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, 2000
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) 598-6780
---------------------------------------------------------------------------
(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. |X| Yes |_| 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, 2000
Common Stock, $.001 4,401,166 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.
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, 1999
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.
Stein's Holdings, Inc. (the "Company"), formerly known as Vegas Ventures,
Inc. and TeleMall Communications, Inc., acquired 100% of Multi-Source Capital,
Ltd. in April, 1999, pursuant to which the Registrant's name was changed to
"Stein's Holdings, Inc." At that 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. Also in September, 1999, the Company lent $37,500 to the Bakery for the
purchase of certain equipment. The Bakery has agreed to make payments of
interest only until September, 2000 when all accrued interest and unpaid
principal are due.
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
<PAGE>
by the online store. The contract expires in December, 2000.
Results of Operations
The Company realized a net loss of ($257,340) from operations for the
three month period ended June 30, 2000 compared to a loss of ($321,572) for the
three month period ended June 30, 1999. For the three month period ended June
30, 2000, the Company had revenues of ($153,746), composed primarily of
unrealized losses on the securities it owns. During this period, the Company's
subsidiary had no revenues, compared to no revenues during the previous year's
period. The subsidiary's revenues and expenses are consolidated and reported in
the Company's consolidated financial statements contained herein. The Company
had revenue of ($204,272) for the three month period ended June 30, 1999.
The Company realized a net loss of ($189,829) for the six months ended
June 30, 2000 compared to a net loss of ($321,572) for the six months ended June
30, 1999. The Company had revenues of $241,331 for the six month period ended
June 30, 2000 compared to revenues of ($204,272) for the six month period ended
June 30, 1999. The net loss per share for the six month period ended June 30,
2000 was ($.04) per share compared to a net loss per share of ($.18) for the six
month period ended June 30, 1999.
The Company had costs and expenses of $127,790 for the three month period
ended June 30, 2000 compared to costs and expenses of $168,795 for the three
month period ended June 30, 1999. The Company's expenses consist salaries,
professional fees and rent expense along with general office expenses. The net
loss per share for the three month period ended June 30, 2000 was $.06, compared
to ($.18) for the three month period ended June 30, 1999.
The Company's assets at June 30, 2000 were $1,066,447 compared to assets
of approximately $646,000 at June 30, 1999. The difference is due to the
Company's acquisition of MSC. The Company's liabilities at June 30, 2000 were
approximately $572,000 compared to liabilities of approximately $98,000 at June
30, 1999. Part of 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 largest liability of the Company at June 30, 2000 is its margin
account payable of approximately $448,555 compared to its margin account payable
of $14,329 for the prior year's period. The Company's current liabilities at
June 30, 2000 consist of its margin account payable of approximately $449,000
and accounts payable of approximately $84,000. At June 30, 1999, the Company's
current liabilities consisted of its margin account payable of approximately
$14,000 and a note payable of $25,000.
Total shareholder equity decreased from $548,109 at June 30, 1999 to
$494,784 at June 30, 2000.
Liquidity and Capital Resources
As of June 30, 2000, the Company had working capital of approximately
$450,000 consisting of $1,017,812 in current assets and $565,387 in current
liabilities. The Company had working capital of approximately $580,000 at June
30, 1999 consisting of $633,686 in current assets and $54,478 in current
liabilities. 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
<PAGE>
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 three months ended June 30, 2000. Further, inflation is not
expected to have any significant effect on future operations of the Company.
PART II OTHER INFORMATION
Items 1, 2, 3, 4 and 5 are Inapplicable
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed for the relevant period.
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.
Date August 14, 2000 /s/ Charles Smith
--------------------------------------
Charles Smith, CEO, CFO
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
<PAGE>
TABLE OF CONTENTS
Page No.
--------
INDEPENDENT ACCOUNTANTS' REVIEW REPORT ................................ 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets ........................................ 2
Consolidated Statements of Operations .............................. 3
Consolidated Statement of Changes in Stockholders' Equity .......... 4 - 5
Consolidated Statements of Cash Flows .............................. 6 - 7
Notes to Consolidated Financial Statements ......................... 8 - 14
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Stein's Holdings, Inc.
Woodland Hills, California
We have reviewed the accompanying balance sheets of Stein's Holdings, Inc. as of
June 30, 2000 and 1999, and the related 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 the 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
August 11, 2000
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND 1999
(UNAUDITED)
ASSETS
2000 1999
---------- ----------
CURRENT ASSETS
Cash and cash equivalents $ 184 $ 214,903
Trading securities 851,528 323,825
Notes and loans receivable 35,600 38,500
Corporation income tax refund 0 9,458
Deferred tax asset 130,500 47,000
---------- ----------
TOTAL CURRENT ASSETS 1,017,812 633,686
PROPERTY AND EQUIPMENT 11,135 12,415
---------- ----------
OTHER ASSETS
Note receivable 37,500 0
---------- ----------
TOTAL ASSETS $1,066,447 $ 646,101
========== ==========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
----------- -----------
CURRENT LIABILITIES
Accounts payable $ 83,849 $ 0
Accrued liabilities 1,975 742
Margin accounts payable 448,555 14,329
Note payable 25,000 25,000
Corporation income taxes payable 6,008 14,407
----------- -----------
TOTAL CURRENT LIABILITIES 565,387 54,478
----------- -----------
LONG-TERM LIABILITIES
Deferred income tax payable 1,200 2,098
----------- -----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 5,076 41,416
----------- -----------
STOCKHOLDERS' EQUITY
Convertible preferred stock
Authorized 10,000,000 shares, par
value $10 per share
Issued and outstanding - 0- shares 0 0
Common stock
Authorized 50,000,000 shares, par
value $.001 per share
Issued and outstanding
4,401,166 shares at June 30, 2000 4,401 0
4,365,630 shares at June 30, 1999 0 4,365
Paid in capital in excess of par value of stock 2,924,005 2,500,522
Retained earnings (deficit) (2,433,622) (1,956,778)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 494,784 548,109
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,066,447 $ 646,101
=========== ===========
See Accompanying Notes and Independent Accountants' Review Report.
2
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 2000 1999 1999
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUES
Realized and unrealized gains (losses) on trading securities $ (154,346) $ 240,045 $ (209,899) $ (209,899)
Website design, dividends and interest 600 1,286 5,627 5,627
----------- ----------- ----------- -----------
TOTAL REVENUES (153,746) 241,331 (204,272) (204,272)
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Loss on worthless subsidiary 0 195,657 0 0
General and administrative expenses 126,790 274,697 167,263 167,263
Interest expense 1,000 6,101 1,532 1,532
----------- ----------- ----------- -----------
TOTAL COSTS AND EXPENSES 127,790 476,455 168,795 168,795
----------- ----------- ----------- -----------
(LOSS) BEFORE INCOME TAXES (REFUND)
AND MINORITY INTEREST (281,536) (235,124) (373,067) (373,067)
INCOME TAXES (REFUND) (22,745) (11,423) (47,000) (47,000)
----------- ----------- ----------- -----------
(LOSS) BEFORE MINORITY INTEREST (258,791) (223,701) (326,067) (326,067)
MINORITY INTEREST IN (LOSS) OF SUBSIDIARY 1,451 33,872 4,495 4,495
----------- ----------- ----------- -----------
NET (LOSS) $ (257,340) $ (189,829) $ (321,572) $ (321,572)
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic and diluted $ (.06) $ (.04) $ (.18) $ (.18)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
Basic and diluted 4,401,166 4,401,166 1,524,626 1,524,626
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
3
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Convertible Paid in Accumulated
Preferred Stock Common Stock Capital in Retained During
-------------------- ------------------ Excess of Earnings Development
Shares Amount Shares Amount Par Value (Deficit) Stage
------ ------ ------ ------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 510,000 $ 5,100,000 44,376 $ 44 $ 1,189,154 $ 0 $(1,507,386)
CANCELLATION OF PREFERRED
STOCK (510,000) (5,100,000) 0 0 290,687 0 0
ISSUANCE OF COMMON STOCK
FOR SERVICES, AT PAR 0 0 62,500 62 0 0 0
PRIVATE PLACEMENT OF STOCK
THROUGH SUBSIDIARY
COMPANIES 0 0 0 0 227,140 0 0
MERGER WITH 20/20 WEB
DESIGN, INC 0 0 0 0 177,566 (94,180) 0
ISSUANCE OF COMMON STOCK
FOR MERGER OF MULTI-SOURCE
CAPITAL LTD 0 0 4,247,754 4,248 560,986 (33,640) 0
ISSUANCE OF COMMON STOCK FOR
CASH 0 0 5,000 5 24,995 0 0
RENT 0 0 4,000 4 19,996 0 0
ACCOUNTS PAYABLE 0 0 2,000 2 9,998 0 0
TRANSFER OF DEFICIT
ACCUMULATED DURING
DEVELOPMENT STAGE TO
RETAINED EARNINGS 0 0 0 0 0 (1,507,386) 1,507,386
NET (LOSS) FOR THE SIX MONTHS
ENDED JUNE 30, 1999 0 0 0 0 0 (321,572) 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1999 0 0 4,365,630 4,365 2,500,522 (1,956,778) 0
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
4
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Convertible Paid in Accumulated
Preferred Stock Common Stock Capital in Retained During
------------------------- ------------------------- Excess of Earnings Development
Shares Amount Shares Amount Par Value (Deficit) Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MERGER WITH 20/20 WEB
DESIGN, INC 0 $ 0 0 $ 0 $ 278,386 $ (367,248) $ 0
ISSUANCE OF COMMON STOCK
FOR
CASH 0 0 13,610 14 67,986 0 0
ACCOUNTS PAYABLE 0 0 11,926 12 75,131 0 0
CONSULTING SERVICES 0 0 10,000 10 1,980 0 0
NET INCOME FOR THE
SIX MONTHS ENDED
DECEMBER 31, 1999 0 0 0 0 0 80,233 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE DECEMBER 31, 1999 0 0 4,401,166 4,401 2,924,005 (2,243,793) 0
NET (LOSS) FOR THE SIX
MONTHS ENDED JUNE 30, 2000 0 0 0 0 0 (189,829) 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 2000 0 $ 0 4,401,166 $ 4,401 $ 2,924,005 $(2,433,622) $ 0
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
5
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(189,829) $(321,572)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Depreciation 2,082 1,196
Minority interest in (loss) of subsidiary (33,872) (4,495)
Loss on investment in subsidiary 195,000 0
Common stock issued for services 0 20,000
Changes in operating assets and liabilities:
Trading securities (457,641) 386,888
Corporation income tax refund 0 (9,458)
Accounts receivable 28,136 0
Deferred tax assets (10,413) (47,000)
Prepaid insurance 507 0
Accounts payable 51,190 (32,020)
Accrued liabilities (182) (455)
Corporation income taxes payable 831 0
--------- ---------
NET CASH FLOWS (USED) BY OPERATING
ACTIVITIES (414,191) (6,916)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,751) (7,469)
Increase in notes and loans receivable (34,600) (38,500)
--------- ---------
NET CASH FLOWS (USED) BY INVESTING
ACTIVITIES (37,351) (45,969)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on margin accounts payable 448,555 (25,839)
Proceeds from issuance of common stock 0 252,140
--------- ---------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 448,555 226,301
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,987) 173,416
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,171 41,487
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 184 $ 214,903
========= =========
See Accompanying Notes and Independent Accountants' Review Report.
6
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
-------- --------
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 4,501 $ 1,532
======== ========
Taxes paid $ 0 $ 0
======== ========
NON CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock for rent
And accounts payable $ 0 $ 20,000
======== ========
Cancellation of preferred stock $ 0 $290,687
======== ========
See Accompanying Notes and Independent Accountants' Review Report
7
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 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's main activities and sources of income are derived
from daily trading in the stock 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
The companies have adopted the accrual method of accounting. In addition,
Stein's Holdings, Inc. records the sale of trading securities on the
"trade date".
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
See Accompanying Notes and Independent Accountants' Review Report.
8
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
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.
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
See Accompanying Notes and Independent Accountants' Review Report.
9
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net (Loss) Per
Share (Continued)
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, 2000, 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.
NOTE 3 NOTES AND LOANS RECEIVABLE
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
College Connection, Inc., DBA Stein's Bakery
The loan dated September 9, 1999 requires monthly
interest payments of $344 and a balloon payment of
principal and interest on September 1, 2000. The company
has not received any payments on the loan $37,500 $37,500
National Healthcare Technology, Inc.
On March 20, 2000 the company loaned National
Healthcare Technology, Inc. $20,000. The loan
is unsecured, bears interest at 12% and is due on
June 1, 2000. In the event the note and accrued
interest are not paid when due, then the company
may elect to have National issue shares of its
common stock (restricted) for the loan at a price
to be agreed upon by both companies 20,600 0
Universal Services and Acquisitions, Inc.
Open loan, no interest, collateral or due date 15,000 1,000
------- -------
$73,100 $38,500
======= =======
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
10
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
2000 1999
------- -------
Computer hardware $13,592 $10,841
Computer software 4,785 4,785
------- -------
18,377 15,626
Less accumulated depreciation 7,242 3,211
------- -------
Total property and equipment $11,135 12,415
======= =======
The depreciation expense for the six months ended June 30, 2000 and 1999
was $2,082 and $170, respectively.
NOTE 5 NOTE PAYABLE
The note payable is unsecured, bears interest at 10% and is due on demand.
NOTE 6 INCOME TAXES
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
(Loss) from operations before income taxes $(235,124) $(373,068)
--------- ---------
The provision for income taxes is estimated as follows:
Currently payable $ 0 $ 0
--------- ---------
Deferred payable $ 1,200 $ 0
--------- ---------
Deferred asset $ 130,500 $ (47,000)
--------- ---------
Estimated tax (refund) $ (11,423) $ (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 $ (11,423) $ 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 asset is: $ 130,500 $ 47,000
========= =========
The net deferred tax liability is: $ 1,200 $ 2,098
========= =========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
11
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 6 INCOME TAXES (CONTINUED)
Temporary differences that give rise to deferred tax assets and
liabilities included the following:
<TABLE>
<CAPTION>
Deferred Tax at June 30, 2000
Assets Liabilities
------------ ------------
<S> <C> <C>
Net operating and capital losses carryforwards $ 261,000 $ 0
Property and equipment related 0 1,200
------------ ------------
261,000 1,200
Less valuation allowance 130,500 0
------------ ------------
Total deferred taxes $ 130,500 $ 1,200
============ ============
Balance, January 1, 2000 $ 120,500
Applied to six months ended June 30, 2000 10,000
============
Balance, June 30, 2000 $ 130,500
============
</TABLE>
NOTE 7 TAX CARRYFORWARDS
As of January 1, 2000, the company had net operating loss carryforwards of
$679,810 and capital loss carryforwards in the amount of $28,560 which can
be carryforward until the year 2019. Approximately $259,959 was used to
reduce the June 30, 2000 taxable income.
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,
2000 and 1999 of $6,101 and $1,532, respectively.
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,
2000 and 1999 was $25,299 and $20,000, respectively.
See Accompanying Notes and Independent Accountants' Review Report.
12
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 11 INSURANCE
The company does not carry liability or worker's compensation insurance.
NOTE 12 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.
All inter company transactions between segments have been eliminated.
Segment results for the six months ended June 30, 2000 are as follows:
Stein's 20/20 Web
Holdings, Inc. Design, Inc.
-------------- ------------
Net sales $ 241,331 $ 0
(Loss) from operations (134,928) (123,863)
Assets 1,066,328 119
Capital expenditures 2,751 0
A reconciliation from the segment information to the consolidated balances
for (loss) from operations and assets is set forth below:
Segment (loss) from operations $ (258,791)
Consolidated (loss) from operations (258,791)
Segment assets 1,066,447
Consolidated total assets 1,066,447
NOTE 13 STOCK OPTIONS
The company does not have any stock options outstanding at June 30, 2000.
See Accompanying Notes and Independent Accountants' Review Report.
13
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 14 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 has not realized any income from this contract.
NOTE 15 LOSS ON WORTHLESS SUBSIDIARY
Management believes the investment in Stein's Cake Box Inc. is
uncollectible and therefore elected to write-off the $195,657 investment
as uncollectible.
NOTE 16 CASH IN BANK
At June 30, 1999, the company had $214,903 deposited in one banking
institution. Only $100,000 of the balance was insured by the Federal
Deposit Insurance Corporation.
NOTE 17 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of June 30, 2000 is unaudited.
In managements opinion, such information includes all normal recurring
entries necessary to make the financial information not misleading.
See Accompanying Notes and Independent Accountants' Review Report.
14
