SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 ---------
For the Transition Period from ________ to ________
Commission file number 2-70345-NY
TimeOne Inc.
(Exact name of registrant as specified in its
charter) Former name of registrant -
Buffs-N-Puffs, Ltd.
Nevada 88-0182534
(State or other (IRS Employer ID Number)
jurisdiction of incorporation
of organization.)
6500 South State Street, Murray, Utah 84107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 268-9280
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
State issuer's revenues for its most recent fiscal year $1,465,867
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of the filing.
2,511,375 shares at $0.125 per share = $313,922 as of
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
8,354,900 shares common stock par value $0.0001
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(b) 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 XX NO
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PART I
ITEM 1. BUSINESS
TimeOne, Inc., formerly known as Buffs-N-Puffs, Ltd. and before that as
Pubcoa, Inc., (the "Company") was incorporated under the laws of the State of
Nevada on November 14, 1980. It has engaged during the past seventeen (17) years
in various business opportunities.
In 1990, the Company entered the carwash business. On March 22nd, 1990,
the Company's carwash operations started at 6500 South State, Murray, Utah. The
facilities have eight gas pumps and two tunnels. The first of these tunnels
houses carwash equipment, which the Company believes is the best equipment
available in terms of cleaning the vehicles, reliability, and durability. In
this tunnel the Company offers a full range of services for automotive cleaning,
including the cleaning of the undercarriage and tires. The Company operations
are known as a full service carwash because of the many services it offers and
because the customer performs no service. The carwash operations is not a self
service nor a single station roll over wash. The second tunnel houses automotive
interior cleaning equipment, which the Company has developed. With its unique
auto interior cleaning equipment the Company provides auto carpet and seat
upholstery cleaning services. The carwash building also has a boutique, which is
also the waiting room for customers. Windows allow customers to view the
equipment in operation. The boutique offers a wide range of convenience items,
which include automotive products, convenience foods, and greeting cards.
The Company presently has approximately 35 full time and 30 part time
employees.
The carwash tunnel has the following equipment, which is listed in the
sequence of the cleaning cycle:
1. Vacuums
2. Prep
- Chemical tire applicator (CTA) applies cleaning chemical to tires.
3. Tunnel
- Presoak Arch - applies cleaning chemical for tough dirt and road
grime.
- Foamerator - Applies cleansing agent, with optical brightners.
- Wave-A-Cross - Cleans car from side to side with soft cloths.
- Wrap-arounds - Cleans car front to back and side to side with soft
cloth.
- Tire Brushes - Cleans tire sidewalls.
- Neon Super Sudsers - Applies concentrated cleaning foam.
- Whippersnappers - Cleans car from front to back with soft cloths.
- Undercarriage Wash - Removes soil from undercarriage of car.
- Set of 2x2's - Side wheel clothes to clean lower door panels.
- Tri-Color Wax Arch - applies three clearcoat waxes.
- Wash Module - Whippersnappers and side wheel clothes (2nd set)
for polish wax.
- Rust Inhibitor - High pressure water with rust inhibitor applied to
undercarriage.
- Low volume rinse, wax arch - Rinses car exterior and applies sealer
wax.
- Booster nozzles side dryers - Air jets dry sides of car.
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- Infrared perform air dryer - Complete forced air drying system.
4. Drying Area
- Wipe and Windows - Car is hand dried completely and windows are
finished off with a glass cleaning solution by hand.
- At the end of the tunnel is a large four bay drying area, where the
wash is completed and the customers pick up their cars.
5. Quality Control
- Manager inspects washed vehicles to assure that the service meets the
Company's standards.
- The Company recycles all water used in the carwash and reuses
approximately 80% of the water.
6. Services
The Company provides a variety of services ranging from a basic wash
package to a complete interior detail package.
During 1997 the Company retrofitted all side wheels with Belanger's new
Waves and Fins(TM). The Company also installed a Wave Across(TM), and Gyro
Wrap(TM)featuring Waves and Fins(TM). Waves and Fins(TM) places the cloth
horizontally to more thoroughly clean cracks and crevices of moldings, door
handles and wheel wells. The Waves(TM) are specifically shaped to provide
oscillating motion, which produces more cleaning area overlap. The design of the
cloth Fin(TM) provides twice the cleaning capability of the previous design. The
system is also designed to make replacement of cloth much faster, from hours to
minutes. The Company also installed a new dryer, to more completely dry vehicles
on line, and a RO (Reverse Osmosis) system to provide a spot free final rinse.
Reverse Osmosis breaks water down to its basic chemical components and removes
virtually all impurities, before it is sprayed onto vehicles.
Carpet Express
Carpet Express is a unique system that the Company developed to clean
automotive interiors, both carpeting and upholstery. The Carpet Express process
uses a combination of hot water, chemicals, and suction to wash, clean and
shampoo automotive carpets and upholstery. After the cleaning process the
interior is damp and dries within several hours. Management believes that the
Carpet Express process offers the best available means, on a commercial scale,
to clean automotive carpet and upholstery. Carpet Express offers to a full
service carwash additional services to market to customers thereby increasing
sales dollars per vehicle.
The carwash has used the Carpet Express system and process for cleaning
automotive interior carpeting and upholstery since the carwash facilities were
opened in March of 1990. The Company's experience during fiscal 1997 was that
approximately 5% of the carwash customers purchased the Carpet Express service
and these services accounted for approximately 11% of revenues.
The equipment used in the carpet and upholstery system is unique to the
Company and, in management's opinion, is superior to any equipment available to
clean automotive interiors on a commercial scale in the carwash environment.
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Facility
The facility consists of two buildings. The larger of the two buildings
houses the boutique, carwash tunnel and offices. Its dimensions are
approximately 192 feet by 65 feet. The office space on the second floor of the
building is comprised of approximately 4000 square feet. There is a reception
area, day room facilities, storage rooms, and six offices. The second building
houses Carpet Express operations and is approximately 3500 square feet. Inside
it are a drive through tunnel, two offices, and an equipment room.
The property on which the two buildings sit is approximately 3.5 acres.
The facilities are visible from the major beltway in Salt Lake County and from a
major thoroughfare, which passes by the front of the property. The daily car
count for the major thoroughfare at the front of the property is approximately
37,000 cars per twenty-four hour period.
The Company's carwash targets the upper-middle class market. Most of
the cars washed are late model, more expensive vehicles. The customer ratio is
approximately 50-50 male and female. The Company believes that a high ratio of
its customers are women because of the aesthetic appeal of the buildings and
grounds. At carwash conventions the Company's carwash has been shown as an
example of the work product of some of the participants in the construction of
the carwash facilities.
The facility also maintains a stand alone two bay oil/lube facility. This
project is a joint venture between TimeOne and Lubeco (Q lube). The companies
each own 50% of the joint venture and share in profits and losses equally. The
Company contributed use of the land and Q Lube contributed use of the building
to the joint venture. Each company contributed $50,000 in working capital. The
facility was profitable during 1997.
Competition
In the Greater Salt Lake area there are approximately 160 carwashes,
known as rollovers, located at gas stations. A rollover is a system of three
rotating brushes that simultaneously wash the top and sides of the vehicle. The
major gas companies offer free carwashes with gas purchases.
In the area are ten other full service washes, which compete directly
with the Company. It is believed the Company has a better location, superior
equipment, more aesthetic facilities, and better services to offer its customers
than the competition. The Company has no meaningful data as to the size of the
carwash market or the Company's share in that market.
In addition, competition comes from coin operated self service washes.
In the area there are approximately thirty-four coin operated carwashes. Also
locally there are two mechanical touchless rollover operations. The vehicles are
cleaned chemically without brushes.
Management believes its operations have matured as its facility and
services have become better known and more recognized by the motoring public.
The overall market for the Company's services is imprecise. Management believes
that the single biggest determinant of sales volume is the weather. If the
weather is stormy or overcast, business declines. With good weather, sales
increase dramatically.
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Inflation and Foreign Exchange.
Management believes that inflation and foreign exchange rates have no
effect on its operations or profits.
ITEM 2. PROPERTIES
On March 25,1995, the Company purchased the building and the land the
carwash is located on from Daniel F. Pentelute, the majority stock holder of the
Company, for $2,075,000. The purchase was financed through Bank One of Utah and
consists of the following: A one year renewable line of credit of $150,000
dollars at 8.25%, and a $1,800,000 note with a twenty year amortization and five
year call at 8.26%. In addition, the Company issued 2,000,000 shares of common
stock to Mr. Pentelute at a price of 1/8. The Company repaid the line of credit
during the second quarter of 1997.
On June 21, 1993, the Company purchased approximately 1.67 acres of
land located at approximately 3750 West 4700 South, West Valley City, Utah. The
property was purchased for the specific purpose of building a second carwash for
the Company. This particular piece of property was purchased because of the high
traffic counts surrounding it and its location in an area, which is not being
served by any other full service carwash. During 1996, the Company abandoned
plans to build a second carwash on this site. The property was sold in 1997, a
balance of $30,000 is still owed on the sale. It is anticipated the balance will
be paid in full during the 2nd quarter of 1998.
During September, 1994, Daniel Pentelute, the majority stockholder of
the Company, purchased 21 acres of land in Montana. Three days later the Company
purchased a one half interest in this land from Mr. Pentelute at his cost. The
other one half interest is owned by Desert Land Enterprises, whose sole
shareholder is Daniel Pentelute. The cost of the one half interest was $52,590
of which the Company still owed $11,081 as of December 31, 1997. Monthly
payments on the land are $1,162 and the loan is secured by the land. It is
anticipated by the Company that it will be able to sell the land in the future
at a substantial profit.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended 1997, no matters were submitted by the Company
for a vote to its security holders.
ITEM 5. OTHER INFORMATION
On January 1998, the Company agreed to lease two vacant offices to
Wireless Systems, a cellular phone company. In March, the Company leased an
additional office to Wireless Systems. The three offices are being leased for
$1250.00 per month. The lease is in effect for a minimum of six months.
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PART II
ITEM 6. MARKET FOR THE REGISTRANT'S COMMON STOCK & RELATED
SHAREHOLDERS MATTERS.
The Company's common stock is traded on the OTC Bulletin Board under
the symbol TYME. The information below, since the end of the first quarter of
1992, was provided by Alpine Securities of Salt Lake City, Utah and does not
necessarily represent prices of actual sales of the Company's common stock, nor
does it take into account any brokerage discounts, commissions, or fees. At the
close of business on March 7, 1998 the Company had approximately 645
stockholders of record. During 1997 a majority of the outstanding shares voted
to change the company name from Buffs-N-Puffs, Ltd., to TimeOne, Inc. This
change took effect July 24, 1997.
QUARTER HIGH BID HIGH ASK LOW BID LOW ASK
First 1997 1/64 5/64 1/8 1/16
Second 1997 1/64 5/64 1/64 5/64
Third 1997* 0 0 0 0
Fourth 1997* 0 0 0 0
First 1996 1/8 1/2 1/8 1/2
Second 1996 1/8 1/2 1/8 1/2
Third 1996 1/8 1/2 1/8 1/2
Fourth 1966 1/8 1/2 1/8 1/2
First 1995 3/4 1/2 1/64 1/8
Second 1995 1/2 1/2 1/64 1/64
Third 1995 1/2 3/8 1/64 1/64
Fourth 1995 3/8 3/8 1/8 1/8
First 1994 1/8 3/8 1/8 3/8
Second 1994 1/8 3/8 1/8 3/8
Third 1994 1/8 3/8 1/8 3/8
Fourth 1994 1/8 3/8 1/8 3/8
* The Company did not have two market makers during the third and fourth
quarters, therefore no official data is available.
No dividends have been paid nor are any anticipated in the foreseeable future.
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ITEM 7. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Total
<S> <C> <C> <C> <C> <C>
Revenues $ 1,465,867 $ 1,510,079 $ 1,544,118 $ 1,633,892 $ 1,444,466
Net
Operating
Revenues 143,034 142,531 195,957 117,704 83,748
Net Income
from
continuing
operations 143,034 142,531 195,957 117,704 83,748
Net Income 64,209 107,831 133,857 109,604 281,648(1)
Total
Assets 3,303,676 3,575,179 1,448,539 1,503,992 1,472,827
Total
Stock-
holders'
Equity 1,523,619 1,459,410 1,193,768 1,108,863 950,307
Long Term
Debt 1,697,610 1,857,178 136,612 203,551 285,149
</TABLE>
NOTES
(1) In February, 1992 the Financial Accounting Standards Board adopted a new
standard which requires that deferred tax balances be adjusted to reflect the
tax rates in effect when those amounts are expected to become payable or
refundable. This statement was required to be applied in the company's financial
statements for the year 1993.
The company was given the choice of either restating prior period
financial statements or recognizing the cumulative effect of the change in 1993.
The company chose to recognize the cumulative effect of the change during 1993.
Had the company chose to make the adjustments in 1991 and 1992 rather than
totally in 1993, the net income of the company would have been $87,648 in 1993
rather than $241,648, earnings per share would have been $.01, rather than $.05.
ITEM 8. MANAGEMENTS DISCUSSION AND ANALYSIS
On March 22, 1990, the Company commenced its carwash operation at 6500
South State Street, Salt Lake City, Utah. Previously, the Company had not
engaged in any meaningful business operations and the Company had no revenues
generated from business operations.
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1997 to 1996
As of December 31,1997 the Company had cash of $270,215
compared to cash of $225,496 as of December 31,1996, an increase of $44,719
(20%). The increase is attributable to the sale of the West Valley property and
income from the Q lube joint venture.
Current assets as of December 31, 1997 were $790,570 compared to
$654,363 as of December 31, 1996 an increase of $136,207 (21%). The increase is
due to higher receivables, inventory and the market value of securities held.
Property, plant, and equipment were $2,354,266 as of December 31, 1997 compared
to $2,729,406 as of December 31, 1996, a decrease of $375,140 (14%). The
decrease is due to normal depreciation and sale of land.
Current Liabilities as of December 31, 1997 were $82,447 compared to
$258,591 as of December 31,1996, a decrease of $176,144 (68%). Long term
liabilities decreased from $1,857,178 as of December 31, 1996 to $1,697,610 as
of December 31, 1997. The decrease is due to reduction of debt associated with
the West Valley property and the existing Bank One loans. Total liabilities as
of December 31, 1997 were $1,780,057 compared to $2,115,769 as of December 31,
1996.
Stockholders' Equity as of December 31, 1997 was $ 1,523,619 compared
to $1,459,410 as of December 31,1996, an increase of $64,209 (4%). This increase
is due to profits from Q Lube and sale of the West Valley property.
Total revenues for the year ended December 31, 1997 were $1,465,687
compared to total revenues of $1,510,079 as of December 31, 1996. Total revenues
decreased $44,392 (3%). The decrease is due to lower sales across the range of
services offered by the Company. Weather still has the most significant effect
on revenue. In addition, during 1997 a major reconstruction project on I-15 has
forced more traffic and resulting traffic jams on the surface street in front of
the carwash. As a result, it is much more difficult to enter and exit the
carwash property during operating hours.
Total costs and expenses for the year ended December 31, 1997 were
$1,566,411 compared to $1,496,360 for the year ended December 31, 1996. Total
costs and expenses increased $70,051 (5%). Expenses were up across the board
with exception of travel, auto, advertising categories. Labor costs continue to
rise in the Salt Lake area as the unemployment rate is around 3%. There are few
employees available and the job skills of those that are available are
significantly lower than in previous years. The Company's installation of
equipment upgrades has not had the desired effect of significantly reducing
labor costs. In addition the equipment is using more power than was forecasted
by the manufacturer. Management believes that 1998 will be another difficult
year with respect to rising wages and employee availability. Net income (before
income tax benefit) for the year ending December 31, 1997 was $143,034 compared
to $142,531 as of December 31, 1996, an increase of $503. The net income per
share of the Company's common stock for 1997 was .01 compared to a net income of
.01 per share in 1996. The current ratio of the Company as of December 31, 1997
was 9.58 compared to 2.53 as of December 31,1996.
The carwash has reached a level of maturity in which volume should
remain in the 95,000 -100,000+ range of cars per year. The Company was not
successful in reducing expense in 1997,
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1998 will see a redoubling of efforts to reduce expenses. As of December 31,
1997 the Company has started an in-house discount program in an effort to
increase carwash volume. The program reduces package wash prices by $2.00, this
program has been well received and will continue into 1998. The program has also
increased per car revenues, as more customers are purchasing extra services. The
Board of Directors is currently exploring several opportunities to increase
shareholder value.
1996 to 1995
As of December 31,1996 the Company had cash of $225,496 compared to
cash of $177,086 as of December 31,1995, an increase of $48,418 (27%). The
increase is attributable to profits from stock sales.
Current assets as of December 31, 1996 were $654,363 compared to
$462,012 as of December 31, 1995 an increase of $192,351 (42%). Property, plant,
and equipment were $2,729,406 as of December 31, 1996 compared to $751,815 as of
December 31, 1995. The increase of $1,977,59, or 263%, is attributable to the
purchase of the buildings and the land the carwash is located on.
Current Liabilities as of December 31, 1996 were $258,591 compared to
$118,159 as of December 31,1995, an increase of $140,432 (118%). Long term
liabilities increased from $136,612 as of December 31, 1995 to $1,857,178 as of
December 31, 1996, an increase of $1,720,566 (1,259%). The increase is due to
loans for the purchase of the carwash facilities. Total liabilities as of
December 31, 1996 were $2,115,768 compared to $254,771 as of December 31, 1995.
Stockholders' Equity as of December 31, 1996 was $1,459,410 compared to
$1,193,768 as of December 31,1995, an increase of $265,642 (22%). This increase
is attributable to operating profits and purchase of common stock by present and
former offices of the Company.
Total revenues for the year ended December 31, 1996 were $1,510,079
compared to total revenues of $1,554,118 as of December 31, 1995. Total revenues
decreased $44,039 (-2.8%). This decrease is attributable to lower express detail
service sales and slightly lower carwash volume.
Total costs and expenses for the year ended December 31, 1996 were
$1,496,360 compared to $1,390,363 for the year ended December 31, 1995. Total
costs and expenses increased $105,997, or approximately 7.6%. Interest expenses
were substantially higher due to loans for the purchase of the carwash building
and land. Salary Expenses continue to rise due to the increase in minimum wage
and the extremely light labor market in Salt Lake,(around 3% unemployment). With
another raise in the minimum wage in 1997, and Utah's rapidly expanding economy,
management expects wages to continue to rise. Net income (before income tax
benefit) for the year ending December 31, 1996 was $142,531 compared to $195,957
as of December 31, 1995, a decrease of $53,426 or 27%. The net income per share
of the Company's common stock for 1996 was .01 compared to a net income of .02
per share in 1995. The current ratio of the Company as of December 31, 1996 was
2.53 compared to 3.91 as of December 31,1995.
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Management believes the carwash has reached a level of maturity, in
which volume will be fairly stable at 100,000+ cars per year. Management also
believes it will be difficult to increase per car revenues above current levels,
therefore the expenses of the operation must be reduced. As of December 31, 1996
the Company had on order additional drying equipment, to further dry the
vehicles on line, thereby reducing labor costs. In addition, the whip across and
wrap arounds were being replaced with updated designs which clean more
effectively. It is anticipated that a spot free rinse system will be installed
during the first half of 1997. Spot free rinse will further reduce the labor
costs by making the drying equipment more effective. Management is discussing
raising prices to further offset labor costs.
1995 to 1994
As of December 31, 1995 the Company had cash of $177,086 compared to
cash of $183,741 as of December 31, 1994, a decrease of $6,655 (3.6%). The
decrease is attributable to the Company's decreased revenue.
Current assets as of December 31, 1995 were $462,012 compared to
$382,718, an increase of $79,294 (20.7%). Property, plant, and equipment were
$751,815 as of December 31, 1995 compared to $834,024 as of December 31, 1994, a
decrease of $82,209 (9.8%). The decrease is mainly attributable to normal
depreciation expense.
Current liabilities as of December 31, 1995 were $118,159 compared to
$170,205 as of December 31, 1994, or a decrease of $52,046 (30.6%). Long term
liabilities decreased from $203,551 as of December 31, 1994 to $136,612 as of
December 31 ,1995, a decrease of $66,939 (32.9%). Total liabilities as of
December 31, 1995 were $254,771 compared to $373,756 as of December 31, 1994, a
decrease of $118,985 (31.8%). Total liabilities decreased due to lower accounts
payable and continuing reduction of debt.
Stockholders' Equity as of December 31, 1995 was $1,193,768 compared to
$1,059,911 as of December 31, 1994, an increase of $133,857 (12.6%). This
increase is primarily attributable to profits from operations, and the dismissal
of the Murray City lawsuit.
Total revenues for the year ended December 31, 1995 were $1,554,118
compared to total revenues for the year ended December 31, 1994 of $1,633,892.
Total revenues decreased by $79,774, or an approximate 4.9% decrease when
compared to the previous year. The primary reason for this decrease is the
decrease in the number of cars being serviced at the carwash due to weather
conditions, and lower Carpet Express equipment sales. The drop in carwash volume
was partially offset by a price increase in carwash services. Total costs and
expenses for the year ended December 31, 1995 were $1,390,363 compared to costs
and expenses of $1,540,497 for the year ended December 31, 1994. Total costs and
expenses decreased by $150,134 or an approximate decrease of 9.8% when compared
to the previous year. The primary reason for the decrease in costs and expenses
was the decrease in labor due to equipment upgrades and changing chemicals used
in the carwash process. The net income (before income tax benefit) for the year
ended December 31, 1995 was $195,957 compared to net income for the year ended
December 31, 1994 of $117,704, or an increase of $78,253, an approximate 66.5%
increase. The net income per share of the Company's common stock for 1995 was
$.02 per share compared to a net income of .02 per share in 1994. The current
ratio of the Company as of December 31, 1995 was
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3.91 compared to the current ratio as of December 31, 1994 of 2.24. This is
primarily the result of the profitability of the Company for the 1995 year.
Management intends to increase revenues and volume by continuing to
offer the highest quality service in the carwash business. Further cost
reduction is anticipated due to continuing updating of carwash equipment and
chemical applications. A price increase instituted in March of 1995 appears to
have had little effect on carwash volumes, while increasing profitability. It is
anticipated that profitability will increase further with the price increase in
effect for the full year.
1994 to 1993
As of December 31, 1994, the Company had cash of $183,718 compared to
cash of $130,377 as of December 31, 1993, an increase of $53,364 (40.9%). This
increase in cash was primarily the result of the Company's increased revenue.
Current assets as of December 31, 1994 were $382,718 compared to
$312,458, an increase of $70,260 (22.5%), again primarily due to the increase in
the Company's revenues and net income. Property, plant and equipment were
$834,024 as of December 31, 1994 compared to $921,427 as of December 31, 1993 or
a decrease of $87,403 (9.5%). This decrease is primarily attributable to normal
depreciation expense.
Current liabilities as of December 31, 1994 were $170,205 compared to
$167,046 as of December 31, 1993 or an increase of $3,159 (1.9%). Long-term
liabilities also decreased from $285,149 as of December 31, 1993 to $203,551 as
of December 31, 1994. Total liabilities as of December 31, 1994 were $373,756
compared to $452,195 as of December 31, 1993 or an decrease of $78,439(17.3%)
The decrease in long-term liabilities were primarily caused by the reduction of
long term debt.
Stockholders' equity as of December 31, 1994 was $1,059,911 compared to
$950,307 as of December 31, 1993 or an increase of $109,604, which is
approximately 11.5%. This increase is attributable to profits from operations.
Total revenues for the year ended December 31, 1994 were $1,633,892
compared to total revenues of $1,444,466 for the year ended December 31, 1993.
Total revenues increased by $189,426 or an approximate thirteen percent (13%)
increase when compared to the year earlier. Total costs and expenses for the
year ended December 31, 1994 were $1,540,497 compared to $1,379,336 for the year
ended December 31, 1993 or an increase of $161,161 (approximately 11.7%). The
increase in revenues primarily resulted from the increase in the number of cars
that were serviced by the Company. This results from the Company's maturing
process, the public becoming more acquainted with the Company and its location,
and favorable weather factors. The increase in costs and expenses primarily
results from the Company's increase in revenues which requires additional labor,
additional percentage rent, and related expenses. The net income (before income
tax benefit) for 1994 was $117,704 versus $83,748 for the year of 1993 or an
increase of $33,956 (approximately 40.5% increase). The net income per share of
the common stock for 1994 was $.02 per share, including the income tax benefit
described above, versus a net income in 1993 of $.05 per share. As discussed in
Note D, in the financial statements attached hereto, in February, 1992, the
Financial Accounting Standards Board adopted a new standard numbered 109 which
required that all deferred tax balances be adjusted to reflect the tax base in
effect when those
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amounts are expected to become payable or refundable. This statement was
required to be applied in the Company's financial statements for the calendar
year commencing January 1, 1993 and the Company chose to recognize the
cumulative effects of the change during the year of 1993. Because of this
reason, an adjustment was made to the 1993 income thereby increasing it in the
amount of $197,900 and thereby increasing the 1993 net income to $281,648. Had
said benefit been recognized in 1991, 1992 and 1993 the net income for 1993
would have been $.01 per share rather than $.05 per share. This is primarily the
result in the increased revenues of the Company and the aforementioned income
tax benefit. The current ratio of the Company as of December 31, 1994 was 2.24
versus the current ratio as of December 31, 1993 of 1.87. This is primarily a
result of the profitability of the Company for the 1994 year.
LIQUIDITY AND CAPITAL RESOURCES.
Operations.
As of December 31, 1997, the Company's working capital was $708,123 and
included cash and cash equivalents of $270,215 as compared with $395,772 in
working capital and $225,496 in cash and cash equivalents at December 31, 1996.
During the three years ended December 31, 1997, the cash provided by operating
activities more than offset the amount of cash used in the Company's operating
activities. The net cash provided by operating activities in these three periods
were $139,138 in 1997, $297,540 in 1996, and $244,338 in 1995. The Company does
not anticipate any significant change from the positive cash provided by
operating activities during 1998.
Investing Activities.
Net cash provided by investing activities was $220,655 for 1997 compared to net
cash used for investing activities of $187,070 in 1996, and $141,632 in 1995.
The primary source of cash provided were due to the sale of the West Valley
property, and the Q Lube joint venture income.
Financing Activities.
The cash used by the Company's financing activities was $109,361 in
1995, $62,060 in 1996 and $315,074 in 1997. The primary use of cash for
financing activities has been the reduction in the Company's long term debt.
ITEM 9. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
(On following pages)
12
<PAGE>
C O N T E N T S
(a) 1. Financial Statements
The following Financial Statements of TimeOne, Inc.
are included in PART II, ITEM 9:
Page
INDEPENDENT AUDITOR'S REPORT............................................14
FINANCIAL STATEMENTS:
BALANCE SHEETS -
December 31, 1997 and 1996 .............................................15
STATEMENTS OF OPERATIONS -
years ended December 31, 1997, 1996, and 1995 ..........................16
STATEMENTS OF STOCKHOLDERS' EQUITY -
years ended December 31, 1997, 1996, and 1995 .........................17
STATEMENTS OF CASH FLOWS -
years ended December 31, 1997, 1996, and 1995 .........................18
NOTES TO THE FINANCIAL STATEMENTS ......................................19
(a) 2. Financial Statement Schedules
The following financial statement schedules of TimeOne,Inc.
are included in PART IV, ITEM 15(d) (3):
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SUPPLEMENTARY FINANCIAL INFORMATION ................................27
SCHEDULE I - MARKETABLE SECURITIES .....................................28
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT .............................29
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT .........................30
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the financial
statements or notes thereto.
13
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
TimeOne, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheets of TimeOne, Inc. (formerly
Buffs-N-Puffs, Ltd.) as of December 31, 1997 and 1996, and the related
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1997, 1996, and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TimeOne, Inc. at December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years ended December 31, 1997, 1996, and 1995, in conformity with generally
accepted accounting principles.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
April 3, 1998
14
<PAGE>
TIMEONE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1997 1996
----------------- ------------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 270,215 $ 225,496
Accounts receivable - trade 51,671 15,722
Marketable securities, at market value (Note A
and Schedule I) 391,959 343,232
Inventory (Note A) 26,300 18,834
Prepaid expenses and supplies 50,425 51,079
----------------- ------------------
TOTAL CURRENT ASSETS 790,570 654,363
PROPERTY, PLANT AND EQUIPMENT (at cost) (Note A and Schedules V and VI):
Building 1,494,000 1,494,000
Building improvements 202,691 198,187
Furniture, fixtures and equipment 943,108 877,402
Land 581,000 891,185
----------------- ------------------
3,220,799 3,460,774
Less accumulated depreciation 866,533 731,368
----------------- ------------------
2,354,266 2,729,406
OTHER ASSETS
Joint Venture 74,227 0
Start-up costs (Note D) 12,522 43,987
Deposit 2,501 1,433
Montana Land (Note F) 52,590 52,590
Deferred tax asset (Note C) 17,000 93,400
----------------- ------------------
158,840 191,410
----------------- ------------------
$ 3,303,676 $ 3,575,179
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and payroll and sales taxes $ 34,154 $ 54,792
Loans payable (Note B) 48,130 203,636
Loans payable - related parties (Note B) 163 163
----------------- ------------------
TOTAL CURRENT LIABILITIES 82,447 258,591
LONG-TERM LIABILITIES:
Loans payable (Note B) 1,697,610 1,857,178
----------------- ------------------
TOTAL LIABILITIES 1,780,057 2,115,769
STOCKHOLDERS' EQUITY:
Capital stock, common, authorized 100,000,000
shares of $0.0001 par value; issued and outstanding
8,354,900 shares 835 846
Additional paid-in capital 1,229,327 1,278,268
Retained earnings 293,457 229,248
----------------- ------------------
1,523,619 1,508,362
Less Treasury stock - at cost (109,000 shares) 0 (48,952)
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY 1,523,619 1,459,410
----------------- ------------------
$ 3,303,676 $ 3,575,179
================= ==================
</TABLE>
See notes to the financial statements.
15
<PAGE>
TIMEONE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
----------------- ----------------- ------------------
REVENUES:
<S> <C> <C> <C>
Carwash $ 1,446,401 $ 1,470,372 $ 1,514,958
Boutique sales - net 27,743 32,565 30,005
Fuel sales - net 14,013 16,907 18,687
Carpet express equipment sales - net 16 601 1,205
Discounts (22,306) (10,366) (10,737)
----------------- ----------------- ------------------
TOTAL REVENUES 1,465,867 1,510,079 1,554,118
COSTS AND EXPENSES:
Salaries, labor and commissions 692,071 679,071 648,770
Taxes and benefits 116,530 111,455 113,251
Interest and credit card fees 196,075 193,049 76,661
Travel, auto, promotional and
advertising 24,980 28,457 39,293
Office, telephone, printing and
supplies 200,617 186,170 184,933
Utilities, building maintenance,
rent and insurance 150,904 141,964 177,714
Depreciation and amortization 146,494 133,508 105,420
Professional fees and other 38,740 22,686 44,321
----------------- ----------------- ------------------
TOTAL COSTS AND EXPENSES 1,566,411 1,496,360 1,390,363
----------------- ----------------- ------------------
NET INCOME BEFORE OTHER (100,544) 13,719 163,755
OTHER INCOME (EXPENSE)
Joint Venture income 24,227 0 0
Contract services and miscellaneous 11,679 4,112 2,260
Interest and dividends 17,933 7,436 7,218
Loss on equipment sales (8,966) (2,277) (4,978)
Gain on sale of property 213,315 0 0
Gain (loss) on sale of securities (cost
determined by specific identification) (83,915) 151,090 17,495
Adjustment of securities to market 69,305 (31,549) 10,207
----------------- ------------------ ------------------
243,578 128,812 32,202
----------------- ----------------- ------------------
NET INCOME
BEFORE TAXES 143,034 142,531 195,957
INCOME TAXES (BENEFIT)
(Notes A & C) 78,825 34,700 62,100
----------------- ----------------- ------------------
NET INCOME $ 64,209 $ 107,831 $ 133,857
================= ================= ==================
NET INCOME PER SHARE OF
COMMON STOCK (based on
weighted average number
of shares outstanding) $ .01 $ .01 $ .02
================= ================= ==================
Weighted average number of common
shares used to compute net income
per weighted average share 8,354,900 7,811,609 6,113,900
================= ================= ==================
</TABLE>
See notes to the financial statements.
16
<PAGE>
TIMEONE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
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
Treasury stock cancelled (109,000) (11) (48,941)
Net income for
year ended 12/31/97 64,209
----------------- ---------------- ----------------- ------------------
Balances 12/31/97 8,354,900 $ 835 $ 1,229,327 $ 293,457
================= ================ ================= =================
</TABLE>
See notes to the financial statements.
17
<PAGE>
TIMEONE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
--------------- -------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 64,209 $ 107,831 $ 133,857
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 146,494 133,508 105,420
Book value of assets sold 8,966 2,277 8,977
Decrease in deferred tax asset 76,400 34,600 62,000
Adjust securities to lower of cost or market (69,305) 31,549 (10,207)
Unrealized gain on Joint Venture (24,227) 0 0
Changes in operating assets and liabilities:
(Increase) decrease in receivables (35,949) 519 9,927
(Increase) decrease in prepaid expense, supplies
and deposits 654 (26,304) 11,339
(Increase) decrease in inventory (7,466) 7,691 2,974
(Increase) decrease in contingent liability 0 0 (70,325)
Increase (decrease) in accounts payable and
payroll taxes payable (20,638) 5,869 (9,624)
--------------- -------------- ---------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 139,138 297,540 244,338
INVESTING ACTIVITIES
Investment in Joint Venture (50,000) 0 0
Cost of securities sold 184,062 208,527 86,367
Purchase of securities (163,484) (362,991) (185,975)
Cost of land sold 310,185 0 0
(Increase) decrease in start-up costs 25,900 0 (15,900)
Purchase of property and equipment (84,940) (32,606) (26,124)
Increase in deposits (1,068) 0 0
--------------- -------------- ---------------
NET CASH (USED)
BY INVESTING ACTIVITIES 220,655 (187,070) (141,632)
FINANCING ACTIVITIES
Sale of stock 0 32,811 0
Repayment of loans and leases (315,074) (94,871) (109,361)
--------------- -------------- ---------------
NET CASH (REQUIRED) BY
FINANCING ACTIVITIES (315,074) (62,060) (109,361)
--------------- -------------- ---------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 44,719 48,410 (6,655)
Cash and cash equivalents at beginning of year 225,496 177,086 183,741
--------------- -------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 270,215 $ 225,496 $ 177,086
=============== ============== ===============
SUPPLEMENTAL INFORMATION
Taxes paid $ 2,425 $ 100 $ 100
Interest paid 196,075 193,049 76,661
</TABLE>
SUPPLEMENTAL INVESTING AND FINANCIAL ACTIVITIES:
During 1996, the Company issued 2,000,000 shares of stock and borrowed
$1,950,000 to purchase land and buildings valued at $2,075,000.
See notes to the financial statements.
18
<PAGE>
TIMEONE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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 and warehouse 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 Statement of Financial Accounting Standards 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 ($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 in 1998 through 2001. The Company also 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 the 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 - LOANS PAYABLE
During 1990, the former President of the Company and her husband personally
borrowed $518,000 from three financial institutions, using their residence and
other personal assets as collateral. $277,828 (including loan costs of $7,270)
of the money was used for the Company. The Company has treated the obligations
as being due to the individuals and is making the monthly loan payments to the
three institutions. In early 1994, one obligation was paid in full, leaving two
loans. Interest rates range from 8.75% to 11.25%. The following is a summary of
debt at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Interest 1997 1996
-------------------------------- --------------------------------
Rate % Current Long-term Current Long-term
------------ --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Bank Mortgage (2) 8.38 $ 42,140 $ 1,692,519 $ 40,879 $ 1,732,579
G. Phillip Condie 7.50 0 0 0 120,000
Bank line of credit 6.00 0 0 150,000 0
Escrow Services (1) 9.50 5,990 5,091 12,757 4,599
Dan Pentelute 8.75-11.25 163 0 163 0
--------------- --------------- -------------- ---------------
$ 48,293 $ 1,697,610 $ 203,799 $ 1,857,178
=============== =============== ============== ===============
</TABLE>
(1) Monthly payments are $1,155. The loan is secured by land with a cost of
$52,590.
(2) Monthly payments are $15,487 and the balance is due 3/25/2001. The loan is
secured by land and buildings with a cost of $2,075,000.
19
<PAGE>
TIMEONE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
NOTE B - LOANS PAYABLE (continued)
Scheduled principal reductions for the next five years are as follows:
12/31/1998 $ 48,293
12/31/1999 51,507
12/31/2000 49,815
12/31/2001 1,596,288
--------------
$ 1,745,903
NOTE C - DEFERRED TAX ASSET
In February, 1992, the Financial Accounting Standards Board adopted 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.
Components of income tax expense are as follows:
Year ended
December 31,
1997 1996
Current
Federal.................$ 0 $ 0
State................... 2,425 1,600
----------------- -----------------
2,425 1,600
----------------- -----------------
Deferred
Federal................. 69,300 26,100
State................... 7,100 7,000
----------------- -----------------
76,400 33,100
----------------- -----------------
Income tax expense.............$ 78,825 $ 34,700
================= =================
Reconciliation of income taxes computed at the federal statutory rate and the
income tax expense are as follows:
<TABLE>
<CAPTION>
Year ended
December 31,
1997 1996
----------------- -----------------
<S> <C> <C>
Federal income taxes at statutory rate.............$ 46,000 $ 58,000
State income taxes, net of federal benefit......... 8,000 8,500
Difference due to graduated federal rates.......... 24,825 (31,800)
----------------- -----------------
$ 78,825 $ 34,700
================= =================
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
Year ended
December 31,
1997 1996
----------------- -----------------
<S> <C> <C>
Net operating loss carryforward.............$ 14,000 $ 68,000
Additonal cost of marketable
securities................................ 3,000 25,400
----------------- -----------------
Net deferred tax assets.....................$ 17,000 $ 93,400
================= =================
</TABLE>
20
<PAGE>
TIMEONE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1997
NOTE D- 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 1995 and 1994, the Company spent $25,900 associated with property being
held for development into a second carwash operation. The cost was added to the
cost of the land when the property was sold.
NOTE E - RELATED PARTY TRANSACTIONS
During 1990, Donna Anderson and Daniel Pentelute arranged for three loans by
pledging their personal assets. Some of the proceeds from these loans were made
available to the Company. The Company has been making the payments for these
loans and the interest and principal have been amortized according to the
portion of the proceeds each party received.
On April 19, 1991, the Company entered into a five year lease with Daniel
Pentelute, the major shareholder of the Company. Under the lease, Mr. Pentelute
received, as rent, four per cent of the gross proceeds excluding gasoline sales
commencing on July 1, 1991, and continuing until April 1, 1992. At that time and
thereafter, Mr. Pentelute was to receive seven per cent of the gross proceeds
from the carwash facility. On May 21, 1991, an addendum to the lease was entered
into providing for a five year option term at the end of the initial five year
term. The terms require a rent payment equal to 7% of monthly gross sales,
excluding gasoline sales with a minimum rent of $5,000 per month. In 1996, the
Company exercised its option to purchase the land and buildings at a price of
$2,075,000.
Also see Note F.
NOTE F - MONTANA LAND
During 1994, Daniel Pentelute, the major shareholder of the Company, purchased
21 acres of land in Montana and three (3) days later sold a one-half interest to
the Company at his cost. The other one-half interest is owned by Desert Land
Enterprises, whose sole shareholder is Daniel Pentelute. It is anticipated that
the Company will be able to sell the land during 1997 at a substantial profit.
NOTE G - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts payable, and accrued
expenses approximate fair value due to the short maturity periods of these
instruments. The fair value of the Company's long-term debt, based on the
present value of the debt, is $1,679,970.
21
<PAGE>
ITEM 10. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Officers and Directors
(1) Andrew A. Chudd, President and Director
(2) Alan Theis, Secretary/Treasurer and Director
(3) W. Sterling Mason, Jr., Director
(4) Craig Celantano, Director
(5) Richard Castellow, Director
All directors serve until the next annual meeting of stockholders or
until their successors have been duly qualified and elected.
(c) Identification of certain significant employees.
Their business backgrounds are set forth in (e) hereinafter.
(d) Family relationships.
The Company's majority stockholder is Daniel Pentelute.
There are no family relationships between any of the directors
or officers.
(e) Business experience.
(1) Background
ANDREW A. CHUDD, 47, President and Director of the Company since August
1992, has been involved in the carwash industry for approximately 6 1/2 years in
both management and carwash equipment sales. Mr. Chudd graduated from Hamilton
High School in California in 1968. He has attended LA Pierce College and West
Los Angeles College, but has received no degree. Since October of 1985 Mr. Chudd
has been an independent business consultant to various corporations and
businesses. Mr. Chudd worked, from 1974 until 1985, primarily as an Insurance
Agent and has had limited experience in publicly-held companies.
Mr. Chudd was President and Director of Discovery Systems, Ltd., a
blind pool/blank check company until February, 1988 at which time new officers
and directors were elected at a shareholders' meeting. Mr. Chudd was President
and Director, until the fall of 1989, of Celebrity Limousine, Ltd., a Utah
Public Company which operated a limousine service in Northern Utah under a
permit from the Utah Public Service Commission. Mr. Chudd was President and
Director Of Verazzana Ventures Ltd., a blind pool/blank check company until
January 1, 1995, at which time new officers and directors were elected at a
shareholders' meeting.
ALAN THEIS, 38, in 1982 received a bachelor of sciences degree in Business
Economics and Public Policy from Indiana University. Since July 1991 Mr. Theis
has been the Secretary and Treasurer of the Company. On May 15, 1997, Mr. Theis
was also elected Vice President of the Company. In March 1990, Mr. Theis became
the assistant accountant for the Company. From June 1988 to March 1990 Mr. Theis
worked as a construction worker for Pentelute Properties,
22
<PAGE>
a company controlled by Daniel Pentelute, the Company's major stockholder. From
1985 to 1987 Mr. Theis was an employee for the Park City Ski Corporation.
W. STERLING MASON, JR., 51, is a Director of the Company and has been
since January 1989, except for a short time at the beginning of 1991. Mr. Mason,
is presently involved in real estate investments and business opportunities in
Mexico. Mr. Mason was engaged in the private practice of law in Salt Lake City,
Utah since 1975. His law practice focused on the business and securities areas
of law. Mr. Mason graduated from the University of Utah Law School in 1975
receiving a Juris Doctor Degree. In addition, Mr. Mason received a Masters in
Business Administration from the University of Utah in 1974 and has a Bachelor
of Science Degree in Finance which he received in 1972. Prior to that time, Mr.
Mason was a stockbroker with various stock brokerage firms, both in Salt Lake
City, Utah and San Francisco, California.
CRAIG CELANTANO, 40, has been involved in the carwash industry since 1967.
Mr. Celantano has experience in carwash design and layout, equipment
installations and operations. He has owned and operated both self service and
full service carwashes. Mr. Celantano currently owns and operates a self service
location in Tucson, Arizona. He has been a distributor for Hanna carwash
equipment for 15 years. Mr. Celantano is currently Vice-President of Blue Coral
Systems, a leading manufacturer of carwash chemicals. He oversees the North
American sales force, as well as responsibilities in equipment design,
application, research and development.
RICHARD CASTELLOW, 48, received a bachelor of arts degree in economics
from the University of Washington in 1975. Since 1990 Mr. Castellow has been the
Northwest distributor for Belanger, Inc., a major manufacturer of carwash
equipment. During the last four years he has consulted and done work for the
majority of the largest carwashes in the northwest. From 1986 to 1989 Mr.
Castellow worked as a carwash consultant and an installer of equipment for
carwashes. In 1983 he became co-owner and operator of three Chevron gas stations
that included three exterior tunnel carwashes and seven self-serve carwash bays.
He operated the washes for three and a half years, at which time the partnership
was dissolved and the washes were sold.
(2) Directorships.
None of the officers and directors serve on the Board of any other
company whose securities are registered pursuant to Section 12 or subject to the
requirements of Section 15 (d) of the Exchange Act or any company registered
under the Investment Company Act of 1940.
(f) Involvement in certain legal proceedings.
None of the officers or directors have any disability
as defined in (1) through (6) of this item.
(g) Promoters and control persons.
Daniel Pentelute, although not an officer or director of the Company, is
the Company's largest and majority shareholder and, in addition, has been (until
March 96) the Company's landlord. Mr. Pentelute, age 47, attended Brigham Young
University and the University of Utah between the years of 1967 and 1970. Mr.
Pentelute was the President and a Director of the Company from 1980 to 1985. He
has been a consultant to the Company and developed the Buffs 'N' Puffs carwash
concept. Since 1986 Mr. Pentelute has engaged in the development and management
of real property located in the states of Nevada, Utah and Montana. Mr.
Pentelute is also a private investor in various business enterprises and
ventures.
23
<PAGE>
ITEM 12. EXECUTIVE COMPENSATION
None of the officers and directors of the Company received remuneration
in excess of $60,000 (Sixty thousand dollars) for the year ended December 31,
1997.
REMUNERATION TABLE
1997 1998
NAME SERVING AS REMUNERATION PROPOSAL
Andrew A. Chudd President, Director
since August 1992 $ 46,600 $ 41,000
W. Sterling Mason Jr. Director 0* 0*
Craig Celantano Director 0 0
Richard Castellow Director 0 0
Alan Theis Vice President,
Secretary, & Director $ 34,650 $ 37,000
------------ -----------
TOTALS $ 81,250 $ 78,000
============ ============
Aggregate remuneration for fiscal year 1997 totaled $81,250. Mr. Andrew
Chudd and Mr. Alan Theis were paid $500.00, Mr. Celantano, Mr. Castellow, and
Mr. Mason were paid $1,500 in directors fees for 1997. Expenses incurred to
attend any board meetings may be paid. Mr. Alan Theis and Mr. Andrew A. Chudd
are full-time employees of the Company. Mr. Mason, Mr. Castellow and Mr.
Celantano are solely directors of the Company and, as such, only devote as much
time as needed in that position.
*Mr. Mason will be compensated for any legal work performed for the
Company. During 1997 Mr. Mason received $5,932 as legal fees and reimbursement
for expenses for the Company.
Employee Stock Option Plan
NONE.
ITEM 13. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS &
MANAGEMENT
(a) (b) Security ownership of certain beneficial owners and management.
Name and Address Amount and Nature
Of Beneficial of Beneficial Percent of
Title of Class Owner Ownership Class
Common Stock Daniel F. Pentelute 5,293,525* 54.85%
6500 South State St.
Murray, Utah 84107
Andrew A. Chudd 400,000 4%
Alan Theis 50,000 0%
* Includes 168,625 shares held by Penex, Inc., a Nevada Corporation and 44,000
shares held by Desert Land, Inc., a Nevada Corporation both of which Mr.
Pentelute is the sole shareholder.
24
<PAGE>
ITEM 14. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
Related Party Transactions.
In April 1990 the former President of the Company and her husband
personally borrowed $518,000 from three financial institutions, using their
residence and other personal assets as collateral. $277,328 (including loan
costs of $7,270) of the money was used for the Company. The Company has treated
the obligation as being due to these individuals and has been making monthly
loan payments to the three institutions. In early 1994 one obligation was paid
in full, leaving two loans with interest rates ranging from 8.75% to 10.5%. The
Company is not an obligor or a guarantor on any of the three obligations. As of
December 1, 1993, the company is also paying Mr. Pentelute directly $3,018
monthly. The entire $3,018 applies to principal due. As of December 31, 1997 the
Company's total share for all these loans was approximately $0.
The Following table shows a list of the loans for which the Company has
made payments.
Original
Lender Principal Interest Term
- ----------------------- ------------------ ------------- -----------------
Zions Bank* $ 250,000 Prime + 2% 5yrs with balloon.
*Paid off as
of Jan 1, 1994
Valley Mortgage $ 234,000 11.05% 30yrs
Great Western $ 34,000 Prime + 2.5% 15yrs
Other Information.
For the year ended December 31, 1996, the Company paid rent of $15,452
to Pentelute Properties, a company controlled by Daniel Pentelute, the majority
shareholder of the Company who owns approximately 54.85% of the issued and
outstanding stock of the Company. The rent was paid pursuant to a lease which
had a five year term with a five year renewal option and an option to purchase
the property. The property was purchased in March,1996.
(b) Certain Business Relationships.
Business entities in which directors of the Company had an interest during
the last fiscal year have not had any transactions with the Company. However,
Director W. Sterling Mason, Jr. is an Attorney at Law. Mr. Mason was paid $5,932
in 1997.
(c) Indebtedness of Management.
NONE.
(d) Transaction with promoters.
The Company had a five (5) year lease on the property and buildings for
its carwash. The Company leased the land and buildings from Pentelute
Properties, a d/b/a of Daniel F. Pentelute, a major shareholder of the Company.
Mr. Pentelute owns approximately 54.85% of the issued and outstanding shares of
the Company. Monthly payments commenced on June 1, 1991, and were based on a
percentage of monthly gross sales excluding fuel sales. Initially rental was
four per cent (4%) of the gross sales excluding fuel sales. On April 1, 1992,
the monthly percentage increased to seven per cent (7%). The Company also
maintains its corporate headquarters on the premises. Under the lease the
Company provides two offices to the Lessor. In addition, under the terms of the
lease the Company had an option to renew the lease for an additional five year
term at a rental of seven per cent (7%) of gross sales excluding fuel sales with
a minimum rent of $5,000 monthly. Also, the Company had an option to purchase
the property commencing at the
25
<PAGE>
end of the initial five year term which option was exercisable on the
anniversary date of the lease each year in the five year option term. The
Company exercised its option to purchase the property and buildings for
$2,075,000 in March, 1996. For the year ended December 31, 1996, the Company
paid rent of $15,452 to Pentelute Properties.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
(a) 1. Financial Statements
The following Financial Statements of TIMEONE, INC. are
included in PART II, ITEM 9:
See page 16 for table of contents
(a) 2. Financial Statement Schedules
The following financial statement schedules of TIMEONE, INC. are included
in PART IV, ITEM 15(d) (3):
Report of Independent Certified Public Accountants on Supplementary
Financial Information.................................................... 27
Schedule I - Marketable Securities....................................... 28
Schedule V - Property, Plant and Equipment............................... 29
Schedule VI - Accumulated Depreciation and Amortization of Property,
Plant and Equipment...................................................... 30
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
26
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
Board of Directors and Shareholders
TimeOne, Inc.
Salt Lake City, Utah
Our audit of the basic financial statements presented in the preceding section
of this report was made primarily to form an opinion on such financial
statements taken as a whole. The additional information, contained in the
following pages, is not considered essential for the fair presentation of the
financial position of TimeOne, Inc., the results of its operations or cash flows
in conformity with generally accepted accounting principles. The following
information consisting of Schedule I, Schedule V and Schedule VI is included to
comply with reporting requirements of the Securities and Exchange Commission.
Such data was subjected to the audit procedures applied in the audit of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
April 3, 1998
27
<PAGE>
TIMEONE, INC.
SCHEDULE I - MARKETABLE SECURITIES
<TABLE>
<CAPTION>
Market
Number Original Value
Name of Issuer of Shares Cost 12/31/97
---------------- ----------------- -----------------
<S> <C> <C> <C>
Interpac Alliance 5,000 $ 50 $ 0
KMS Industries 2,750 33,438 0
Airtech 50,000 1,000 0
Agri-world 4,000 25 0
Fast Eddies Racing Stables 5,000 5,000 0
Dimedix 1,334 200 0
NVF Company 10,000 4,202 0
Berkey, Inc. 1,000 5,930 0
Alliance Gaming Common 38 163 185
Shaw Industries, Inc. 14,000 170,422 162,750
Station Casinos 15,000 107,512 152,805
Utah Medical 500 6,069 3,406
Acres Gaming 5,000 23,828 21,875
Ameristar Casino 5,000 26,075 24,375
Data Broadcasting 500 4,175 2,813
Engineering Animation 500 12,441 23,000
Novell Inc. 100 1,522 750
----------------- -----------------
Totals* $ 402,052 $ 391,959
================= =================
</TABLE>
<TABLE>
<CAPTION>
Market
Number Original Value
Name of Issuer of Shares Cost 12/31/96
---------------- ----------------- -----------------
<S> <C> <C> <C>
Novell Inc. 100 $ 1,522 $ 946
KMS Industries 2,750 33,438 0
Airtech 50,000 1,000 0
Agri-world 4,000 25 0
Fast Eddies Racing Stables 5,000 5,000 0
Dimedix 1,334 200 0
NVF Company 10,000 4,202 0
Berkey, Inc. 1,000 5,930 0
Interpac Alliance 5,000 50 0
Fredericks of Hollywood A 1,000 5,869 4,125
Fredericks of Hollywood B 500 2,404 2,063
Alliance Gaming Common 38 163 166
Alliance Gaming 23 1,621 2,182
Shaw Industries Inc. 14,000 170,422 166,250
Station Casinos 15,000 174,167 151,875
Data Broadcasting 500 4,175 3,500
Engineering Asimtn 500 12,441 12,125
----------------- -----------------
Totals* $ 422,629 $ 343,232
================= =================
</TABLE>
*Marketable securities are carried on the balance sheets as current assets.
28
<PAGE>
TIMEONE, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Balance at Balance
Beginning Additions at End
of Period At Cost Retirement of Period
----------------- ------------------ ------------------- -----------------
Year ended December 31, 1995:
<S> <C> <C> <C> <C>
Land & buildings $ 310,185 $ 0 $ 0 $ 310,185
Leasehold
improvements 194,044 577 0 194,621
Fixtures &
equipment 848,673 25,547 18,268 855,952
----------------- ------------------ ------------------- -----------------
$ 1,352,902 $ 26,124 $ 18,268 $ 1,360,758
================= ================== =================== =================
Year ended December 31, 1996:
Land & buildings $ 310,185 $ 2,075,000 $ 0 $ 2,385,185
Leasehold
improvements 194,621 3,566 0 198,187
Fixtures &
equipment 855,952 29,040 7,590 877,402
----------------- ------------------ ------------------- -----------------
$ 1,360,758 $ 2,107,606 $ 7,590 $ 3,460,774
================= ================== =================== =================
Year ended December 31, 1997:
Land & buildings $ 2,385,185 $ 0 $ 310,185 $ 2,075,000
Leasehold
improvements 198,187 4,504 0 202,691
Fixtures &
equipment 877,402 80,436 14,730 943,108
----------------- ------------------ ------------------- -----------------
$ 3,460,774 $ 84,940 $ 324,915 $ 3,220,799
================= ================== =================== =================
</TABLE>
29
<PAGE>
TIMEONE, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Period Expenses Retirement of Period
----------------- ------------------ ------------------- -----------------
Year ended December 31, 1995:
<S> <C> <C> <C> <C>
Land & buildings $ 0 $ 0 $ 0 $ 0
Leasehold
improvements 71,577 15,203 0 86,780
Fixtures &
equipment 447,301 84,153 9,291 522,163
----------------- ------------------ ------------------- -----------------
$ 518,878 $ 99,356 $ 9,291 $ 608,943
================= ================== =================== =================
Year ended December 31, 1996:
Land & buildings $ 0 $ 27,176 $ 0 $ 27,176
Leasehold
improvements 86,780 15,758 0 102,538
Fixtures &
equipment 522,163 84,804 5,313 601,654
----------------- ------------------ ------------------- -----------------
$ 608,943 $ 127,738 $ 5,313 $ 731,368
================= ================== =================== =================
Year ended December 31, 1997:
Land & buildings $ 27,176 $ 38,306 $ 0 $ 65,482
Leasehold
improvements 102,538 16,551 0 119,089
Fixtures &
equipment 601,654 86,072 5,764 681,962
----------------- ------------------ ------------------- -----------------
$ 731,368 $ 140,929 $ 5,764 $ 866,533
================= ================== =================== =================
Depreciation for year $ 140,929
Amortization for year 5,565
-----------------
$ 146,494
</TABLE>
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated this 13th day of April, 1998.
TimeOne, Inc.
By: /s/Andrew A. Chudd
Andrew A. Chudd
President, Chief Executive
Officer, and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures Title Date
President, Chief Executive
/s/Andrew A. Chudd Officer and Director April 13, 1998
- --------------------------- --------------
Andrew A. Chudd
Secretary/Treasurer,
Chief Financial
/s/Alan R. Theis Officer and Director April 13, 1998
- --------------------------- --------------
Alan R. Theis
/s/W. Sterling Mason Director April 13, 1998
- --------------------------- --------------
W. Sterling Mason, Jr.
31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
TimeOne, Inc. December 31, 1997 financial statements and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000350133
<NAME> TimeOne, Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 270,215
<SECURITIES> 391,959
<RECEIVABLES> 51,671
<ALLOWANCES> 0
<INVENTORY> 26,300
<CURRENT-ASSETS> 790,570
<PP&E> 3,220,799
<DEPRECIATION> 866,533
<TOTAL-ASSETS> 3,303,676
<CURRENT-LIABILITIES> 82,447
<BONDS> 0
0
0
<COMMON> 835
<OTHER-SE> 1,522,784
<TOTAL-LIABILITY-AND-EQUITY> 1,523,619
<SALES> 94,555
<TOTAL-REVENUES> 1,718,411
<CGS> 66,812
<TOTAL-COSTS> 1,566,411
<OTHER-EXPENSES> 8,966
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 196,075
<INCOME-PRETAX> 143,034
<INCOME-TAX> 78,825
<INCOME-CONTINUING> 64,209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,209
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
