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 SEPTEMBER 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)
631 NORTH STEPHANIE STREET, #378
HENDERSON, NEVADA 89014
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:
(702) 456-8070
Former Address:
6500 SOUTH STATE STREET
MURRAY, UTAH 84107-7219
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 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 11 Consecutively numbered pages.
1
<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 September 30, 1998 and the related
statements of income and cash flows for the three and nine month periods ended
September 30, 1998 and September 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.
2
<PAGE>
TimeOne, Inc.
CONSOLIDATED BALANCE SHEET
September 30, 1998
Unaudited
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 326,807
Accounts Receivable 38,917
Inventory 23,062
Marketable Securities 580,913
Prepaid Expenses & Supplies 101,022
-----------------
Total Current Assets 1,070,721
PROPERTY, PLANT, AND EQUIPMENT (Cost)
Building Improvements 202,691
Building 1,494,000
Furniture, Fixtures, & Equipment 891,543
Land 581,000
-----------------
3,169,234
Less Accumulated Depreciation (923,277)
-----------------
Total Property, Plant, & Equipment 2,245,957
OTHER ASSETS
Startup Costs 8,348
Deposit 2,501
Montana Property 75,453
Q-Lube Joint Venture 19,590
Deferred Tax Asset 17,000
-----------------
Total Other Assets 122,892
TOTAL ASSETS $ 3,439,570
=================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable, payroll, & sales tax $ 83,306
Mortgage payable - Bank, current portion 40,608
-----------------
Total Current Liabilities 123,914
LONG TERM LIABILITIES
Mortgage payable - Bank One 1,662,829
-----------------
Total Long Term Liabilities 1,662,829
-----------------
Total Liabilities 1,786,743
STOCKHOLDERS EQUITY
Common Stock 835
Additional Paid in Capital 1,229,327
Retained Earnings 422,665
-----------------
Total Stockholders Equity 1,652,827
-----------------
TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 3,439,570
=================
</TABLE>
3
<PAGE>
TimeOne, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three and Nine Months Ended
September 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1998 1997 1998 1997
------------- ------------- ------------- -------------
REVENUES
<S> <C> <C> <C> <C>
Car Wash $ 381,515 $ 370,129 $ 1,005,518 $ 1,064,175
Boutique - Net 6,922 5,180 16,668 17,888
Fuel Sales - Net 2,992 4,342 7,544 11,400
Carpet Express Equipment - Net 0 0 0 16
Discounts (34,107) (3,150) (82,619) (9,144)
------------- ------------- ------------- -------------
TOTAL REVENUES 357,322 376,501 947,111 1,084,335
COSTS AND EXPENSES
Salaries, Labor, & Commissions 157,662 177,027 447,239 502,772
Taxes & Benefits 23,103 28,507 76,224 85,848
Interest & Credit Card Fees 43,359 48,923 129,636 153,098
Travel/Auto/Promotion/Advertise 1,388 4,723 7,119 16,913
Office/Telephone/Supplies/Print 39,787 46,723 105,755 128,174
Utilities/Insurance/Maintenance 33,738 36,140 89,549 102,778
Depreciation & Amortization 38,238 35,392 114,602 107,267
Professional Fees & Other 27,164 22,797 64,587 85,104
------------- ------------- ------------- -------------
TOTAL COSTS AND EXPENSES 364,439 400,232 1,034,711 1,181,954
------------- ------------- ------------- -------------
Net Operational Income (Loss) (7,117) (23,731) (87,600) (97,619)
Contract Services & Miscellaneous 5,911 4,076 27,253 2,663
Interest & Dividends 2,374 3,588 6,839 13,552
Gain (Loss) on Sale of Securities 31,747 679 153,724 (1,994)
Gain on Property Sale 0 0 5,315 213,315
Q Lube Joint Venture Income 17,848 12,663 36,781 12,663
------------- ------------- ------------- -------------
TOTAL OTHER REVENUE 57,880 21,006 229,912 240,199
------------- ------------- ------------- -------------
Net Income Before Taxes 50,763 (2,725) 142,312 142,580
Income Taxes 1,875 0 (13,104) 2,425
------------- ------------- ------------- -------------
NET INCOME $ 48,888 $ (2,725) $ 129,208 $ 140,155
============= ============= ============= =============
NET INCOME PER SHARE $ 0.006 $ 0 $ 0.015 $ 0.017
============= ============= ============= =============
</TABLE>
4
<PAGE>
TimeOne, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three and Nine Months Ended
September 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1998 1997 1998 1997
------------- ------------- ------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net Income $ 48,888 $ (2,725) $ 129,208 $ 140,155
Adjustments to reconcile net income (loss) to
Net Cash provided by operating activities:
Sale of West Valley Property 0 0 0 (213,315)
Write off Obsolete Assets 0 72 0 8,967
Depreciation & Amortization 36,831 35,392 113,195 107,267
Changes in Current Assets & Liabilities:
Receivables 9,547 26,314 12,754 16
Pre-paid 904 1,400 (50,597) (9,170)
Inventory (1,122) 1,679 3,238 28
Accounts Payable & Payroll Tax (4,536) 6,095 49,152 24,654
------------- ------------- ------------- -------------
NET CASH PROVIDED
OPERATING ACTIVITIES 90,512 68,227 256,950 58,602
INVESTING ACTIVITIES
Investment in Montana Land 0 0 (22,863) 0
Sale of West Valley Property 0 0 0 549,400
Cost of Securities Sold 13,679 1,622 175,057 9,895
Purchase of Securities (57,628) 0 (362,784) (6,069)
Purchase of Property & Equipment (511) (2,103) (1,939) (84,551)
Joint Venture Distribution 2,051 (62,663) 54,637 (62,663)
Increase in Deposits (425) (1,068) 0 (1,068)
------------- ------------- ------------- -------------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (42,834) (64,212) (157,892) 404,944
FINANCING ACTIVITIES
Repayment of Loans (10,364) (11,971) (42,466) (303,891)
Sale of West Valley Property 0 0 0 (150,000)
------------- ------------- ------------- -------------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES (10,364) (11,971) (42,466) (453,891)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 37,314 (7,956) 56,592 9,655
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 289,493 243,107 270,215 225,496
------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 326,807 $ 235,151 $ 326,807 $ 235,151
============= ============= ============= =============
</TABLE>
5
<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. 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 No. 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 value.
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 in 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 used 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.
6
<PAGE>
NOTE B: COMMITMENTS
The Company is obligated under a Maintenance Contract on its signs. The contract
was signed to be effective in December, 1996 with monthly payments of $789.
NOTE C: LOANS PAYABLE
In March, 1996, the Company purchased the carwash building and land from Daniel
F. Pentelute for $2,075,000. The purchase price was below the appraised value of
$2,400,000 and $3,600,000 replacement cost. The Loan Agreements were signed with
Bank One, Utah for $1,800,000 with 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 September 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 $ 1,662,829 $ 47,417 $ 1,706,871
Dan Pentelute 8.75-10.5 0 0 163 0
Escrow Services (2) 9.5 0 0 5,000 7,550
------------- -------------- ------------- -------------
$ 40,608 $ 1,662,829 $ 52,580 $ 1,714,421
============= ============== ============= =============
</TABLE>
(1) 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 second quarter of 1998. Schedule
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 1,563,480
-------------
$ 1,703,437
=============
NOTE D: DEFERRED TAX ASSET
In February, 1992, the Financial Account Standards board adopted the Statement
of Financial Accounting Standards No. 109 Accounting for Income Taxes, which
supersedes substantially all existing authoritative 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 September 30, 1998 and 1997 consisted of the following:
1998 1997
-------------- -------------
Trade Accounts Receivable $ 38,917 $ 165,706
============== =============
7
<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 on (1) of the
five (5) lost 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 improvement do make the lost 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 and all proceeds went to Desert Land to pay for
improvements.
NOTE H: SUBSEQUENT EVENTS
On October 20, 1998, the Company sold its carwash assets and operations to CWP
West Corporation for $3,160,000. CWP West Corporation is a Delaware corporation
involved in purchasing carwashes in various locations around the United States.
The Company netted approximately $1,404,000 in cash from the sale. The Company
is currently reviewing the tax consequences of the sale.
The Company currently has no operations and is evaluating other business
opportunities. Until a decision is made, the Company intends to maintain its
assets in liquid form such as cash, money market funds or marketable securities.
After the sale, the existing Board of Directors resigned and new Directors were
appointed. The new Directors are as follows:
Daniel F. Pentelute - President and Director
Roy E. Molina - Chief Financial Officer and Director
Yolanda Oyler - Secretary and Director
The Company also moved it corporate offices to:
631 North Stephanie Street, #378
Henderson, Nevada 89014
(702) 456-8070
8
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS.
CHANGES IN FINANCIAL CONDITION
As of September 30, 1998, the Company had current assets of $1,070,720 compared
to $790,570 as of December 31, 1997. Cash increased $56,592 for the nine months
ended September 30, 1998. The increase in cash is due to sales of securities and
income from the Q Lube joint venture. Current liabilities as of September 30,
1998 were $123,914 compared to $82,447 as of December 31, 1997. The increase is
due to increased accounts payable.
Inventory decreased $3,238 from $26,300 as of December 31, 1997 to $23,062 as of
September 30, 1998. Marketable securities increased $188,954 from $391,959 as of
December 31, 1997 to $580,913 as of September 30, 1998.
CHANGES IN RESULTS OF OPERATIONS
Carwash volume decreased 1,048 cars from 24,505 for the three month period ended
September 30, 1997 to 23,457 cars for the same three month period ended
September 30,1998. During the quarter, both July and September were record
setting months in the amount of precipitation that fell. Highway I-15
reconstruction continues to limit volume due to increase traffic congestion in
the area of the carwash.
Revenue for the three month period ended September 30, 1998 was $357,322
compared to $364,439 compared to $400,232 for the same three month period ended
September 30, 1997, a decrease of $35,793. The decrease is due to lower salaries
and supply expense.
The Company posted a net profit of $48,888 for the three months ended September
30, 1998, compared to a net loss of $(2,725) for the same three month period
ended September 30, 1997. The increase is profitability is due to sales of
securities, income from Q Lube and tighter cost controls. The Company had a net
loss on the carwash operations of $7,177 for the three months ended September
30, 1998 compared to an operating loss of $(23,731) for the same three month
period ended September 30, 1997. Management is uncertain as to when the carwash
operation will be profitable. It is likely that operating losses will continue.
Net gain per share for the period was $0.01.
Revenues for the nine months ended September 30, 1998 were $947,111 compared to
$1,084,335 for the same nine month period ended September 30, 1997, a decrease
of $137,224. This decrease is due to lower carwash volumes. The Company washed
63,030 cars as of September 30, 1998 compared to 72,314 cars as of September 30,
1997, a decrease of 9,284.
For the nine months ended September 30, 1998, costs and expenses were $1,034,711
compared to $1,181,954 for the same nine month period ended September 30, 1997,
a decrease of $147,243. This decrease is due to lower costs in all areas other
than depreciation. These lower costs relate to lower carwash volumes.
The Company posted a net profit of $129,208 for the nine months ended September
30, 1998 compared to a profit of $140,155 for the same nine month period ended
September 30, 1997, a decrease of $10,947. The Company had a operating loss of
$(87,600) as of September 30, 1998 compared to an operating loss of $(97,619) as
of September 30, 1997. The overall profitability of the Company as of September
30, 1998 continues to be primarily due to securities sales and the
9
<PAGE>
income from the Q Lube joint venture. The Company is confident that the joint
venture will continue to produce income.
The current ratio as of September 30, 1998 is 8.64 compared to 3.02 as of
September 30, 1997. Long term liabilities were $1,662,829 as of September 30,
1998 compared to $1,566,471 as of September 30, 1997. Management is confident
that sufficient working capital exists for its continuing operations.
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
On October 20, 1998, the Company sold its carwash assets and operations to CWP
West Corporation for $3,160,000. CWP West Corporation is a Delaware corporation
involved in purchasing carwashes in various locations around the United States.
The Company netted approximately $1,404,000 in cash from the sale. The Company
is currently reviewing the tax consequences of the sale.
The Company currently has no operations and is evaluating other business
opportunities. Until a decision is made, the Company intends to maintain its
assets in liquid form such as cash, money market funds or marketable securities.
After the sale, the existing Board of Directors resigned and new Directors were
appointed. The new Directors are as follows:
Daniel F. Pentelute - President and Director
Roy E. Molina - Chief Financial Officer and Director
Yolanda Oyler - Secretary and Director
The Company also moved it corporate offices to:
631 North Stephanie Street, #378
Henderson, Nevada 89014
(702) 456-8070
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
10
<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.
Date: November 18, 1998 By:
Roy E. Molina
On behalf of the Registrant and as
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
TimeOne, Inc. September 30, 1998 financial statements and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000350133
<NAME> TimeOne, Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 326,807
<SECURITIES> 580,913
<RECEIVABLES> 38,917
<ALLOWANCES> 0
<INVENTORY> 23,062
<CURRENT-ASSETS> 1,070,721
<PP&E> 3,169,234
<DEPRECIATION> (923,277)
<TOTAL-ASSETS> 3,439,570
<CURRENT-LIABILITIES> 123,914
<BONDS> 1,662,829
0
0
<COMMON> 835
<OTHER-SE> 1,651,992
<TOTAL-LIABILITY-AND-EQUITY> 3,439,570
<SALES> 947,111
<TOTAL-REVENUES> 1,177,023
<CGS> 0
<TOTAL-COSTS> 1,034,711
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,636
<INCOME-PRETAX> 142,312
<INCOME-TAX> 13,104
<INCOME-CONTINUING> 129,208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,208
<EPS-PRIMARY> .015
<EPS-DILUTED> .015
</TABLE>
