673,193
------------------------------
Total Liabilities 1,801,806
Capital Stock, common 835
Additional paid in capital 1,229,327
Retained Earnings 373,777
------------------------------
1,603,939
------------------------------
TOTAL LIABILITY AND STOCKHOLDERS EQUITY $ 3,405,745
==============================
</TABLE>
Page 4 of 13
<PAGE>
TimeOne, Inc.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For three months ended For six months ended
----------------------------------------- --------------------------------------
June 30, June 30, June 30, June 30,
REVENUES: 1998 1997 1998 1997
------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
Car Wash $ 342,732 $ 362,842 $ 624,003 $ 694,046
Boutique Net 7,625 6,814 9,746 12,708
Fuel Sales - Net 2,133 3,548 4,552 7,058
Carpet Express Equipment - Net 0 16 0 16
Discounts (27,505) (3,066) (48,512) (5,994)
------------------ ------------------ ----------------- ------------------
TOTAL REVENUES 324,985 370,154 589,789 707,834
COSTS AND EXPENSES
Salaries, Labor and Commissions 154,306 166,208 289,577 325,745
Taxes and Benefits 28,423 27,193 53,121 57,341
Interest and Credit Card Fees 43,599 49,116 86,277 104,175
Travel, Auto, Promotional and Advertising 4,315 7,382 5,731 12,190
Office, Telephone, Printing and Supplies 35,947 40,939 65,968 81,451
Utilities, Maintenance, Rent and Insurance 25,592 32,738 55,811 66,638
Depreciation and Amortization 39,573 35,143 76,364 71,875
Professional Fees and Other 18,394 29,637 37,423 62,307
------------------ ------------------ ----------------- ------------------
TOTAL COSTS AND EXPENSES 350,149 388,356 670,272 781,722
------------------ ------------------ ----------------- ------------------
Net Income (Loss) before Other Income (25,164) (18,202) (80,483) (73,888)
Q Lube Income 10,476 0 18,933 0
Contract Services and Miscellaneous 11,270 6,056 21,342 (1,413)
Interest and Dividends 1,854 2,913 4,465 9,964
Gain On Property Sale 5,315 213,315 5,315 213,315
Gain (loss) on Sale of Securities 35,433 0 121,977 (2,673)
------------------ ------------------ ----------------- ------------------
64,348 222,284 172,032 219,193
Income Taxes (11,229) (2,425) (11,229) (2,425)
------------------ ------------------ ----------------- ------------------
NET INCOME $27,955 $201,657 $80,320 $142,880
================== ================== ================= ==================
NET INCOME PER SHARE NIL $.02 $.01 $.02
================== ================== ================= ==================
</TABLE>
Page 5 of 13
<PAGE>
TimeOne, Inc.
STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
Balances 12/31/93 6,113,900 $ 611 $ 1,120,692 $ (122,044)
Net income for year ended 12/31/94 109,604
------------ ----------- ----------- --------------
Balances 12/31/94 6,113,900 611 1,120,692 (12,440)
Net income for year ended 12/31/95 133,857
------------ ----------- ----------- --------------
Balances 12/31/95 6,113,900 611 1,120,692 121,417
Net income for year ended 12/31/96 107,831
Stock issued for assets 2,000,000 200 124,800
Restricted stock issued to employees 350,000 35 32,776
------------ ----------- ----------- --------------
Balances 12/31/96 8,463,900 846 1,278,268 229,248
Net Income for year ended 12/31/97 64,209
Cancel Treasury Stock (109,000) (11) (48,941)
------------ ----------- ----------- --------------
Balances 12/31/97 8,354,900 835 1,229,327 293,457
Net income for 6 months ended 80,320
------------ ----------- ----------- --------------
Balances 6/30/98 8,354,900 $ 835 $ 1,229,327 $ 373,777
============ =========== =========== ==============
</TABLE>
Page 6 of 13
<PAGE>
TimeOne, Inc.
CASH FLOWS STATEMENT
<TABLE>
<CAPTION>
For three months ended For six months ended
---------------------------------- ----------------------------------
June 30, June 30, June 30, June 30,
OPERATING ACTIVITIES 1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Income $ 27,955 $ 201,657 $ 80,320 $ 142,880
Adjustments to reconcile
net income (loss) to Net
cash provided by operating
activities:
Joint Venture Income (2,030) 0 (10,487) 0
Sale of West Valley Property 0 (213,315) 0 (213,315)
Write off Obsolete Assets 0 0 0 8,895
Depreciation and Amortization 39,573 35,143 76,364 71,875
(Increase) Decrease in Receivables (9,326) (25,050) 3,206 (26,298)
(Increase) Decrease in Pre-Paid Expense, (49,782) (14,368) (51,501) (10,570)
Supplies and Deposits
(Increase) Decrease in Inventory 24 1,905 4,360 (1,651)
Increase (Decrease) in Accounts Payable and 30,407 (39,886) 53,689 18,559
Payroll tax
--------------- --------------- --------------- ---------------
NET CASH PROVIDED OPERATING ACTIVITIES 36,821 (53,914) 155,951 (9,625)
INVESTING ACTIVITIES
Investment in Montana Land (22,863) 0 (22,863) 0
Sale of West Valley Property 0 549,400 0 549,400
Cost of Securities Sold 73,969 0 161,378 8,273
Purchase of Securities (52,272) 0 (305,156) (6,069)
Purchase of Property and Equipment (1,428) (1,874) (1,428) (82,448)
Joint Venture Distribution 0 0 63,073 0
Decrease in Deposits 0 0 425 0
--------------- --------------- --------------- ---------------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (2,594) 547,526 (104,571) 469,156
FINANCING ACTIVITIES
Repayment of Loans (19,276) (230,223) (32,102) (291,920)
Sale of West Valley Property 0 (150,000) 0 (150,000)
--------------- --------------- --------------- ---------------
NET CASH PROVIDED OR (USED) BY FINANCING (19,276) (380,223) (32,102) (441,920)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 14,951 113,389 19,278 17,611
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 274,542 129,718 270,215 225,496
--------------- --------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 289,493 $ 243,107 $ 289,493 $ 243,107
=============== =============== =============== ===============
</TABLE>
Page 7 of 13
<PAGE>
TimeOne, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE A - Summary of Significant Accounting Policies
Revenue Recognition
Interest income is accrued as earned. Gains or losses on the sale of
securities are recorded as of the trade date.
Depreciation
Depreciation on office equipment and furniture is provided over the
estimated useful life of five to ten years using an accelerated method and
depreciation on the office building is being provided over the estimated useful
life of 30 to 31.5 years using the straight line method.
Marketable Securities
Marketable securities, as a group, are carried at market value in
accordance with FAS #115. Prior to January 1, 1994, the securities were carried
at the lower of cost or market. At December 31, 1997, an increase of $69,305 was
made to adjust to market ($31,549 decrease was made for 1996 and $10,207
increase was made for 1995).
Income Taxes
No federal income taxes were due for the year ended December 31, 1997. At
December 31, 1997, the Company had unused general business credits of $7,844
which expire in 1998 through 2000, and contributions carryover of $40,386,
expiring 1998 through 2001. The Company has a federal net operating loss
carryover of $92,031 which, if not used, will expire December 31,2006.
Inventory
Inventory consists of items for sale and use in the operations of the
carwash. Inventory is recorded at lower of cost or market, on a first-in,
first-out basis.
Cash and Cash Equivalents
For financial statement purposes, the company considers all highly liquid
investments with an original maturity of three months or less when purchased to
be cash equivalents.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues,
and expenses during the reporting period. Estimates also affect the disclosure
of contingent assets and liabilities at the date of the financial statements.
Actual results could differ from these estimates. Such estimates of significant
accounting sensitivity are allowance for doubtful accounts and reserves for
obsolete inventory.
NOTE B - COMMITMENTS
The Company is also obligated under a maintenance contract on its signs.
The contract was signed to be effective in December 1996. The cost is $789
monthly.
Page 8 of 13
<PAGE>
NOTE C - LOANS PAYABLE
In March 1996, the Company purchased the carwash buildings and land from
Daniel F. Pentelute for $2,075,000. The purchase price was below the appraised
value of 2,400,000 actual and $3,600,000 replacement cost. The loan agreements
were signed with Bank One, Utah for $1,800,000 at an interest rate of 8.26% with
20 year amortization and 5 year call. A line of credit for $150,000 with an
interest rate of 8.25% was also taken out. The line of credit was repaid in
1997. The following is a summary of debt at June 30, 1998 and 1997.
<TABLE>
<CAPTION>
Interest 1998 1997
Rate % Current Long-Term Current Long-Term
------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Bank One (1) 8.26 $ 40,608 $ 1,673,193 $ 47,417 $ 1,706,871
Dan Pentelute 8.75-10.5 163 0 163 0
Escrow Services (2) 9.50 0 0 5,000
------------- ----------- ------------- ----------- -----------
$ 41,771 $ 1,673,193 $ $52,580 $ 1,716,477
=========== ============= =========== ===========
</TABLE>
Monthly payments are $15,487, and the balance is due March 25, 2001.
The loan is secured by land and buildings with a cost of $2,075,000.
(2) The loan was repaid during the 2nd quarter of 1998.
Scheduled principal reductions for the next four years are as follows:
12/31/98 $ 40,608
12/31/99 49,534
12/31/00 49,815
Thereafter 1,575,007
-----------
$ 1,714,964
===========
NOTE D - DEFERRED TAX ASSET
In February, 1992, the Financial Account Standards board adopted Statement
of Financial Accounting Standards No. 109 Accounting for Income Taxes, which
supersedes substantially all existing authoritive literature for accounting for
income taxes and requires deferred tax balances to be adjusted to reflect the
tax rates in effect when those amounts are expected to become payable or
refundable. The Statement was applied in the Company's financial statements for
the calendar year commencing January 1, 1993 by recognizing the cumulative
effect of the change during 1993.
NOTE E - RECEIVABLES
Receivables at June 30, 1998 and 1997 were as follows:
June 30, June 30,
1998 1997
Trade Accounts Receivables $ 48,464 $ 192,020
======== =========
Page 9 of 13
<PAGE>
NOTE F - START-UP COSTS
These are costs associated with development of the carwash. The costs are
being amortized, depreciated or expensed. The costs include travel to view other
carwashes, equipment, inventory, legal fees for patents and trademarks, etc.
During 1994 and 1995 the Company spent $25,900 associated with property being
held for development into a second carwash operation. These costs were written
off when the West Valley land was sold in May 1997.
NOTE G - MONTANA LAND
During the quarter Desert Land Enterprises and the Company sold (1) one of
the (5) five lots they jointly own. At the time of the sale, Desert Land
presented the Company with a bill for the improvements previously funded solely
by Desert Land. The bill was for $41,726, which is the cost of roads, curbing
and electrical service. The Company was unable to pay for these improvements at
the time they were undertaken. Since these improvements do make the lots more
attractive and therefore saleable the Company feels it is fair to pay it's half
of the improvements. Although the Company made a profit of $5,315 on the sale,
no cash was realized, all proceeds went to Desert Land to pay for improvements.
Page 10 of 13
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS.
Changes in Financial Condition
As of June 30,1998 the Company had current assets of $997,560 compared to
$790,570 as of December 31, 1997. Cash increased $19,278 from $270,215 as of
December 31, 1997 to $289,493 as of June 30, 1998. The cash increase is due to
the sales of securities. Current liabilities as of June 30,1998 were $128,615
compared to $82,447 as of December 31,1997. This increase is due to accounts
payable related to improvements on the Montana land to facilitate sale of
property.
Inventory decreased $4,360 from $26,300 as of December 31, 1997 to $21,940
as of June 30, 1998.
Changes In Result of Operations
Carwash volume continues to decline in the face of cooler and wetter than
normal conditions. Wash volume decreased 3,193 cars, from 23,864 for the 3 month
period ended June 30, 1997 to 20,671 for the 3 month period ended June 30, 1998.
Continued major highway construction projects also contribute to reduced volume.
Revenue for the 3 month period ended June 30, 1998 was $324,985 compared
to $370,154 for the same period ended June 30, 1997, a decrease of $45,169
(12%). Revenue decreases are due in part to a discount program on wash packages
and reduction in wash volume.
The Company posted a net profit of $27,955 for the 3 month period ended
June 30, 1998, compared to a profit of $201,657 for the same 3 month period
ended June 30, 1997. This decrease is due to a somewhat larger loss from
operations in 1998 and the fact that the Company sold its West Valley property
in 1997, which resulted in a large gain during the second quarter.
For the 6 month period ended June 30, 1998 the Company posted a loss from
operations of ($80,483) compared to a loss of ($73,888) for the same 6 month
period ended June 30, 1997. Overall the Company posted a net profit of $80,320
for the 6 months ended June 30, 1998, compared to a profit of $142,880 for the
same period ended June 30, 1997. The larger profit in 1997 was primarily due to
the sale of the West Valley property. Net earnings per share for the six month
period ended June 30, 1998 were negligible.
As of June 30, 1998 cash and cash equivalents were $289, 493 compared to
$243,107 as of June 30, 1997.
The current ratio as of June 30, 1998 was 7.76 compared to 3.78 for the
period ended June 30, 1997.
Management believes that sufficient working capital exists for its
operations.
Page 11 of 13
<PAGE>
PART II.
ITEM 1. LEGAL PROCEEDINGS
During the reporting period the Company was not party to any legal
proceedings.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Registrant has no securities which are reportable under this item.
ITEM 4. MATTERS SUBMITTED TO A VOTE OF THE COMPANY'S SHAREHOLDERS
No matters were submitted to a vote of the Company's shareholders during
this quarter.
ITEM 5. OTHER INFORMATION
Currently the Company is involved in serious discussions to sell the
carwash assets to a group that is buying existing car washes across the
United States. The deal would be on a cash basis. No final agreements have
been reached.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
Page 12 of 13
<PAGE>
SIGNATURES
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.
TimeOne, Inc.
By: ___/s/ Alan R. Theis________
Alan R. Theis
On Behalf of the Registrant
and as Secretary / Treasurer
and Vice President.
Dated August 11, 1998
Page 13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
TimeOne, Inc. June 30, 1998 financial statements and is qualified in its
entirely by reference to such financial statements.
</LEGEND>
<CIK> 0000350133
<NAME> TimeOne, Inc.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 289,493
<SECURITIES> 535,736
<RECEIVABLES> 48,464
<ALLOWANCES> 0
<INVENTORY> 21,940
<CURRENT-ASSETS> 997,559
<PP&E> 3,168,723
<DEPRECIATION> (886,446)
<TOTAL-ASSETS> 3,405,745
<CURRENT-LIABILITIES> 128,613
<BONDS> 1,673,193
0
0
<COMMON> 835
<OTHER-SE> 1,603,104
<TOTAL-LIABILITY-AND-EQUITY> 3,405,745
<SALES> 589,789
<TOTAL-REVENUES> 761,821
<CGS> 0
<TOTAL-COSTS> 670,272
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,277
<INCOME-PRETAX> 91,549
<INCOME-TAX> 11,229
<INCOME-CONTINUING> 80,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,320
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
