UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission File No. 33-11986-LA
STEIN'S HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada, USA 88-022660
(State of Incorporation) (IRS Employer Identification No.)
21800 Oxnard Street, #440, Woodland Hills, California 91367
(Address of principal executive offices)
Registrant's Telephone Number, (818) 598-8888
TELEMALL COMMUNICATIONS, INC., 5030 Paradise Road, #C-213, Las Vegas, NV 89119
- ------------------------------------------------------------------------------
(Former name, former address and fiscal year, if changed since last report)
Indicate by check mark if 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 such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. ___ Yes __X_ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. []Yes[]No
APPLICABLE ONLY TO CORPORATE ISSUERS
State number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at June 30, 1999
Common Stock, $.001 4,365,630 shares
par value ----------------
Outstanding Securities
Transitional Small Business Disclosure Format (check one): Yes[] No[x]
<PAGE>
STEIN'S HOLDINGS, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial statements are unaudited and included herein beginning on page F1 and
are incorporated herein by this reference.
<PAGE>
STEIN'S HOLDINGS, INC.
(FORMERLY TELEMALL COMMUNICATIONS, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
<PAGE>
TABLE OF CONTENTS
Page No.
--------
INDEPENDENT ACCOUNTANTS' REVIEW REPORT............................... 1
FINANCIAL STATEMENTS
Consolidated Balance Sheet....................................... 2
Consolidated Statement of Operations............................. 3
Consolidated Statement of Changes in Stockholders' Equity........ 4
Consolidated Statement of Cash Flows............................. 5 - 6
Notes to Consolidated Financial Statements....................... 7 - 15
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Stein's Holdings, Inc.
Woodland Hills, California
We have reviewed the accompanying consolidated balance sheet of Stein's
Holdings, Inc. as of June 30, 1999, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the six months
then ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of
management of Stein's Holdings, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Moffitt & Company, P.C.
Scottsdale, Arizona
March 29, 2000
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 214,903
Trading securities 323,825
Loans receivable 38,500
Corporation income tax refund 9,458
Deferred tax asset 47,000
-----------
TOTAL CURRENT ASSETS $ 633,686
PROPERTY AND EQUIPMENT 12,415
----------
TOTAL ASSETS $ 646,101
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Margin account payable $ 14,329
Accrued liabilities 742
Note payable 25,000
Corporation income taxes payable 14,407
-----------
TOTAL CURRENT LIABILITIES $ 54,478
LONG-TERM LIABILITIES
Deferred income tax payable 2,098
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 41,416
STOCKHOLDERS' EQUITY
Convertible preferred stock
Authorized 10,000,000 shares, par
value $10 per share
Issued and outstanding - 0- shares 0
Common stock
Authorized 50,000,000 shares, par
value $.001 per share
Issued and outstanding - 4,365,630 shares 4,365
Paid in capital in excess of par value of stock 2,500,522
Retained earnings (deficit) (1,956,778)
-----------
TOTAL STOCKHOLDERS' EQUITY
548,109
----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 646,101
==========
</TABLE>
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
REVENUES
<S> <C> <C>
Realized and unrealized (losses) on trading securities $ (209,899)
Website design, dividends and interest 5,627
----------
TOTAL REVENUES (DEFICIT) $ (204,272)
COSTS AND EXPENSES
General and administrative expenses 167,263
Interest expense 1,532
------------
TOTAL COSTS AND EXPENSES 168,795
------------
(LOSS) BEFORE INCOME TAXES (REFUND)
AND MINORITY INTEREST (373,067)
INCOME TAXES (REFUND) (47,000)
------------
(LOSS) BEFORE MINORITY INTERESTS (326,067)
MINORITY INTEREST IN (LOSS) OF SUBSIDIARIES 4,495
------------
NET (LOSS) $ (321,572)
============
NET (LOSS) PER COMMON SHARE
Basic and diluted $ (.18)
============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
Basic and diluted 1,524,626
============
</TABLE>
2
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Convertible Preferred Stock Common Stock
------------------------- ------------
Shares Amount Shares Amount
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 510,000 $ 5,100,000 8,875,105 $ 8,875
CANCELLATION OF PREFERRED
STOCK (510,000) (5,100,000) 0 0
ISSUANCE OF COMMON STOCK
FOR SERVICES, AT PAR VALUE 0 0 12,500,000 12,500
---------- ------------ ------------- ------------
SUBTOTAL 0 0 21,375,105 21,375
200-TO-1 REVERSE STOCK SPLIT
(NO CHANGE IN PAR VALUE) 0 0 106,876 (21,269)
PRIVATE PLACEMENT OF STOCK
THROUGH SUBSIDIARY
COMPANIES 0 0 0 0
MERGER WITH 20/20 WEB
DESIGN, INC. 0 0 0 0
ISSUANCE OF COMMON STOCK
FOR MERGER OF MULTI-
SOURCE CAPITAL LTD. 0 0 4,247,754 4,248
ISSUANCE OF COMMON STOCK
FOR
CASH 0 0 5,000 5
RENT 0 0 4,000 4
ACCOUNTS PAYABLE 0 0 2,000 2
TRANSFER OF DEFICIT
ACCUMULATED DURING
DEVELOPMENT STAGE TO
RETAINED EARNINGS 0 0 0 0
NET (LOSS) FOR THE SIX MONTHS
ENDED JUNE 30, 1999 0 0 0 0
---------- ------------ ------------- ------------
BALANCE, JUNE 30, 1999 0 $ 0 4,365,630 $ 4,365
========== ============ ============= ============
</TABLE>
3
<PAGE>
Deficit
Paid in Accumulated
Capital in Retained During
Excess of Earnings Development
Par Value (Deficit) Stage
---------- ----------- ------------
$1,167,885 $ 0 $( 1,507,386)
290,687 0 0
0 0 0
---------- ----------- ------------
1,458,572 0 ( 1,507,386)
21,269 0 0
227,140 0 0
177,566 (94,180) 0
560,986 (33,640) 0
24,995 0 0
19,996 0 0
9,998 0 0
0 (1,507,386) 1,507,386
0 (321,572) 0
---------- ----------- ------------
$2,500,522 $(1,956,778) $ 0
========== =========== ============
4
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(321,572)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Depreciation and amortization $ 1,196
Minority interest in (loss) of subsidiary (4,495)
Common stock issued for services 20,000
Increases (decreases) in:
Trading securities 386,888
Corporation income tax refund (9,458)
Deferred tax assets (47,000)
Accounts payable (32,020)
Accrued liabilities (455)
---------
NET CASH FLOWS (USED) BY OPERATING
ACTIVITIES (6,916)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,469)
Increase in loans receivable (38,500)
---------
NET CASH FLOWS (USED) BY INVESTING
ACTIVITIES (45,969)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing on margin account (25,839)
Proceeds from issuance of common stock 252,140
---------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 226,301
---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 173,416
CASH AND CASH EQUIVALENTS,
JANUARY 1, 1999 41,487
---------
CASH AND CASH EQUIVALENTS,
JUNE 30, 1999 $ 214,903
=========
5
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 1,532
==========
Taxes paid $ 0
==========
NON CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock for rent and accounts payable $ 20,000
==========
Cancellation of preferred stock $ 290,687
==========
6
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Stein's Holdings, Inc., a Nevada corporation, was incorporated on
November 3, 1986. The company was originally incorporated as Ed
Phills, Inc. and its name was changed to Vegas Ventures, Inc.,
Telemall Communications, Inc. and subsequently to Stein's Holdings,
Inc. The company was a development stage company until 1999, when it
acquired the following companies and became an active company:
Multi-Source Capital Ltd. - Merged into Stein's Holdings, Inc. in
May 1999.
20/20 Web Design, Inc. - The company acquired 80% ownership in this
company in March 1999.
Nature of Business
Stein's Holdings, Inc. main activities and sources of income are
derived from daily trading in the stock and commodities markets.
20/20 Web Design, Inc. is in the business of developing website
designs and managing and acquiring subsidiary companies.
Principles of Consolidation
The consolidated financial statements include the accounts of
Stein's Holdings, Inc. and its 80% owned subsidiary, 20/20 Web
Design, Inc.
All material inter-company accounts and transactions have been
eliminated.
Methods of Accounting
All of the companies have adopted the accrual method of accounting.
In addition, Stein's Holdings, Inc.'s method of accounting for
trading securities requires that sales of securities be recorded on
the "trade date" for the stock transaction.
7
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trading Securities
The company has adopted Statement of Financial Accounting Standards
No. 115. This statement requires that trading securities be recorded
as follows:
A. Balance sheet - recorded at fair market value as a
current asset.
B. Unrealized holding gains and losses - included in the
statement of income as current earnings.
C. Dividends and interest income - included in the
statement of income as current earnings.
D. Cash flows from purchase, sales, and maturities of
trading securities shall be classified as cash flows
from operating activities.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers
all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Major renewals and
improvements are charged to the asset accounts while replacements,
maintenance and repairs, which do not improve or extend the lives of
the respective assets, are expensed. At the time property and
equipment are retired or otherwise disposed of, the asset and
related accumulated depreciation accounts are relieved of the
applicable amounts. Gains or losses from retirements or sales are
credited or charged to income.
The company depreciates its property and equipment for financial
reporting purposes using the straight-line method based upon the
following useful lives of the assets:
Computer hardware 5 years
Computer software 3 years
Accounting Estimates
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
8
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and
between the tax bases of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or
settled as prescribed in FASB Statement No. 109, Accounting for
Income Taxes. As changes in tax laws or rate are enacted, deferred
tax assets and liabilities are adjusted through the provision for
income taxes.
Compensated Absences
Employees of the corporation are entitled to paid vacations, sick
days and other time off depending on job classification, length of
service and other factors. It is impractical to estimate the amount
of compensation for future absences and, accordingly, no liability
has been recorded in the accompanying financial statements. The
corporation's policy is to recognize the costs of compensated
absences when paid to employees.
Net Loss Per Share
The company adopted Statement of Financial Accounting Standards No.
128 that requires the reporting of both basic and diluted earnings
per share. Basic earnings per share is computed by dividing net
income available to common shareowners by the weighted average
number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised
or converted into common stock.
NOTE 2 DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The company has financial instruments, none of which are held for
trading purposes. The company estimates that the fair value of all
financial instruments at June 30, 1999, as defined in FASB 107, does
not differ materially from the aggregate carrying values of its
financial instruments recorded in the accompanying balance sheet.
The estimated fair value amounts have been determined by the company
using available market information and appropriate valuation
methodologies. Considerable judgement is required in interpreting
market data to develop the estimates of fair value, and accordingly,
the estimates are not necessarily indicative of the amounts that the
company could realize in a current market exchange.
9
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Computer hardware $ 10,841
Computer software 4,785
---------
15,626
Less accumulated depreciation 3,211
---------
Total property and equipment $12,415
==========
The depreciation expense for the six months ended June 30, 1999 is $170.
NOTE 4 NOTE PAYABLE
The note payable is unsecured, bears interest at 10% and is due on
demand.
NOTE 5 INCOME TAXES
(Loss) from operations before income taxes $(373,068)
---------
The provision for income taxes is estimated as follows:
Currently payable $ 0
Deferred payable $ 0
Deferred tax asset $ 47,000
Estimated refund $ 47,000
---------
A reconciliation of the provision for income taxes compared with the
amounts at the U.S. Federal statutory rate was as follows:
Tax refund at U.S. Federal statutory income
tax rate $ 47,000
---------
Deferred income tax asset and liabilities reflect the
impact of temporary differences between amounts
of assets and liabilities for financial reporting purposes
and the basis of such assets and liabilities as measured
by tax laws.
The net deferred liability is: $ 2,098
---------
The net deferred tax asset is: $ 47,000
==========
</TABLE>
10
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
NOTE 5 INCOME TAXES (CONTINUED)
Temporary differences that give use to deferred tax assets and
liabilities included the following:
Deferred Tax
----------------------
Assets Liabilities
------- -----------
Net operating loss $93,000 $ 0
Property and equipment related 0 2,098
------- ----------
93,000 2,098
Less valuation allowance 46,000 0
------- ----------
Total deferred taxes $47,000 $ 2,098
------- ----------
Balance, January 1, 1999 $ 495,121
Less adjustments due to merger (63,876)
Current year reduction due to managements' estimate
of future profits due to mergers and new subsidiary (385,245)
----------
Balance, June 30, 1999 $ 46,000
==========
</TABLE>
NOTE 6 TAX CARRYFORWARDS
The corporations have the following net operating loss carryforwards:
Amount Expiration Date
--------- ---------------
$ 163 2001
3,128 2002
17,910 2003
9,297 2004
500 2005
4,363 2006
59,049 2007
281,412 2011
94,200 2018
373,067 2019
--------
$ 843,089
=========
11
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 7 CONVERTIBLE PREFERRED STOCK
The company canceled the outstanding preferred stock in exchange
for the mutual funds and inventory that the company owned at
December 31, 1998.
NOTE 8 CONVERTIBLE PREFERRED STOCK PREFERENCES
No rights or preferences have been assigned to the preferred
stock except for the convertible privilege.
NOTE 9 INTEREST
The company incurred interest expense for the six months ended
June 30, 1999 of $1,532.
NOTE 10 RENT
The company rents its facilities on a month to month basis from
an affiliated company. The rent expense for the six months ended
June 30, 1999 was $20,000.
NOTE 11 ACQUISITION OF 20/20 WEB DESIGN, INC. On March 30, 1999, Trump Oil
Corporation completed a merger with 20/20 Web Design, Inc. by
exchanging 8,620,000 shares of section 144 restricted common stock
for 100% of the outstanding shares of 20/20 Design, Inc.
The merger has been accounted for as a pooling of interest (reverse
acquisition as defined by the Securities and Exchange Commission)
and the company recorded the merger as follows:
Increase in common stock
8,620,000 shares @ .001(cent)par value $ 8,620
Decrease in paid-in capital 8,620
After the merger, the company changed its name to 20/20 Web Design,
Inc.
The following unaudited information presents certain income
statement data of the separate companies for the periods preceding
the merger:
Net sales
Trump Oil Corporation $ 2,500
20/20 Web Design, Inc. 0
Net (loss)
Trump Oil Corporation (20,000)
20/20 Web Design, Inc. 0
12
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 11 ACQUISITION OF 20/20 WEB DESIGN, INC. (CONTINUED) There were no
material transactions between Trump Oil Corporation and 20/20 Web
Design, Inc. prior to the merger. The effects of conforming 20/20
Web Design, Inc.'s accounting policies to those of Trump Oil
Corporation were not material.
After the merger, 20/20 Web Design, Inc. became an 80% subsidiary of
Stein's Holdings, Inc.
NOTE 12 BUSINESS COMBINATION - MULTI-SOURCE CAPITAL LTD. In May 1999,
the company completed a merger with Multi-Source Capital Ltd. by
exchanging 4,247,754 shares of Section 144 restricted common
stock for 100% of the outstanding shares of Multi-Source Capital
Ltd.
The merger has been accounted for as a pooling of interest (reverse
acquisition as defined by the Securities and Exchange Commission)
and the company recorded the merger as follows:
Book value of net assets received of $531,594 for 4,247,754 shares
of .001(cent) par value shares.
The following unaudited information presents certain income
statement data of the separate companies for the period preceding
the merger:
Stein's Multi-Source
Holdings, Inc. Capital Ltd.
-------------- ------------
Net sales $ 0 $(203,741)
Net (loss) 0 278,596
There were no material transactions between the companies prior to
the merger. The effects of conforming Multi-Source Capital Ltd.'s
accounting policies to those of Stein's Holdings, Inc. were not
material.
NOTE 13 SEGMENT REPORTING
The company has two reportable segments:
Stein's Holdings, Inc. - Trading securities.
20/20 Web Design, Inc. - Web design and management of subsidiary
company operations. The company evaluates segment performance based
on income from operations. Sales for each segment are based on the
location of the third-party customer. All inter company transactions
between segments have been eliminated.
13
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 13 SEGMENT REPORTING (CONTINUED)
Segment results as of June 30, 1999 are as follows:
Stein's 20/20 Web
Holdings, Inc. Design, Inc.
------------- -------------
Net sales $(206,772) $ 2,500
(Loss) from
operations (303,592) (22,475)
Assets 434,671 211,430
Capital expenditures 15,626 0
A reconciliation from the segment information to the consolidated
balances for income (loss) from operations and assets is set forth
below:
Segment (loss) from operations $(326,067)
Consolidated (loss) from operations (326,067)
Segment assets 646,101
Consolidated total assets 646,101
NOTE 14 STOCK OPTIONS
The company does not have any stock options outstanding at June
30, 1999.
NOTE 15 WEB DESIGN CONTRACT
In December 1998, the company entered into a web-design contract
which began in September 1999. As compensation for its services,
the company will receive 50% of the net sales profits generated
by the Internet web site created by the company.
The initial term of the contract shall be for two years.
The company did not realize any income on the contract.
14
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
NOTE 16 OFF-BALANCE SHEET RISK
The company has $214,903 deposited in one banking institution.
Only $100,000 of the balance is insured by the Federal Deposit
Insurance Corporation.
NOTE 17 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of June 30, 1999 is
unaudited. In management's opinion, such information includes all
normal recurring entries necessary to make the financial
information not misleading.
15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward- looking statements. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements are in
the Company's annual report on Form 10-K for the year ended December 31, 1998
and in the Company's other filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company assumes no
obligation to update any forward-looking statements or comments on the reasons
why actual results may differ therefrom.
The Registrant, formerly known as Vegas Ventures, Inc. and Telemall
Communications, Inc., acquired 100% of TeleMall Network, Inc. in June, 1996,
pursuant to which the Registrant's name was changed to TeleMall Communications,
Inc. The directors of Vegas Ventures resigned and were replaced by the slate of
directors of TeleMall Network, Inc. and TeleMall Communications, Inc. (now the
Registrant) continued to operate the business as a public entity.
Management was unable to implement the business activities of each of its
three Divisions since it was unsuccessful in completing its proposed private
offering and unable to raise the necessary capital necessary to proceed with its
proposed operations. Additionally, the Registrant did not go forward with its
planned secondary offering due to the market conditions at the time which were
not favorable to offerings for businesses such as Registrant. The Registrant was
not successful in raising the capital to completely and fully fund each division
and in March, 1997, laid off its employees and closed its offices. From that
time until Spring, 1999, the Company was dormant.
In May, 1999, the Company issued 4,000 (post-split) shares of its common
stock to its former landlord to satisfy claims that the former landlord had
asserted against the Company for unpaid rent and other charges. In March, 1999,
the Company issued 12,500 (post-split) shares of its common stock to its former
attorney as compensation for past services. Also in March, 1999, the Company
also issued 50,000 (post-split) shares of its common stock to an officer in
cancellation of $41,000 in promissory notes due to him from the Company and as
cancellation of certain other debts and obligations the Company owed him.
16
<PAGE>
In April, 1999, the Company acquired a private company, Multi- Source
Capital Ltd. ("MSC"), a Colorado corporation, by issuing 4,247,754 (post-split)
shares of its common stock to MSC's shareholders in exchange for the transfer of
assets worth $531,594. As part of this transaction, the Company's former
officers and directors resigned and a new slate of officers and directors were
elected and appointed. As part of this acquisition, the shareholders of the
Company approved a 200-for-1 stock split and the name of the Company was changed
to Stein's Holdings, Inc.
At this time, the Company assumed an agreement previously entered into by
MSC to acquire College Connection, Inc. d.b.a. Stein's Bakery, a wholesale and
retail bakery operation located in Dallas, Texas. The proposed acquisition of
Stein's Bakery requires the Company to raise approximately $1,200,000 to pay off
certain indebtedness of Stein's Bakery as well as the issuance of 1,000,000
shares of the Company's common stock to the sole shareholder of Stein's Bakery.
As of the date of this report, the proposed acquisition of Stein's Bakery has
not occurred and the Company has been unable to raise the $1,200,000 needed to
consummate this transaction. It is doubtful as to whether or not Company will be
able to complete this transaction. The president of Stein's Bakery is Randy
Sutton, former CEO and director of the Company.
While the Company is attempting to raise the necessary capital to complete
its acquisition of the Bakery, the Company has been investing its capital in the
stock market as well as conducting its due diligence investigation of the Bakery
and investigating other business opportunities that the Company may be
interested in acquiring. To date, none of these other business activities have
proven to be significantly attractive to the Company.
As a consequence of its acquisition of MSC, the Company became the
majority shareholder of another publicly traded company, 20/20 Web Design, Inc.
("20/20 Web"), a Nevada corporation formerly known as Trump Oil Corporation.
20/20 Web merged with MSC's wholly owned subsidiary and MSC received eighty
percent of the issued and outstanding shares of 20/20 Web as a result of that
merger. 20/20 Web is in the business of developing and maintaining web sites for
other companies. 20/20 Web also has a contract with an online jewelry whereby
20/20 Web will develop and design as well as maintain the online jewelry store
for the vendor and will receive fifty percent of the net profits from the online
sales generated by the website. As of the date of this report, no revenues have
been generated by the online store. The contract expires in December, 2000.
Results of Operations
17
<PAGE>
The Company realized a net loss of $321,572 from operations for the six
month period ended June 30, 1999 compared to no loss for the six month period
ended June 30, 1998. For the six month period ended June 30, 1999, the Company
had revenues of $(204,272), composed primarily of unrealized losses on the
securities it owns. During this period, the Company's subsidiary realized
revenue of $5,627 for its website design, dividends and interest, compared to no
revenues during the previous year. The subsidiary's revenues and expenses are
consolidated and reported in the Company's consolidated financial statements
contained herein. The Company had no revenue for the six month period ended June
30, 1998. The Company had costs and expenses of $168,795 for the six month
period ended June 30, 1999 compared to no costs and expenses for the six month
period ended June 30, 1998, when the Company was dormant and had no operations.
The Company's expenses consisted of salaries, professional fees and rent expense
along with general office expenses. The loss per share for the six month period
ended June 30, 1999 was $(.18), compared to no loss for the six month period
ended June 30, 1998.
Th Company's assets at June 30, 1999 were $646,101 compared to $5,101,061
at June 39, 1998. The difference is due to the Company's cancellation of the
convertible preferred stock it had issued to certain vendors for artwork, a
mutual fund and other assets to which the Company never received title. The
cancellation of this convertible preferred stock resulted in those assets no
longer appearing as assets of the Company with the resulting change in total
assets of the Company. The Company canceled these convertible preferred shares
in March, 1999 prior to the acquisition of MSC. The Company's liabilities at
June 30, 1999 were $97,992 compared to $331,687 at June 30, 1998. The difference
is attributable to the cancellation of debt owed to an officer and director
through the issuance of stock in March, 1999 as well as the write-off of certain
accounts payable, some through the issuance of stock. The Company's current
liabilities at June 30, 1999 consist of a note payable to a shareholder dating
from approximately 1996, income taxes owed by MSC and transferred to the Company
as part of its acquisition of MSC and an amount the Company owed on its margin
account.
Total shareholder equity was reduced from $4,769,374 at June 30, 1998 to
$548,109 at June 30, 1999. This was due to the cancellation of the convertible
preferred shares in March, 1999.
Liquidity and Capital Resources
As of June 30, 1999, the Company has working capital of $579,208
consisting of $633,686 in current assets and $54,478 in
18
<PAGE>
current liabilities. The Company had no working capital at June 30, 1998. While
the Company has adequate working capital for its current operations, it does not
have sufficient capital to complete its proposed acquisition of Stein's Bakery.
The Company has an agreement to acquire Stein's Bakery in Lewisville,
Texas. To complete this acquisition, the Company must raise approximately
$1,200,000. To date, the Company has been unable to raise this sum and it
appears likely that the merger will not be completed. In the event that the
merger is not completed, the Company will seek out other opportunities to
acquire an operating business for the Company. The Company has sufficient assets
to continue to operate its business at the present time. Effect of Inflation
Inflation did not have any significant effect on the operations of the
Company during the six months ended June 30, 1999. Further, inflation is not
expected to have any significant effect on future operations of the Company.
PART II OTHER INFORMATION
Items 1, 3, 4 and 5 are Inapplicable
Item 2. Changes in Securities and Use of Proceeds
In April, 1999, the Company sold 6,700 shares of its common stock at $5
per share to affiliates of the Company, which included 4,000 shares sold to the
then-president, Randy Sutton and 700 shares to Rex Morden, CFO of the Company.
The remaining 2,000 shares were sold to a business partner of Mr. Morden. In
May, the Company sold 5,000 shares of its common stock at $5 per share to Mr.
Sutton's father-in-law. In June, the Company sold 600 shares of its common stock
to Image Jewelers, with whom the Company's subsidiary, 20/20 Web Design, Inc.
has a contract to design, develop and maintain an online jewelry store. The
Company relied on Section 4(2) of the Securities Act of 1933, for these
transactions as transactions not involving a public offering. The shares were
restricted shares and all the investors represented and warranted that they were
acquiring the shares for investment purposes, not with a view to resale or
distribution. The Company used the proceeds to fund its operations.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed for the relevant period.
19
<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.
Stein's Holdings, Inc. f.k.a.
Telemall Communications, Inc.
Date March 31, 2000 /s/Shahram Khial
---------------------------------
Shahram Khial, Ph.D., CEO
/s/Rex Morden
---------------------------------
Rex Morden, Chief Financial
Officer
20
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 214,903
<SECURITIES> 323,825
<RECEIVABLES> 38,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 633,686
<PP&E> 12,415
<DEPRECIATION> 0
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<OTHER-SE> 548,109
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<SALES> 0
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<CGS> 167,263
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