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, 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 September 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.
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The accompanying statements should be read in conjunction with the audited
financial statements for the year ended December 31, 1999. In the opinion of
management, all adjustments (consisting only of normal occurring accruals)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the nine months ended September 30,
2000 are not necessarily indicative of results that may be expected for the year
ending December 31, 2000. The financial statements are presented on the accrual
basis.
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 Company'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
("Stein's Bakery"), a wholesale and retail bakery operation located in Dallas,
Texas. As of the date of this report, the proposed acquisition of Stein's Bakery
has not occurred and most likely will not occur. Stein's Bakery filed for
protection under Chapter 11 of the United States Bankruptcy Code on October 13,
2000. The president of Stein's Bakery is Randy Sutton, former CEO and director
of the Company. In September, 1999, the Company lent $37,500 to the Bakery for
the purchase of certain equipment. The Bakery agreed to make payments of
interest only until September, 2000 when all accrued interest and unpaid
principal are due. No payments were ever made and it is unlikely that the
Company will be repaid this loan.
The Company has been investing its capital in the stock market 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.
<PAGE>
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 presently seeking a business to acquire. 20/20 Web lent $195,000 to Stein's
Bakery in December, 1999 and has been attempting to secure repayment of the
loan. Given the bankruptcy filing of Stein's Bakery, it is doubtful that the
loan will be repaid or when it might be repaid. 20/20 Web wrote off the debt
during the first quarter of 2000.
During the quarter ended September 30, 2000, the Company acquired 80% of the
issued and outstanding shares of Universal Services and Acquisitions, Inc.
("USI"), a Colorado corporation, in exchange for agreeing to pay the legal,
accounting and other fees necessary to make USI current under the reporting
obligations of the Securities Exchange Act of 1934. The Company intends to make
the necessary filings on behalf of USI and seek out suitable businesses to whom
sell its interest in USI. The Company may also seek suitable merger candidates
and merge USI with another company. At the present time, the Company has no
candidates in mind with whom to sell or merge USI.
Results of Operations
The Company realized a net loss of ($166,470) from operations for the three
month period ended September 30, 2000 compared to a gain of $36,962 for the
three month period ended September 30, 1999. For the three month period ended
September 30, 2000, the Company had revenues of ($70,013), composed primarily of
unrealized losses on the securities it owns. During this period, the Company's
subsidiaries had no revenues, compared to no revenues during the previous year's
period. The subsidiaries' revenues and expenses are consolidated and reported in
the Company's consolidated financial statements contained herein. The Company
had revenues of $111,222 for the three month period ended September 30, 1999.
The net loss per share for the three month period ended September 30, 2000 was
($.04) per share compared to a net gain per share of $.01 for the three month
period ended September 30, 1999.
The Company realized a net loss of ($356,298) for the nine months ended
September 30, 2000 compared to a net loss of ($284,610) for the nine months
ended September 30, 1999. The Company had revenues of $171,318 for the nine
month period ended September 30, 2000 compared to revenues of ($93,050) for the
nine month period ended September 30, 1999. The net loss per share for the nine
month period ended September 30, 2000 was ($.08) per share compared to a net
loss per share of ($.11) for the nine month period ended September 30, 1999.
The Company had costs and expenses of $150,219 for the three month period ended
September 30, 2000 compared to costs and expenses of $70,790 for the three month
period ended September 30, 1999. The Company's expenses consist of salaries,
professional fees, rent expense and interest expense along with general office
expenses.
The Company's assets at September 30, 2000 were $678,278 compared to assets of
approximately $735,000 at September 30, 1999. The difference is due to the
market price fluctuation of securities owned by the Company. The Company's
liabilities at September 30, 2000 were approximately $355,000 compared to
liabilities of approximately $42,000 at September 30, 1999. Much of the
difference between this two periods is due to the Company's margin account
payable. The largest liability of the Company at September 30, 2000 is its
margin account payable of approximately $261,000 compared to no margin account
payable for the prior year's period. The Company's current liabilities at
September 30, 2000 consist of its margin account payable of approximately
<PAGE>
$261,000 and accounts payable of approximately $73,000. At September 30, 1999,
the Company's current liabilities consisted of a note payable of $25,000 and
corporation income taxes of approximately $14,000.
Total shareholder equity decreased from $653,071 at September 30, 1999 to
$328,315 at September 30, 2000.
Liquidity and Capital Resources
As of September 30, 2000, the Company had working capital of approximately
$275,000 consisting of $632,992 in current assets and $355,449 in current
liabilities. The Company had working capital of approximately $680,000 at
September 30, 1999 consisting of $722,606 in current assets and $39,795 in
current liabilities. The Company has adequate working capital for its current
operations. if the Company is presented with other business opportunities, it
may have to raise additional capital, of which there can be no assurance that it
will be successful in locating other sources of capital or financing.
The Company had an agreement to acquire Stein's Bakery in Lewisville, Texas
which given Stein's Bakery filing a petition under Chapter 11 of the United
States Bankruptcy Code makes it highly probable that this acquisition will not
be consummated. The Company intends to 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 September 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 and 4 are Inapplicable
Item 5. Other Matters.
Resignation of Officers and Directors.
On October 27, 2000, the Company accepted the resignation of Irving M. Einhorn,
Chairman of the Board. Mr. Einhorn resigned due to the lack of time to deal with
the affairs of the Company. The Company appointed Mehrdad Alborz, an attorney in
Los Angeles, to replace Mr. Einhorn until the annual meeting of shareholders and
until his successor is elected and qualified. Mr. Alborz is a sole practitioner.
Item No. 6 - Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed during the three months ended September
30, 2000.
(b) Exhibits
99 Financial Statements for the periods ended September 30, 2000 and 1999 27
Financial Data Schedule
<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.
Date November 8, 2000 /s/ Charles Smith
---------------------------------
Charles Smith, CEO, CFO
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 - 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 balance sheets of Stein's Holdings, Inc. as of
September 30, 2000 and 1999, and the related 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 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
October 16, 2000
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 257 $ 204,052
Trading securities 427,261 428,596
Notes receivable 22,200 38,500
Loans receivable 10,774 0
Corporation income tax refund 0 9,458
Deferred tax asset 172,500 42,000
----------- -----------
TOTAL CURRENT ASSETS 632,992 722,606
PROPERTY AND EQUIPMENT 10,094 12,245
OTHER ASSETS
Goodwill 35,192 0
----------- -----------
TOTAL ASSETS $ 678,278 $ 734,851
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
----------- -----------
CURRENT LIABILITIES
Accounts payable $ 72,802 $ 388
Accrued liabilities 2,100 0
Margin accounts payable 260,547 0
Note payable 20,000 25,000
Corporation income taxes payable 0 14,407
----------- -----------
TOTAL CURRENT LIABILITIES 355,449 39,795
----------- -----------
LONG-TERM LIABILITIES
Deferred income tax payable 1,200 2,098
----------- -----------
MINORITY INTEREST (DEFICIENCY) IN
CONSOLIDATED SUBSIDIARY (6,686) 39,887
----------- -----------
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 September 30, 2000 4,401 0
4,379,230 shares at September 30, 1999 0 4,379
Paid in capital in excess of par value of stock 2,924,005 2,568,508
Retained earnings (deficit) (2,600,091) (1,919,816)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 328,315 653,071
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 678,278 $ 734,851
=========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
2
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 2000 1999 1999
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Realized and unrealized gains (losses) on trading securities $ (72,213) $ 167,832 $111,222 $ (98,677)
Dividends and interest 2,200 3,486 0 5,627
----------- ----------- --------- ---------
TOTAL REVENUES (70,013) 171,318 111,222 (93,050)
----------- ----------- --------- ---------
COSTS AND EXPENSES
Loss on worthless subsidiary 0 195,657 0 0
General and administrative expenses 140,360 415,057 70,790 238,053
Interest expense 9,859 15,960 0 1,532
----------- ----------- --------- ---------
TOTAL COSTS AND EXPENSES 150,219 626,674 70,790 239,585
----------- ----------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES
(REFUND) AND MINORITY INTEREST (220,232) (455,356) 40,432 (332,635)
INCOME TAXES (REFUND) (42,000) (53,424) 5,000 (42,000)
----------- ----------- --------- ---------
INCOME (LOSS) BEFORE MINORITY INTEREST (178,232) (401,932) 35,432 (290,635)
MINORITY INTEREST IN (LOSS) OF SUBSIDIARY 11,762 45,634 1,530 6,025
----------- ----------- --------- ---------
NET INCOME (LOSS) $ (166,470) $ (356,298) $ 36,962 $(284,610)
=========== =========== ========= =========
NET INCOME (LOSS) PER COMMON SHARE
Basic and diluted $ (.04) $ (.08) $ .01 $ (.11)
=========== =========== ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic and diluted 4,401,166 4,401,166 2,478,605 2,478,605
=========== =========== ========= =========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
3
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 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
</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 NINE MONTHS ENDED SEPTEMBER 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 (LOSS) FOR THE YEAR
ENDED DECEMBER 31, 1999 0 0 0 0 0 (241,339) 0
--------- --------- --------- --------- ----------- ----------- -----------
BALANCE DECEMBER 31, 1999 0 0 4,401,166 4,401 2,924,005 (2,243,793) 0
NET (LOSS) FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, 2000 0 0 0 0 0 (356,298) 0
--------- --------- --------- --------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 2000 0 $ 0 4,401,166 $ 4,401 $ 2,924,005 $(2,600,091) $ 0
========= ========= ========= ========= =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
5
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(356,298) $(284,610)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Depreciation 3,122 1,366
Minority interest in (loss) of subsidiary (45,634) (6,025)
Loss on investment in subsidiary 195,000 0
Common stock issued for services 0 20,000
Changes in operating assets and liabilities:
Trading securities (33,374) 263,202
Corporation income tax refund 0 9,458
Accounts receivable 28,136 0
Deferred tax assets (52,413) (42,000)
Prepaid insurance 507 0
Accounts payable 67,508 (31,632)
Accrued liabilities (57) (1,197)
Corporation income taxes payable (5,177) 0
--------- ---------
NET CASH FLOWS (USED) BY OPERATING
ACTIVITIES (198,680) (71,438)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,751) (7,469)
Changes in notes and loans receivable 5,527 (38,500)
Acquisition of subsidiary (62,557) 0
--------- ---------
NET CASH FLOWS (USED) BY INVESTING
ACTIVITIES (59,781) (45,969)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on margin accounts payable 260,547 (40,168)
Proceeds from issuance of common stock 0 320,140
Repayment of note payable (5,000) 0
--------- ---------
NET CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES 255,547 279,972
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,914) 162,565
See Accompanying Notes and Independent Accountants' Review Report.
6
<PAGE>
STEIN'S HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
------- --------
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD $ 3,171 $ 41,487
------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 257 $204,052
======= ========
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $13,860 $ 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
SEPTEMBER 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. and
Universal Services and Acquisitions, Inc. are in the business of managing
and acquiring subsidiary companies.
Principles of Consolidation
The consolidated financial statements include the accounts of Stein's
Holdings, Inc. and its 80% owned subsidiaries, 20/20 Web Design, Inc. and
Universal Services and Acquisitions, 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
SEPTEMBER 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
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net (Loss) Per Share (Continued)
dividing net income (loss) 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, 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 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 and wrote the loan off as uncollectible $ 0 $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. As of September 30, 2000, the
company has not elected to convert the loan into stock 22,200 0
Universal Services and Acquisitions, Inc.
Open loan, no interest, collateral or due date 0 1,000
------- -------
$22,200 $38,500
======= =======
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
10
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 8,283 3,381
------- -------
Total property and equipment $10,094 12,245
======= =======
The depreciation expense for the nine months ended September 30, 2000 and
1999 was $3,122 and $1,366 respectively.
NOTE 5 GOODWILL
Goodwill represents the excess of the purchase price of Universal Services
and Acquisitions, Inc. over the fair value of the company's net assets and
will be amortized on a straight-line basis over forty years from September
30, 2000.
NOTE 6 NOTE PAYABLE
The note payable is unsecured, bears interest at 10% and is due on demand.
NOTE 7 INCOME TAXES
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
(Loss) from operations before income taxes $(455,356) $(332,635)
--------- ---------
The provision for income taxes is estimated as follows:
Currently payable $ 0 $ 0
--------- ---------
Deferred payable $ 1,200 $ 0
--------- ---------
Deferred asset $ 172,500 $ (42,000)
--------- ---------
Estimated tax (refund) $ (53,424) $ (42,000)
========= =========
A reconciliation of the provision for income taxes
compared with the amounts at the U.S. Federal statutory
income tax rate was as follows:
Tax (refund) at U.S. Federal statutory income
tax rate $ (53,424) $ (42,000)
========= =========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
11
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 7 INCOME TAXES (CONTINUED)
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: $172,500 $42,000
======== =======
The net deferred tax liability is: $ 1,200 $ 2,098
======== =======
Temporary differences that give rise to deferred tax assets and
liabilities included the following:
Deferred Tax
at September 30, 2000
---------------------------
Assets Liabilities
-------- -----------
Net operating and capital losses carryforwards $345,000 $ 0
Property and equipment related 0 1,200
-------- ------
345,000 1,200
Less valuation allowance 172,500 0
-------- ------
Total deferred taxes $172,500 $1,200
======== ======
Balance, January 1, 2000 $120,500
Applied to nine months ended September 30, 2000 52,000
--------
Balance, September 30, 2000 $172,500
========
NOTE 8 NET OPERATING LOSS CARRYFORWARD
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 carried forward until the year 2019.
NOTE 9 CONVERTIBLE PREFERRED STOCK PREFERENCES
No rights or preferences have been assigned to the preferred stock except
for the convertible privilege.
NOTE 10 INTEREST
The company incurred interest expense for the nine months ended September
30, 2000 and 1999 of $9,859 and $1,532, respectively.
See Accompanying Notes and Independent Accountants' Review Report.
12
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 11 RENT
The company rents its facilities on a month to month basis. The rent
expense for the nine months ended September 30, 2000 and 1999 was $29,629
and $20,000, respectively.
NOTE 12 INSURANCE
The company does not carry liability or worker's compensation insurance.
NOTE 13 SEGMENT REPORTING
The company has two reportable segments:
Stein's Holdings, Inc. - Trading securities.
20/20 Web Design, Inc. and Universal Services and Acquisitions, Inc.
- 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 nine months ended September 30, 2000 are as
follows:
20/20 Web Design, Inc.
Stein's and Universal Services
Holdings, Inc. and Acquisitions, Inc.
-------------- ----------------------
Net sales $ 167,833 $ 0
(Loss) from continuing operations (226,259) (32,515)
Assets 678,189 89
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 $(258,774)
Consolidated (loss) from continuing operations (258,774)
Segment assets 678,278
Consolidated total assets 678,278
See Accompanying Notes and Independent Accountants' Review Report.
13
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 14 STOCK OPTIONS
The company does not have any stock options outstanding at September 30,
2000.
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 September 30, 1999, the company had $203,785 deposited in one banking
institution. Only $100,000 of the balance was insured by the Federal
Deposit Insurance Corporation.
NOTE 17 BUSINESS COMBINATION - UNIVERSAL SERVICES AND ACQUISITIONS, INC.
On September 30, 2000, the company completed its acquisition of Universal
Services and Acquisitions, Inc. (Universal). Universal is in the business
of managing and acquiring subsidiary companies. The acquisition, recorded
under the purchase method of accounting, included the purchase of
8,930,000 shares of stock for $29,000 plus assumed liabilities. A portion
of the purchase price has been allocated to assets acquired and
liabilities assumed based on estimated fair market value at the date of
acquisition with the balance allocated to goodwill.
The following unaudited pro forma summary presents information as if
Universal had been acquired as of the beginning of Stein's Holding, Inc.
fiscal years 1999 and 1998. The pro forma amounts include certain
adjustments, primarily to recognize amortization, and do not reflect any
benefits from economies which might be achieved from combining operations.
The pro forma information does not necessarily reflect the actual results
that would have occurred nor is it necessarily indicative of future
results of operations of the combined companies:
<TABLE>
<CAPTION>
Nine Months Ended
1999 1998 September 30, 2000
---------- ---------- ------------------
<S> <C> <C> <C>
Revenues $ (3,417) $ 0 $ 171,318
Net income (loss) after
Amortization of goodwill (242,219) (880) (356,958)
Earnings (loss) per share
Basic and diluted $ (.06) $(.00) $ (.08)
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
14
<PAGE>
STEIN'S HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
NOTE 18 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 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 19 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of September 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.
15
