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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 1999
OR
__ Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to
Commission File Number 0-18707
TBM HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
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Florida 59-2824411
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
136 Main Street, Westport, Connecticut 06880
(Address of principal executive offices) (zip code)
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(203) 227-6140
(Registrant's telephone number, including area code)
(Former name, former address and formal fiscal year, if changed
since last report)
Indicate by check mark whether the issuer: (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 for 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
The number of shares outstanding of the issuer's Common Stock, $.001 par value
per share, as of November 10, 1999, was 2,570,224, excluding 516 contingently
issuable shares held by an escrow agent.
Transitional Small Business Disclosure Format (check one): Yes No X
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INDEX
TBM HOLDINGS, INC.
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Page
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
as of September 30, 1999, and December 31, 1998................................1
Consolidated Statements of Operations for the three months
ended September 30, 1999, and the thirteen weeks ended
September 27, 1998; and the nine months ended September 30,
1999; and the thirty-nine weeks ended September 27,
1999...........................................................................2
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1999, and the
thirty-nine weeks ended September 27, 1998.....................................3
Notes to Consolidated Financial Statements.....................................4
Item 2. Plan of Operation.............................................................6
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders...........................7
Item 6. Exhibits and Reports on Form 8-K..............................................7
Signature........................................................................................8
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
TBM HOLDINGS, INC.
CONDENSED BALANCE SHEETS
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SEPTEMBER 30 DECEMBER 31
1999 1998
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(Unaudited)
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ASSETS
CURRENT ASSETS
Cash 12,043,004 1,652
Other current expenses 16,072 --
----------------------------------
Total current assets 12,059,076 1,652
FIXED ASSETS
Property and equipment, net 6,515 2,023
OTHER ASSETS
Security deposits 1,800 --
----------------------------------
TOTAL ASSETS 12,067,391 3,675
==================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable 1,309 363,999
Corporation taxes payable 11,827 2,007
Demand loans payable to stockholders -- 517,865
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Total current liabilities 13,136 883,871
OTHER LIABILITIES
Legal settlement 80,000 80,000
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Total liabilities 93,136 963,871
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Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock; $.001 par value; 15,000,000 shares authorized;
Series A-1 preferred stock; 10,000,000 shares authorized;
0 and 2,394,130 shares issued and outstanding -- 2,394
Common Stock; $.001 par value; 10,000,000 shares authorized;
2,568,000 and 9,324,738 shares issued and outstanding 2,568 9,325
Additional paid - in capital 24,376,392 11,573,570
Accumulated deficit (12,404,705) (12,369,821)
Treasury stock - 0 and 240,500 common shares, at cost -- (175,664)
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Total stockholders' equity (deficit) 11,974,255 (960,196)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 12,067,391 3,675
==================================
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CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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THREE MONTHS THIRTEEN NINE MONTHS THIRTY-NINE
ENDED WEEKS ENDED ENDED WEEKS ENDED
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 30, SEPTEMBER 27,
1999 1998 1999 1998
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RESULTS OF CONTINUING OPERATIONS:
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Selling, general and
Administrative expenses 180,094 - 189,347 -
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Loss from operations (180,094) - (189,347) -
Investment income 149,029 186,307
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Loss from continuing operations (31,065) - (3,040) -
Loss from discontinued operations - (23,715) (31,844) (208,460)
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Net loss (31,065) (23,715) (34,884) (208,460)
=======================================================================
Loss per share:
Loss from continuing operations (0.01) - - -
Loss from discontinued
operations - (1.08) (0.03) (9.48)
-----------------------------------------------------------------------
Net loss (0.01) (1.08) (0.03) (9.48)
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Weighted average number of common
shares outstanding 2,568,000 22,000 1,012,111 22,000
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CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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NINE MONTHS THIRTY-NINE
ENDED WEEKS ENDED
SEPTEMBER 30, SEPTEMBER 27,
1999 1998
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Cash flows from operating activities:
Net loss (34,884) (208,460)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,023 616
Gain on forgiveness of debt (23,924)
Changes in:
Other current assets (16,072) 42,059
Other assets (1,800) --
Accounts payable (99,682) (30,182)
Corporation taxes payable 9,820 (2,798)
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Net cash used in operating activities (164,519) (198,765)
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Cash flows from investing activities:
Purchase of fixed assets (6,515)
-----------
Cash flows from financing activities:
Proceeds from issuance of common stock 12,730,000 --
Costs of issuance of common stock (517,614) --
Loans from stockholders -- 170,993
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Net cash provided by financing activities 12,212,386 170,993
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Net increase (decrease) in cash
and cash equivalents 12,041,352 (27,772)
Cash and cash equivalents, beginning of period 1,652 29,416
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Cash and cash equivalents, end of period 12,043,004 1,644
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TBM HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
NOTE A - BASIS OF PRESENTATION:
The accompanying unaudited condensed financial statements of TBM Holdings, Inc.
(the "Company") (formerly known as Specialty Retail Group, Inc.) have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-QSB.
With respect to the unaudited Condensed financial statements for the nine months
ended September 30, 1999 and the thirty-nine weeks ended September 27, 1998,
respectively, it is the Company's opinion that all necessary adjustments
(consisting of normal and recurring adjustments) have been included to present a
fair statement of results for the interim periods.
As discussed in Note D, the only current operations of the Company are related
to its plans to acquire a manufacturing business. On June 15, 1999, the Company
effected a 1:412.92 reverse stock split. This split has been given retroactive
effect throughout these financial statements.
These statements should be read in conjunction with the Company's financial
statements included in the Company's Annual Report on Form 10-KSB for the
transition period ended December 31, 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations promulgated by the Securities and Exchange
Commission.
NOTE B - FISCAL YEAR:
The Company previously adopted a 52/53 week fiscal year ending on the Sunday
closest to June 30. Fiscal year June 28, 1998 consisted of 52 weeks. The Company
changed its fiscal year to a twelve month reporting period and its year end to
December 31.
NOTE C - COMMITMENTS AND CONTINGENCIES:
(1) LEGAL SETTLEMENT - ISSUANCE OF COMMON STOCK:
In settlement of litigation the Company agreed to guarantee up to $160,000 for
any shortfall from $650,000 realized upon the sale by the holders of 1,574
shares of the Company's common stock issued in the settlement. The Company may
satisfy the guarantee by a cash payment or issuance to the holders of 516 shares
of common stock currently being held by an escrow agent. In connection with the
agreement detailed in Note D, a former officer (who is also a shareholder)
assumed personal liability for any amounts which may be due that are excess of
the $80,000 accrued on the Company's balance sheet.
(2) LEASE COMMITMENTS:
The Company presently has no operating lease commitments. The Company currently
occupies office space on a month to month basis at $1,800 per month. Rent
expense totaled $7,200 for the nine months ended September 30, 1999 and $0 for
the thirty-nine weeks ended September 27, 1998.
4
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TBM HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(Unaudited)
NOTE D - STOCKHOLDERS' EQUITY
On June 15, 1999, the Company finalized an agreement whereby substantially all
of the Company's liabilities were paid, forgiven or converted to equity or stock
purchase options. In conjunction therewith, the Company effected a 1:412.92
reverse stock split (reducing its outstanding shares from 9,084,238 to 22,000),
changed its name from Specialty Retail Group, Inc. to TBM Holdings, Inc.,
dissolved its subsidiaries and revised its corporate articles of incorporation
and by-laws. Also, the Company completed a private placement of 2,546,000
restricted common shares at $5.00 per share for a total of $12,730,000. Expenses
related to the private placement of $517,614 result in net proceeds to the
Company of $12,212,386. It is the Company's plan to purchase a manufacturing
business and use the expertise of the Company's executives and consultants to
improve the operations and value of the business on a long-term basis.
As a result of the private placement, the federal net operating loss
carryforward in any one year will be severely limited in accordance with
Internal Revenue Code Section 382 regarding changes in ownership of more than
50%. As a result, any federal net operating loss carryforwards and the benefits
attributable to them will be insignificant.
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Item 2. Plan of Operation
On June 15, 1999, TBM Holdings, Inc., a Florida corporation (the
"Company"), completed a private placement of its Common Stock pursuant to which
the Company issued and sold 2,546,000 shares of Common Stock for aggregate
proceeds to the Company of $12,730,000 (the "Offering"). The Company intends to
use the net proceeds of the Offering to finance future business acquisitions of
one or more manufacturing companies in specifically targeted industries. Pending
an acquisition, the Company has invested the proceeds of the Offering with
Morgan Stanley & Company, as custodian, in short-term securities, money market
instruments and government securities.
Currently, the Company does not have an operating business and,
accordingly, does not have any revenues. The Company is solely engaged in
seeking an underperforming manufacturing company with approximately $50,000,000
to $250,000,000 in sales for possible acquisition. Upon an acquisition, the
Company intends to implement certain growth strategies to strengthen the
operation, performance and competitive position of the acquired company. Once an
initial company is acquired and operations and performance are improved, the
Company intends to acquire other companies in the same industry or complementary
manufacturing industries. As of the date hereof, the Company has not entered
into an agreement with any specific company. During the past three months, the
Company has engaged in preliminary discussions with numerous acquisition
candidates and has identified several potential candidates which fit the
Company's acquisition criteria. The Company is actively pursuing preliminary
discussions with such candidates. No assurance of success with respect to
these discussions, or the Company's efforts to identify and acquire a
manufacturing company, can be made.
The Company believes that its available cash, cash equivalents and
liquid investments will satisfy its cash requirements for its operations in the
next twelve months. Upon the identification of an acquisition candidate, the
Company may need to raise additional funds to consummate such acquisition. Until
an acquisition is consummated, the Company does not intend to conduct any
product research or development, purchase any plant or significant equipment or
make any significant changes in the number of employees.
The Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues other than interest
income. For the current fiscal year, the Company anticipates incurring a loss as
a result of expenses associated with reporting obligations pursuant to the
Securities Exchange Act of 1934, as amended, and expenses associated with
locating and evaluating acquisition candidates.
6
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Statements contained in this Form 10-QSB that are not purely historical
are forward-looking statements and are being provided in reliance upon the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements are made as of the date hereof and are based on
current management expectations and information available to the Company as of
such date. The Company assumes no obligation to update any forward-looking
statement. It is important to note that actual results could differ materially
from historical results or those contemplated in the forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties and may
include trend information.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
An Annual Meeting of Stockholders was held on July 15, 1999. The
following matters were acted upon:
a. The election of seven Directors to serve until the next annual
meeting of shareholders and until his or her successor is elected
and qualified. Each of the following persons were elected as
Directors with 1,990,188.9 shares voted in favor, zero shares
withheld and zero shares abstained: Rainer H. Bosselmann, George
Koenigsaecker, Daniel A. Levinson, William A. Schwartz, Anand
Sharma, Michael L. Stone and Amy Ludwig Weisman.
b. The ratification of the selection by the Board of Directors of
Richard A. Eisner & Company, LLP to serve as the Company's
independent auditors for the current fiscal year ending December
31, 1999. Of the shares voted cast, 1,915,188.9 shares were voted
in favor of the ratification, 75,000 shares were voted against and
zero shares abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for the nine months ended September
30, 1999
(b) Reports on Form 8-K
None.
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SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the Company has caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TBM HOLDINGS, INC.
Date: November 12, 1999 By: /s/ William A. Schwartz
------------------------
William A. Schwartz, President and
Principal Financial Officer
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THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM BALANCE SHEET,
STATEMENT OF OPERATIONS, STATEMENT OF CASH FLOWS AND NOTES THERETO INCORPORATED
IN PART I, ITEM 1 OF THIS FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,043,004
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,072
<PP&E> 6,515
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,067,391
<CURRENT-LIABILITIES> 13,136
<BONDS> 0
0
0
<COMMON> 2,568
<OTHER-SE> 24,376,392
<TOTAL-LIABILITY-AND-EQUITY> 12,067,391
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 189,347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,040)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,040)
<DISCONTINUED> (31,844)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,884)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
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