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 September 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
SEPTEMBER 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 September 30, 1999, and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the nine
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
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 204,052
Trading securities 428,596
Loans receivable 38,500
Corporation income tax refund 9,458
Deferred tax asset 42,000
-----------
TOTAL CURRENT ASSETS $ 722,606
PROPERTY AND EQUIPMENT 12,245
-----------
TOTAL ASSETS $ 734,851
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 388
Note payable 25,000
Corporation income taxes payable 14,407
-----------
TOTAL CURRENT LIABILITIES $ 39,795
LONG-TERM LIABILITIES
Deferred income tax payable 2,098
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 39,887
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 - 4,379,230 shares 4,379
Paid in capital in excess of par value of stock 2,568,508
Retained earnings (deficit) (1,919,816)
-----------
TOTAL STOCKHOLDERS' EQUITY 653,071
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 734,851
===========
</TABLE>
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
REVENUES
Realized and unrealized (loss) on trading securities $ (98,677)
Website design, dividends and interest 5,627
-----------
TOTAL REVENUES (DEFICIT) $ (93,050)
COSTS AND EXPENSES
General and administrative expenses 238,053
Interexpense 1,532
-----------
TOTAL COSTS AND EXPENSES 239,585
-----------
(LOSS) BEFORE INCOME TAXES (REFUND)
AND MINORITY INTEREST (332,635)
INCOME TAXES (REFUND) (42,000)
-----------
(LOSS) BEFORE MINORITY INTERESTS (290,635)
MINORITY INTEREST IN (LOSS) OF SUBSIDIARIES 6,025
-----------
NET (LOSS) $ (284,610)
===========
NET (LOSS) PER COMMON SHARE
Basic and diluted $ (.11)
===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
Basic and diluted 2,478,605
===========
</TABLE>
2
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Paid in Accumulated
Convertible 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> <C>
BALANCE, JANUARY 1, 1999 510,000 $ 5,100,000 8,875,105 $ 8,875 $ 1,167,885 $ 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 VALUE 0 0 12,500,000 12,500 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
SUBTOTAL 0 0 21,375,105 21,375 1,458,572 0 (1,507,386)
===========
200-TO-1 REVERSE STOCK SPLIT
(NO CHANGE IN PAR VALUE) 0 0 106,876 (21,269) 21,269 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 18,600 19 92,981 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 NINE MONTHS
ENDED SEPTEMBER 30, 1999 0 0 0 0 0 (284,610) 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 0 $ 0 4,379,230 $ 4,379 $ 2,568,508 $(1,919,816) $ 0
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
4
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(284,610)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Depreciation and amortization 1,366
Minority interest in (loss) of subsidiary (6,025)
Common stock issued for services 20,000
Increases (decreases) in:
Trading securities 263,202
Corporation income tax refund 9,458
Deferred tax assets (42,000)
Accounts payable (31,632)
Accrued liabilities (1,197)
---------
NET CASH FLOWS (USED) BY OPERATING
ACTIVITIES $ (71,438)
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
Borrowings on margin account (40,168)
Proceeds from issuance of common stock 320,140
---------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 279,972
---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 162,565
CASH AND CASH EQUIVALENTS,
JANUARY 1, 1999 41,487
---------
CASH AND CASH EQUIVALENTS,
SEPTEMBER 30, 1999 $ 204,052
=========
5
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 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
SEPTEMBER 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
SEPTEMBER 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
SEPTEMBER 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 September 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
SEPTEMBER 30, 1999
(UNAUDITED)
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 3,381
---------
Total property and equipment $ 12,245
=========
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 $(332,635)
---------
The provision for income taxes is estimated as follows:
Currently payable $ 0
---------
Deferred payable $ 0
---------
Deferred tax asset $ 42,000
---------
Estimated refund $ 42,000
=========
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 $ 42,000
=========
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 leabilities as measured
by tax laws
The net deferred liability is: $ 2,098
=========
The net deferred tax asset is: $ 42,000
=========
10
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 5 INCOME TAXES (CONTINUED)
Temporary differences that give use to deferred tax assets and liabilities
included the following:
<TABLE>
<CAPTION>
Deferred Tax
---------------------
Assets Liabilities
--------- ----------
<S> <C> <C>
Net operating loss $ 83,000 $ 0
Property and equipment related 0 2,098
--------- ---------
83,000 2,098
Less valuation allowance 41,000 0
--------- ---------
Total deferred taxes $ 42,000 $ 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 (390,245)
---------
Balance, September 30, 1999 $ 41,000
=========
</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
332,635 2019
----------
$ 802,657
==========
11
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 nine months ended September
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 nine months ended September
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
SEPTEMBER 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
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 13 SEGMENT REPORTING (CONTINUED)
Segment results as of September 30, 1999 are as follows:
Stein's 20/20 Web
Holdings, Inc. Design, Inc
-------------- -----------
Net sales $(101,177) $ 2,500
(Loss) from
operations (225,078) (30,120)
Assets 531,066 203,785
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 $(284,610)
Consolidated (loss) from operations (284,610)
Segment assets 734,851
Consolidated total assets 734,851
NOTE 14 STOCK OPTIONS
The company does not have any stock options outstanding at September 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
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 16 OFF-BALANCE SHEET RISK
The company has $203,785 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 September 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 Registrant was not successful in raising the capital to completely and
fully fund its proposed operations 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.
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.
16
<PAGE>
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 $38,500 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 by the online store. The contract expires in December, 2000.
Results of Operations
The Company realized a net loss of $284,610 from operations for the nine
month period ended September 30, 1999 compared to no loss for the nine month
period ended September 30, 1998. For the nine month period ended September 30,
1999, the Company had revenues of $(93,050), 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
17
<PAGE>
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 nine month period ended September 30, 1998. The Company had
costs and expenses of $239,585 for the nine month period ended September 30,
1999 compared to no costs and expenses for the nine month period ended September
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 nine month period September
30, 1999 was $(.11), compared to no loss for the nine month period ended
September 30, 1998.
Th Company's assets at September 30, 1999 were $734,851 compared to
$5,101,061 at September 30, 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 September 30, 1999 were $81,780 compared to $331,687 at September 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 September 30, 1999 consist of a note payable to
a shareholder in dating from approximately 1996 and income taxes owed by MSC and
transferred to the Company as part of its acquisition of MSC.
Total shareholder equity was reduced from $4,769,374 at September 30, 1998
to $653,071 at September 30, 1999. This was due to the cancellation of the
convertible preferred shares in March, 1999.
Liquidity and Capital Resources
As of September 30, 1999, the Company has working capital of $682,811
consisting of $722,606 in current assets and $39,795 in current liabilities. The
Company had no working capital at September 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
18
<PAGE>
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 nine months ended September 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 July, 1999, the Company sold 11,440 shares of its common stock at $5
per share to current shareholders of the Company. 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<CASH> 204,052
<SECURITIES> 428,596
<RECEIVABLES> 38,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 722,606
<PP&E> 12,415
<DEPRECIATION> 0
<TOTAL-ASSETS> 734,851
<CURRENT-LIABILITIES> 39,795
<BONDS> 0
0
0
<COMMON> 4,379
<OTHER-SE> 653,071
<TOTAL-LIABILITY-AND-EQUITY> 734,851
<SALES> 0
<TOTAL-REVENUES> (93,050)
<CGS> 238,053
<TOTAL-COSTS> 239,585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,532
<INCOME-PRETAX> 0
<INCOME-TAX> (42,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (284,610)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
