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 March 31, 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 March 31, 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 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. 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 by the online store. The contract expires in December, 2000.
<PAGE>
Results of Operations
The Company realized a net profit before taxes of $67,511 from operations
for the three month period ended March 31, 2000 compared to no loss for the
three month period ended March 31, 2000. For the three month period ended March
31, 2000, the Company had revenues of $395,077, composed primarily of capital
gains 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 no
revenue for the three month period ended March 31, 1999.
The Company had costs and expenses of $348,665 for the three month period
ended March 31, 2000 compared to no costs and expenses for the three month
period ended March 31, 1999, when the Company was dormant and had no operations.
The Company's expenses consisted of a loss of an investment by its subsidiary of
approximately $195,000, salaries, professional fees and rent expense along with
general office expenses. The net income for this three month period was
approximately $67,500 compared to no loss for the three month period ended March
31, 1999. The net gain per share for the three month period ended March 31, 2000
was $.015, compared to no loss for the three month period ended March 31, 1999.
The Company's assets at March 31, 2000 were $1,565,270 compared to assets
of approximately $1,000 at March 31, 1999. The difference is due to the
Company's acquisition of MSC. The Company's liabilities at March 31, 2000 were
approximately $806,000 compared to liabilities of $331,687 at March 31, 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 March 31, 2000 is its margin account payable
of approximately $722,000 compared to no margin account payable for the prior
year's period. The Company's current liabilities at March 31, 2000 consist of
its margin account payable of approximately $722,000 and accounts payable of
approximately $51,000. At March 31, 1999, the Company's current liabilities
consisted of accounts payable of approximately $290,000 and a note payable to a
former officer and director of $41,000. This note was canceled through the
issuance of stock in 1999. Certain of the accounts payable were written off and
some were satisfied through the issuance of the Company's common stock.
Total shareholder equity was increased from ($330,626) at March 31, 1999
to $752,124 at March 31, 2000. This was due to the acquisition of MSC.
Liquidity and Capital Resources
As of March 31, 2000, the Company had working capital of $748,428
consisting of $1,553,846 in current assets and $805,418 in current liabilities.
The Company had negative working capital of ($330,626) at March 31, 1999
consisting of $1,061 in current assets and $331,687 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
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.
<PAGE>
Effect of Inflation
Inflation did not have any significant effect on the operations of the
Company during the three months ended March 31, 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, and 4 are Inapplicable
Item 5. Other Information.
The Company's President, Shahram Khial, Ph.D., resigned effective May 15,
2000. Mr. Khial has been replaced by Charles Smith. Mr. Smith is a CPA in Texas
and will also act as CFO of the Company.
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 May 18, 2000 /s/ Charles Smith
------------------------------
Charles Smith, CEO, CFO
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
<PAGE>
TABLE OF CONTENTS
Page No.
--------
INDEPENDENT ACCOUNTANTS' REVIEW REPORT ................................ 1
FINANCIAL STATEMENTS
Consolidated Balance Sheet...................................... 2
Consolidated Statement of Income................................ 3
Consolidated Statement of Changes in Stockholders' Equity....... 4
Consolidated Statement of Cash Flows............................ 5 - 6
Notes to Consolidated Financial Statements...................... 7 - 13
<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 sheet of Stein's Holdings, Inc. as of
March 31, 2000, and the related statements of income, changes in stockholders'
equity and cash flows for the three 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
May 10, 2000
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,648
Trading securities 1,380,948
Loans receivable
Related entities 57,500
Other 2,250
Deferred tax asset 108,500
----------
TOTAL CURRENT ASSETS $1,553,846
PROPERTY AND EQUIPMENT 11,424
----------
TOTAL ASSETS $1,565,270
==========
See Accompanying Notes and Independent Accountants' Review Report.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 50,931
Accrued liabilities 1,350
Margin accounts payable 722,629
Note payable 25,000
Corporation income taxes payable 5,508
-----------
TOTAL CURRENT LIABILITIES $ 805,418
LONG-TERM LIABILITIES
Deferred income tax payable 1,200
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 6,528
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 - 4,401,166 shares 4,401
Paid in capital in excess of par value of stock 2,924,005
Retained earnings (deficit) (2,176,282)
-----------
TOTAL STOCKHOLDERS' EQUITY 752,124
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,565,270
===========
See Accompanying Notes and Independent Accountants' Review Report.
2
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
REVENUES
Realized and unrealized gains on trading securities $ 394,391
Dividends, interest and other 686
----------
TOTAL REVENUES $ 395,077
COSTS AND EXPENSES
Loss on worthless subsidiary 195,657
General and administrative expenses 147,907
Interest expense 5,101
----------
TOTAL COSTS AND EXPENSES 348,665
----------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 46,412
INCOME TAXES 11,322
----------
INCOME BEFORE MINORITY INTEREST 35,090
MINORITY INTEREST IN (LOSS) OF SUBSIDIARY 32,421
----------
NET INCOME $ 67,511
==========
NET INCOME PER COMMON SHARE $ .015
==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES 4,401,166
==========
See Accompanying Notes and Independent Accountants' Review Report.
3
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Paid in
Common stock Capital in Retained
--------------------------------- Excess of Earnings
Shares Amount Par Value (Deficit)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 2000 4,401,166 $ 4,401 $ 2,924,005 $(2,243,793)
NET INCOME FOR THE
THREE MONTHS ENDED
MARCH 31, 2000 0 0 0 67,511
----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2000 4,401,166 $ 4,401 $ 2,924,005 $(2,176,282)
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
4
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 67,511
Adjustments to reconcile net income to net cash
(used) by operating activities:
Depreciation 1,041
Minority interest in (loss) of subsidiary (32,420)
Loss on investment in subsidiary 195,000
Changes in operating assets and liabilities:
Trading securities (987,061)
Accounts receivable 28,136
Deferred tax assets 11,587
Prepaid insurance 507
Accounts payable 18,273
Accrued liabilities (807)
Corporation income taxes payable 331
---------
NET CASH FLOWS (USED) BY OPERATING
ACTIVITIES $(697,902)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,000)
Increase in notes receivable (21,250)
---------
NET CASH FLOWS (USED) BY INVESTING
ACTIVITIES (23,250)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on margin accounts payable 722,629
---------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 722,629
---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 1,477
CASH AND CASH EQUIVALENTS,
JANUARY 1, 2000 3,171
---------
CASH AND CASH EQUIVALENTS,
MARCH 31, 2000 $ 4,648
=========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
5
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 5,101
=========
Taxes paid $ 0
=========
See Accompanying Notes and Independent Accountants' Review Report.
6
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(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.'s method of accounting for trading securities
requires that sales of securities be recorded on the "trade date" for the
stock transaction.
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.
7
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(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.
8
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Loss Per Share
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 March 31, 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 LOANS RECEIVABLE
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
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. 20,000
----------
$ 57,500
==========
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
See Accompanying Notes and Independent Accountants' Review Report.
9
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 4 PROPERTY AND EQUIPMENT (CONTINUED)
Computer hardware $ 12,841
Computer software 4,785
----------
17,626
Less accumulated depreciation 6,202
----------
Total property and equipment $ 11,424
==========
The depreciation expense for the three months ended March 31, 2000 is
$1,040.
NOTE 5 NOTE PAYABLE
The note payable is unsecured, bears interest at 10% and is due on demand.
NOTE 6 INCOME TAXES
Income from operations before income taxes $ 46,412
----------
The provision for income taxes is estimated as follows:
Currently payable $ 0
----------
Deferred $ 11,322
----------
Estimated tax $ 11,322
==========
A reconciliation of the provision for income taxes compared with
the amounts at the U.S. Federal statutory rate was as follows:
Tax at U.S. Federal statutory income
tax rate $ 11,322
==========
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: $ 108,500
==========
The net deferred tax liability is: $ 1,200
==========
Temporary differences that give rise to deferred tax assets and
liabilities included the following:
See Accompanying Notes and Independent Accountants' Review Report.
10
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 6 INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
Deferred Tax
------------------------------
Assets Liabilities
--------- ---------
<S> <C> <C>
Net operating loss $ 217,000 $ 0
Property and equipment related 0 1,200
--------- ---------
217,000 1,200
Less valuation allowance 108,500 0
--------- ---------
Total deferred taxes $ 108,500 $ 1,200
========= =========
Balance, January 1, 2000 $ 120,500
Applied to three months ended March 31, 2000 (12,000)
---------
Balance, March 31, 2000 $ 108,500
=========
</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 $232,072 was used to
reduce the March 31, 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 three months ended March 31,
2000 of $5,101.
NOTE 10 RENT
The company rents its facilities on a month to month basis from an
affiliated company. The rent expense for the three months ended March 31,
2000 was $11,322.
NOTE 11 INSURANCE
The company does not carry liability or worker's compensation insurance.
See Accompanying Notes and Independent Accountants' Review Report.
11
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
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 three months ended March 31, 2000 are as follows:
<TABLE>
<CAPTION>
Stein's 20/20 Web
Holdings, Inc. Design, Inc.
-------------- ------------
<S> <C> <C>
Net sales $ 395,077 $ 0
Income from
operations 256,512 (210,100)
Assets 1,565,071 199
Capital expenditures 2,000 0
A reconciliation from the segment information to the consolidated balances
for income from operations and assets is set forth below:
Segment income from operations $ 46,412
Consolidated income from operations 46,412
Segment assets 1,565,270
Consolidated total assets 1,565,270
</TABLE>
NOTE 13 STOCK OPTIONS
The company does not have any stock options outstanding at March 31, 2000.
See Accompanying Notes and Independent Accountants' Review Report.
12
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(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 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of March 31, 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.
13
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
BALANCE SHEETS
(unaudited)
ASSETS
Current Assets March 31, 1999 December 31, 1998
- -------------- -------------- -----------------
Aristocrat Mutual
Fund (note 8) 0 500,000
Inventory (Notes
1 and 7) 1,061 3,101,061
Total Current
Assets 1,061 3,601,061
--------- ---------
Investment in Stock
(Note 5) 0 0
--------- ---------
Other Assets
Aristocrat Mutual Fund
(Note 8) 0 1,500,000
--------- ---------
Total Assets 1,061 5,101,061
--------- ---------
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
BALANCE SHEETS
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities March 31, 1999 December 31, 1998
- ------------------- -------------- -----------------
Accounts Payable 290,687 290,687
Notes Payable (Note 9) 41,000 41,000
Total Current Liabilities 331,687 331,687
---------- ----------
Stockholders' Equity
Convertible preferred stock: 10,000,000
Shares authorized at $10.00 stated
value per share, issued and
outstanding no shares at
March 31, 1999, 510,000 shares
at December 31, 1998 0 5,100,000
Common stock - 50,000,000 shares authorized
at $.001 per share par value; issued and
outstanding 21,375,105 shares at
March 31, 1999 and 8,875,105 at
December 31, 1997 21,375 8,875
Paid in capital (Note 2) 1,155,385 1,167,885
Deficit accumulated during the
Development stage (1,507,386) (1,507,386)
---------- ----------
Total Stockholders' Equity
(Deficit) (330,626) 4,769,374
---------- ----------
Total Liabilities and
Stockholders' Equity 1,061 5,101,061
---------- ----------
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
For the Three
Months Ended
March 31,
-------------
1999 1998
----- -----
Revenue: 0 0
----- -----
Operating
Expenses:
Selling, general and
Administrative expenses 0 0
Depreciation 0 0
Amortization 0 0
----- -----
Total Operating Expenses: 0 0
----- -----
Net Income 0 0
----- -----
Per share calculations are nil per share
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR PERIOD FROM INCEPTION (NOVEMBER 3, 1986) TO MARCH 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the Total
----------------- Paid in Development Stockholders'
Issued Amount Capital Stage Equity(Deficit)
------ ------ ------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Shares of common
stock issued
in November 1986
in exchange for
cash ($.08 per
share):
Officers and
directors 75,000 75 5,925 -- 6,000
Related
parties 5,000 5 395 -- 400
Net loss for
period -- -- -- (163) (163)
-------- -------- -------- -------- --------
Balance at
December 31,
1986 80,000 80 6,320 (163) 6,237
Shares of common
Stock issued in
public stock
offering at $1.00
per share in
September 1987
(net of offering
costs of
$66,512) 201,000 201 134,287 -- 134,488
Shares of common
Stock issued in
October 1987
for services in
connection with
public stock
offering 750,000 750 (750) -- --
Net Loss for
the year -- -- -- (3,128) (3,128)
-------- -------- -------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Balance at
December 31,
1987 1,031,000 1,031 139,857 (3,291) 137,597
Net Loss for
the year -- -- -- (137,557) (137,557)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1988 1,031,000 1,031 139,857 (140,848) 40
Shares of
common stock
issued in
April 1989
for cash $.22
per share) 45,000 45 9,955 -- 10,000
Shares of
common stock
issued in
July 1989 for
services 760,000 760 (760) -- --
Net Loss for
the year -- -- -- (9,745) (9,745)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1989 1,836,000 1,836 149,052 (150,593) 292
Shares of
common stock
issued in
January 1990
for services 3,155,000 3,155 (3,155) -- --
Net Loss for
the year -- -- -- (500) (500)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1990 4,991,000 4,991 145,897 (151,096) (208)
Net Loss for
the year -- -- -- (4,363) (4,363)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1991 4,991,000 4,991 145,897 (155,459) (4,571)
Shares of common
Stock issued in
August 1992 to
Related parties
For consulting
Services ($.01
Per share) 1,470,000 1,470 18,830 -- 20,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares of common
Stock issued in
August 1992
in exchange
for unimproved
real estate
($.41 per
share) 6,400,000 6,400 2,627,395 -- 2,633,795
Net Loss for
the year -- -- -- (59,049) (59,049)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1992 12,861,000 12,861 2,791,822 (214,508) 2,590,175
---------- ---------- ---------- ---------- ----------
Shares of
common stock
issued March
30, 1993 in
exchange for
services 250,000 250 (250) -- --
Net loss for
the year -- -- -- 0 0
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1993 13,111,000 13,111 2,791,572 (214,508) 2,590,175
Net (loss)
for the year -- -- -- (1,011,466) (1,011,466)
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1994 13,111,000 13,111 2,791,572 (1,225,974) 1,578,709
Shares of common
Stock issued
October 1,
1995 in exchange
for services 1,850,000 1,850 (1,850) -- --
Net Loss for
the year -- -- -- 0 0
---------- ---------- ---------- ---------- ----------
Balance at
December 31,
1995 14,961,000 14,961 2,789,722 (1,225,974) 1,578,709
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deficit
Accumulated
During Total
Common Stock Preferred Stock Paid In Development Stockholders
Shares Amount Issued Amount Capital Stage Equity(Deficit)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1995 14,961,000 14,961 2,789,922 (1,225,974) 1,578,709
Return of
Company shares
In exchange for
Investment shares
distributed
to
shareholders (6,400,000) (6,400) (1,573,600) -- (1,580,000)
---------- ---------- ---------- ---------- ----------
8,561,000 8,561 1,216,122 (1,225,974) (1,291)
Reverse 10
for 1 split (7,704,900) (7,705) 7,705 -- --
---------- ---------- ---------- ---------- ----------
856,100 856 1,223,827 (1,225,974) (1,291)
Issuance of
common stock
for
acquisition
of Telemall
Network,
Inc. 2,933,000 2,933 (55,942) -- (53,009)
Issuance of
Common Stock
For cash 5,086,005 5,086 -- -- 5,086
Preferred
stock issued
by TeleMall
Network,
Inc. 510,000 5,100,000 5,100,000
Net Loss
for the year (281,412) (281,412)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance,
Dec. 31,
1996 8,875,105 8,875 510,000 5,100,000 1,167,885 (1,507,386) 4,769,374
Net Profit for
Year 1997 -- -- -- -- -- -- --
Balance, December
31, 1997 8,875,105 8,875 510,000 5,100,000 1,167,885 (1,507,386) 4,769,374
Net Profit for
year 1998 -- -- -- -- -- -- --
Balance, Dec
31, 1998 8,875,105 8,875 510,000 5,100,000 1,167,885 (1,507,386) 4,769,374
Cancellation of
Preferred Shares (510,000) (5,100,000) (5,100,000)
Issuance of Common
Shares 12,500,000 12,500 (12,500)
Net profit for the
Period ended March
31, 1999 -- -- -- -- -- -- --
Balance, March
31, 1999 21,375,105 21,375 0 0 1,155,385 (1,507,386) (330,626)
</TABLE>
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended
March 31,
--------------------------
1999 1998
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) 0 0
Adjustments to reconcile net (loss) to
net cash (used) by operating activities
NET CASH (USED) BY OPERATING ACTIVITIES 0 0
----- -----
CASH PROVIDED (USED) IN INVESTING ACTIVITIES 0 0
NET CASH PROVIDED FROM FINANCING ACTIVITIES 0 0
NET INCREASE (DECREASE) IN CASH 0 0
----- -----
CASH BALANCE, BEGINNING OF PERIOD 0 0
----- -----
CASH BALANCE, END OF PERIOD 0 0
----- -----
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Las Vegas Ventures, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
Note 1 Summary of Significant Accounting Policies:
This summary of significant accounting policies of TELEMALL COMMUNICATIONS, INC.
(Telemall or the "Company"), formerly Vegas Ventures, Inc., a development stage
Company, is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and objectivity.
Management represents that these financial statements and the accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Organization and Business Nature:
The Company was incorporated in the State of Nevada on November 3, 1996 as
Ed-Phills, Inc. Since inception, the Company has been engaged in organizational
activities. The Corporation changed its name from Ed- Phills, Inc. on August 24,
1992 to Vegas Ventures, Inc. Vegas Ventures, Inc. changed its name to TeleMall
Communications, Inc., effective June 4, 1996.
(b) Inventory:
Inventory at December 31, 1998 is stated at the lower cost or market and
includes $3,100,000 of artwork, stored in a warehouse in Jenkintown,
Pennsylvania. The Company never received proper title to the inventory and the
Board of Directors cancelled the preferred stock issued for the artwork,
effective March 1, 1999 (see note 7).
(c) Fiscal Year:
The Company operates on a calendar year basis.
(d) Basis of Operation:
The Company prepares its financial statements and federal income taxes on the
accrual basis of accounting.
Note 2 Acquisitions:
Effective June 4, 1996 the Company exchanged 2,933,000 shares of its common
stock for all the outstanding common shares of TeleMall Network Incorporated
("TNI"). TNI was incorporated in Nevada on May 12, 1994 and its main business
activity is merchandising products over television.
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(unaudited)
(continued)
Note 3 Options, Warrants and Preferred Stock Conversion Features:
There are no options or warrants outstanding against the common stock of the
Company. The convertible preferred stock provides for the exchange of one share
of preferred stock for two shares of common stock of TeleMall Communications,
Inc. at the option of the shareholders. The conversion option provides for
redemption release stages over time with no expiration date as to the conversion
option.
Note 4 Divided Policy:
The Company has not yet adopted a policy regarding dividends.
Note 5 Investment in Stock:
On March 31, 1992, the Company entered into an agreement to acquire a 5/6
interest in three parcels of unimproved real property located in the Las Vegas,
Nevada metropolitan area in exchange for 6,400,000 shares of the Company's
common stock. The three parcels were appraised at $3,157,555 for the 5/6
interest and were subject to two loans totaling $466,635 plus accrued interest
of $35,541, and unpaid property taxes of $9,862.
On August 16, 1993 the Company filed for relief for Chapter XI Federal
Bankruptcy, the United States Bankruptcy Court, District of Nevada, case number
BK-S- 93-21874-LBR.
Effective January 4, 1994 the Company was successful in providing a plan of
reorganization which primarily provided for the sale of the 5/6 interest in the
three parcels of unimproved real estate for 395,000 shares of preferred voting
stock of C.E.C., a public company. The buyer of the vacant parcels also assumed
the debt associated with the unimproved parcels.
The Company was subsequently successful in obtaining a dismissal from the
Chapter XI proceedings.
In May 1996 the 395,000 shares of C.E.C. stock held by the Company was exchanged
for the 6,400,000 shares originally issued for the vacant parcels. The Company
then cancelled all of the 6,400,000 shares.
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
(continued)
Note 6 Common Stock:
On August 24, 1992, the Company approved a 10 to 1 reverse stock split. All
references in the Financial Statements to shares of common stock and per share
data reflect the August 24, 1992 changes.
In May, 1996 the Company approved a 10 to 1 reverse split and the corresponding
effect is reflected in the current period in order to relate to the stock
activity for the pre and post acquisition transaction.
The Company issued an additional 12,500,000 shares of stock for services
rendered during the first quarter of 1999.
Note 7 Artwork:
Inventory of Len Garon Artwork was acquired from Cable Print Network Marketing
in exchange for 310,000 shares of TeleMall Network, Inc. Redeemable Convertible
Preferred Stock valued @ $10/share. Effective March 1, 1999 the Company=s Board
of Directors cancelled the outstanding shares as the title to the artwork was
never perfected in the name of the Company.
Note 8 Securities:
Investment in Aristocrat Endeavor Fund consists of 100,000 shares at $20/share
which was exchanged for 200,000 shares of TeleMall Network, Inc. Convertible
Preferred Stock valued @ $10/share.
Effective March 1, 1999 the Company=s Board of Directors cancelled the issuance
of the Preferred Stock as the Company never received the shares to the
Aristocrat Endeavor Fund in its name.
Note 9 Notes Payable:
Officer and director - demand note $16,000
Officer and director - demand note 25,000
Total Notes Payable $41,000
<PAGE>
TELEMALL COMMUNICATIONS, INC.
(formerly Vegas Ventures, Inc.)
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
(continued)
Note 10 Income Taxes:
At December 31, 1997, the Company has federal operating loss carryforward of
$1,507,386 for financial accounting and federal income tax purposes. Utilization
of the net operating loss in any taxable year during the carryforward period may
be subject to an annual limitation due to the ownership change limitations
imposed by the tax law.
The net operating losses will expire at various dates commencing in the year
2006 through 2011.
The deferred tax asset consists of the future benefit of net operating loss
carryforwards. A valuation allowance limits the recognition of the benefit of
deferred tax assets until realization is reasonably assured by future
profitability.
The following is a summary of deferred taxes:
Deferred asset 417,145
Valuation allowance (417,145)
Total 0
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,648
<SECURITIES> 1,380,948
<RECEIVABLES> 59,750
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,553,846
<PP&E> 17,626
<DEPRECIATION> 6,202
<TOTAL-ASSETS> 1,565,270
<CURRENT-LIABILITIES> 805,418
<BONDS> 0
0
0
<COMMON> 4,401
<OTHER-SE> 747,723
<TOTAL-LIABILITY-AND-EQUITY> 1,565,270
<SALES> 0
<TOTAL-REVENUES> 395,077
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 348,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,101
<INCOME-PRETAX> 46,412
<INCOME-TAX> 11,322
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,511
<EPS-BASIC> .015
<EPS-DILUTED> .015
</TABLE>
