SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934(Fee Required)
For the Fiscal Year Ended June 30, 1996
Commission File number 0-17330
DAINE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2881685
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
461 Beach 124 Street, Belle Harbor, New York 11694
(Address of Principal Executive Office) (Zip Code)
(718)474-6568
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding twelve
months and (2) has been subject to such filing requirements for the
past ninety days.
Yes / X / No / /.
Indicate by check if disclosure of delinquent filers pursuant to
Item 405 or Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. /X/
As of September 18, 1996, there was no aggregate market value of
the voting stock held by non-affiliates of the Registrant due to
the fact that there was no trading market in the shares of the
Registrant.
The Number of Shares Outstanding of Common Stock, $.0001 par value
at June 30, 1996 was 248,461,935.
Documents Incorporated By Reference: None.
DAINE INDUSTRIES, INC.
Part 1
Item 1. Business.
Daine Industries, Inc. ("The Registrant") was incorporated on
September 24, 1987 and is currently engaged in the manufacture and
assembly of wiring devices.
On February 26, 1990, the Registrant acquired substantially
all of the assets (with the exception of the cash) and the business
of Lite King Corporation, a manufacturer and assembler of wiring
devices, cord sets and sockets. The assets acquired had a total
cost of $738,079, consisting of machinery and equipment, inventory,
accounts receivable, a non compete clause entered into with Lite
King Corporation's former president and principal shareholder and
a rent deposit. The purchase price ($663,079 in cash and a $75,000
five year note payable in quarterly installments with interest of
12%) was arrived at by arms length negotiations and the Registrant
obtained the funds for the purchase from its own internal sources.
There was no material relationship between the Registrant and Lite
King Corporation or any of its officers or directors prior to this
transaction. The Registrant had entered into a six month
consulting agreement with Lite King Corporation's former president
and owner Mr. Jerold Kolton. For the consulting services rendered,
the Registrant paid Mr. Kolton the sum of $36,000 plus expenses of
$9,000, or a total of $45,000.
Lite King and its predecessors have been in operation for over
twenty five years and its customers are in the Christmas,
Halloween, lamp, lighting, point of purchase display and ceramic
products field. Lite King's electrical wiring devices, consists of
wiring harnesses, "pigtails", power supply cords and the sale of
bulbs. Wiring harnesses consist of wire, one or more sockets on a
line with a polarized plug and with or without a plug and a switch
(which is optional). "Pigtails" consist of a socket and wire.
Power supply cords consists of a plug, wire and a switch (which is
optional). The Registrant's customers consists of manufacturers of
lamps, chandeliers, Christmas and Halloween illuminated
decorations, novelties, point of purchase displays, signs,
religious illuminated items, illuminated ceramic products and
electrical specialties. The Registrant's "pigtails" are primarily
sold to lamp and chandelier manufacturers while wiring devices and
power supply cords are sold primarily to the Registrant's other
customers.
The Registrant obtains its raw materials from a number of
different suppliers and believes that it is not dependent upon any
source of supply. It faces competition from a number of domestic
and international wiring device manufacturers, several of whom are
considerably larger than the Registrant. Competition is believed
to be intense and while the Registrant believes it is able to
finance future growth internally, management believes that a number
of the Registrant's competitors are materially stronger financially
along with having production facilities located domestically and
overseas, taking advantage of lower rates offshore.
Lite King's facilities consist of approximately 16,000 square
feet of office and factory space with annual lease payments of
$54,000 plus tax escalations. The lease is scheduled to expire on
April 30, 2002. At June 30, 1996, there were approximately 31
employees, all except three which were engaged in manufacturing and
assembly activities. For the year ended June 30, 1995, four
customers accounted for 31.3%, 29.8%, 25% and 5%, respectively of
total revenues. For the fiscal year ended June 30, 1996 four
customers accounted for 43%, 24.4%, 15.1% and 5.2% respectively of
total revenues. The loss of any one of these customers would have
a material adverse effect on the Registrant's future operations.
No other customer accounted for 10% or more of revenues for the
1995 and 1996 fiscal years.
Lite King has embarked upon a modernization program which
resulted in upgrading some of its present tooling and equipment.
The modernization program has resulted in some improvement in
productivity in some production areas and in making available some
improved products. Management will also continue to seek out the
acquisition of other companies or the purchase of assets of other
firms which may be in a related field to Lite King or which may
complement Lite King's business although no assurances can be given
that such an acquisition or purchase will be completed in the near
future.
Item 2. Properties
As of June 30, 1996, the Registrant owned no property. Lite
King's facilities consist of 16,000 square feet of office and
factory space pursuant to a five year lease scheduled to expire on
April 30, 2002. Annual lease payments during the first two years
ending on June 30, 1999 will amount to $58,000 plus tax
escalations. During the third year the rental amounts to $60,000
plus tax escalations and during the fourth and fifth year of the
lease ending April 30, 2992, the annual lease payment amounts to
$62,000 plus tax escalations. The Registrant's corporate office is
in the facility of Modern Technology Corp., an affiliated company
for which it does not pay rent.
Item 3. Legal Proceedings
The President and Secretary-Treasurer of the Registrant have
been included as defendants in a class action entitled "Barker et.
al v. Power Securities Corp., et. al" in the Western District of
New York which commenced in February 1989. The complaint alleges
violations of the securities laws(section 10b and Rule 10b-5 of the
Securities and Exchange Act of 1934) in trading certain securities
including those of the Company and its affiliated company, Davin
Enterprises Inc., by all of the defendants. The officers and
directors of the Registrant named in the complaint, who are also
officers and directors of Davin Enterprises Inc., deny the
allegations and believe the suit to be without merit. The
Registrant has undertaken to advance any expenses necessary and
incurred by the officers and directors in the litigation subject to
an undertaking by such officer and director to repay the advances
if it be ultimately determined that the officer or director is not
entitled to be indemnified. At this date, expenses are not
material. A judgement by settlement was entered against certain
defendants other than those who are officers of this Registrant.
The officers of the Registrant continue to deny the allegations
against them and plaintiffs have not been pursuing the suit against
them. In the event that the plaintiffs were to prevail against the
officers and directors and a judgment was issued against them, this
may have a material adverse effect on the Registrant's future
financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
The following table sets forth, for the periods indicated, the
Company's common stock as published by the National Daily Quotation
Service. Prices represent quotations between dealers without
adjustments for retail markups, markdowns or commissions, and may
not represent actual transactions.
High Bid Low Bid
Quarter ended September 30, 1994 * *
Quarter ended December 31, 1994 * *
Quarter ended March 31, 1995 * *
Quarter ended June 30, 1995 * *
Quarter ended September 30, 1995 * *
Quarter ended December 31, 1995 * *
Quarter ended March 31, 1996 * *
Quarter ended June 30, 1996 * *
*there were no pink sheet market makers for the Registrant's common
stock; no price information was available.
On September 12, 1996, there was no market for the shares of
the Registrant.
Number of shareholders of record on September 12, 1996 was
695.
Dividends - The Company has not paid any dividends since its
inception and presently anticipates that all earnings, if any, will
be retained for development and expansion of the Registrant's
business and that no dividends on the common stock will be declared
in the foreseeable future.
Item 6. Selected Financial Data
For The Year Ended June 30,
1996 1995 1994 1993 1992
Net Sales $1,610,409 $2,907,587 $2,127,327 $1,759,895 $ $1,597,229
Interest Income 11,193 14,068 14,493 14,820 24,059
Net Income (Loss) (31,332) 114,996 71,878 93,732 80,424
Net Income (Loss)
Per Share NIL NIL NIL NIL NIL
Total Assets 1,981,225 2,232,032 2,065,842 1,798,703 1,609,284
Long Term Debt -0- -0- -0- 11,250 26,250
Dividends -0- -0- -0- -0- -0-
Item 7. Management's Discussion And Analysis of Results of
Operations.
For the year ended June 30, 1994, the Registrant generated
revenues of $2,127,327. During the year ended June 30, 1995, the
Registrant generated revenues of $2,907,587. During the year ended
June 30, 1996, the Registrant generated revenues of $1,610,409.
During the year ended June 30, 1996, the Registrant generated a net
loss of $31,332 as compared with a net income after taxes of
$114,996 for the year ended June 30, 1995 and net income after
taxes of $71,878 for the year ended June 30, 1994. The decrease in
profitability for fiscal year 1996 as compared with fiscal year
1995 was due to lower revenues. The fiscal year 1996 loss figure
consists of a gross margin of $386,769 and interest income of
$11,193, offset by general and administrative expenses of $391,837,
and depreciation and amortization expense of $39,741 less an income
tax expense benefit amounting to $2,284 resulting in a net loss of
$31,332. For the year ended June 30, 1995, net income before
income taxes amounted to $191,959 and income tax expense of
$76,963, resulting in net income of $114,996.
The fiscal year 1995 net income figure of $114,996, consisted
of a gross margin of $748,897 and interest income of $14,068,
offset by general and administrative expenses of $521,783, interest
expense of $718 and depreciation and amortization expense of
$48,505 and combined federal and state income taxes of $76,963.
As of June 30, 1996, the Registrant had total assets of
$1,981,225 as compared with total assets of $2,232,032 at June 30,
1995. The decrease in assets of $250,807 can be attributed to a
decline in the following current asset categories: cash and cash
equivalents ($163,236), and accounts receivable ($190,105) and and
increase in several current asset categories, such as inventory
$96,074 and prepaid expenses $29,066. There was a decrease in the
fixed asset account: $22,606 (net).
During fiscal year 1996, total liabilities declined by
$219,475 reflected by a decrease in current liabilities of
$220,499, while deferred tax liabilities rose by $1,024. At June
30, 1996, shareholders' equity amounted to $1,628,887 as compared
with $1,660,219 at June 30, 1995. The current ratio (current
assets to current liabilities) at June 30, 1996 was approximately
5:1.
Management presently is considering a number of negative
factors which could have a material adverse effect on fiscal 1997
revenues and profitability. The Company presently works with two
non profit testing organizations for its U.S. and Canadian
electrical products(Underwriters Laboratories[U.L.] and the
Canadian Standards Association[C.S.A.]). U.L. has proposed new
standards for 1997 seasonal products for the U.S. which management
considers extreme and unrealistic. For example, as of 9/15/96, no
new fused plug for the seasonal cord sets has been approved by U.L.
for 1997. Since this is an important component of the Company's
product, the lack of an approved plug could have a material adverse
effect on the Company's business. The company is working to have
its components approved for the 1997 U.L. standard before 12/31/96.
While the company is attempting to also obtain another testing
organization's approval for the 1997 seasonal product standards, no
assurance can be given at this time that approval for 1997 U.S.
seasonal products will be obtained. If the Company's customers
require product with these 1997 approvals and approvals are not
received by January 1, 1997, this could have a materially negative
effect on Company's revenues and operations. Because of these
uncertainties, management can not forecast fiscal year 1997
revenues or profitability.
Item 8. Financial Statements
Attached and listed in Item 14.
Item 9. Changes In and Disagreements with Accountants in
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers
The executive officers and directors of the Registrant are as
follows:
Age Term Expires
Arthur Seidenfeld 45 President and Director Next annual meeting
Anne Seidenfeld 83 Treasurer,Secretary
and Director Next annual meeting
Gerald Kaufman 55 Director Next annual meeting
Each of the above named individuals has served the Registrant
in the capacity indicated since its formation on September 24, 1987
(with the exception that Anne Seidenfeld became the Registrant's
secretary on December 17, 1989 and Gerald Kaufman became a director
in 1990), and Arthur Seidenfeld and Anne Seidenfeld may be deemed
a "parent" under the Rules and Regulations promulgated under the
Securities Act of 1933, as amended.
Arthur Seidenfeld, President and Director was awarded a B.S.
Degree in Accounting from New York University in 1972 and an M.B.A.
in Finance in 1978 from Pace University. He has also served as
President and Director of Modern Technology Corp., a public company
since 1983. Mr. Seidenfeld is also President and a Director of
Davin Enterprises, Inc., a public company whose proposed business
is to provide a mechanism to take advantage of business
opportunities, which went public during the quarter ended September
30, 1987. From July 1994, he is also treasurer-secretary of Soft
Sail Wind Power Inc., a newly established company engaged in wind
energy research and development activities.
Anne Seidenfeld, Secretary-Treasurer and Director, received
her diploma from Washington Irving High School, New York City, in
1931. Mrs. Seidenfeld is Treasurer, Secretary and a Director of
Modern Technology Corp. and is Treasurer, Secretary and a Director
of Davin Enterprises, inc.
Gerald Kaufman, Director, has been a practicing attorney for
over twenty five years. He has served as a director of the
Registrant, along with being a director of Modern Technology Corp.
and Davin Enterprises, Inc. since November 1990. He has also been
a director of American Mayflower Life Insurance Co. since 1973.
Arthur Seidenfeld is the son of Anne Seidenfeld.
No forms 4 or 5 were filed by officers or directors during the
fiscal year ended June 30, 1996.
Item 11. Management - Remuneration and Transactions
For the year ended June 30, 1996, Arthur Seidenfeld, President
and a Director of the Company received a salary of $66,473 from
Lite King Corp. Anne Seidenfeld, Treasurer and a Director of the
Company, received a salary of $20,700- for the year ended June 30,
1996 from Lite King Corp. She has performed bookkeeping and other
administrative services for Lite King Corp. No other option or
bonus plan exists. The loss of the President's involvement with
Lite King Corp. may have an adverse effect on future Company
operations.
The officers of the Company did not receive salaries from the
Registrant during the year ended June 30, 1996 with the exception
of the salaries received from Lite King Corp., listed above.
PART IV
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
a. The following are known to Registrant to be beneficial owners
of 5% or more of the Registrant's common stock:
Title of Class
Common Stock
Name of Beneficial Owner Amount & Percentage
Nature of of Class
Beneficial
Ownership
Modern Technology Corp.
461 Beach 124 Street
Belle Harbor, New York 72,000,000@ 29.0%
Arthur Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 36,000,000 14.5%
Anne Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 20,000,000 8.0%
American Israel Ventures Corp.
461 Beach 124 Street
Belle Harbor, New York 15,000,000@ 6.0%
@ Arthur Seidenfeld and Anne Seidenfeld are president and
secretary, treasurer respectively of Modern Technology Corp. and
also own 49% and 12% respectively of the common stock of Modern
Technology Corp.
Arthur Seidenfeld owns 70% of the outstanding shares of American
Israel Ventures Corp. Anne Seidenfeld owns 25% of the outstanding
shares of American Israel Ventures Corp. Arthur Seidenfeld and
Anne Seidenfeld are president and treasurer-secretary respectively
of American Israel Ventures Corp.
b. The shares owned by management are as follows:
Common Stock.
Arthur Seidenfeld 36,000,000 14.5%
Anne Seidenfeld 20,000,000 8.0%
Gerald Kaufman 3,000,000 1.2%
Item 13. Certain Relationships and Related Transactions.
The Registrant's corporate office is in the facility of Modern
Technology Corp., an affiliated company where it does not pay any
rent.
Item 14. Exhibits, Financial Statements and Schedules.
a) Financial Statements and Financial Statement Schedules.
Consolidated Balance Sheets - June 30, 1996 and 1995.
Consolidated Statement of Shareholders' Equity For the Period
July 1, 1993 to June 30, 1996.
Consolidated Statement of Operations For the Years Ended June
30, 1996, 1995 and 1994.
Consolidated Statement of Cash Flows For the Years Ended June
30, 1996, 1995, and 1994.
b) Schedules
V PROPERTY AND EQUIPMENT
VI ACCUMULATED DEPRECIATION
X STATEMENT OF EXPENSES AMOUNTING TO 1% OR MORE OF NET
SALES
XIII CAPITAL SHARES
XVI SUPPLEMENTARY INCOME STATEMENT INFORMATION
Other schedules not submitted are omitted, because the
information is included elsewhere in the financial statements or
the notes thereto, or the conditions requiring the filing of these
schedules are not applicable.
Supplemental information to be furnished with reports filed
pursuant to Section 15(d) of the Securities Act of 1934 by
Registrant which have not registered securities pursuant to Section
12 of the Securities Act of 1934:
a) No annual report or proxy material has been sent to
security holders. When such report or proxy materials are
furnished to securities holders subsequent to the filing of this
report, copies shall be furnished to the Commission when sent to
securities holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
DAINE INDUSTRIES, INC.
BY Arthur Seidenfeld
President
Dated: September 18, 1996
DAINE INDUSTRIES, INC.
FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
CONSOLIDATED BALANCE SHEETS - ASSETS 2
CONSOLIDATED BALANCE SHEETS
- LIABILITIES AND SHAREHOLDERS' EQUITY 3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 4
CONSOLIDATED STATEMENTS OF OPERATIONS 5
CONSOLIDATED STATEMENTS OF CASH FLOWS 6-7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 8-11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
DAINE INDUSTRIES, INC.
461 Beach 124 Street
Belle Harbor, New York 11694
We have audited the accompanying consolidated balance sheets of
DAINE INDUSTRIES, INC. as of June 30, 1996 and 1995 and the related
consolidated statements of operations, statements of shareholders'
equity and cash flows for each of the three years in the period
ended June 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based upon our
audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of DAINE
INDUSTRIES, INC. as of June 30, 1996 and 1995, and the results of
its operations and its cash flows for each of the three years in
the period ended June 30, 1996, in conformity with generally
accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 7, 1996
Page 1 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
A S S E T S
June 30,
1996 1995
CURRENT ASSETS
Cash and Cash Equivalents $ 287,482 $ 450,718
Accounts Receivable 519,935 710,040
Inventory 903,353 807,279
Prepaid Expenses 38,237 9,171
Total Current Assets 1,749,007 1,977,208
FIXED ASSETS, At Cost
Machinery and Equipment 384,873 369,890
Leasehold Improvements 9,787 7,635
Less: Accumulated Depreciation
and Amortization (168,542) (128,801)
226,118 248,724
OTHER ASSETS
Deposits 6,100 6,100
TOTAL ASSETS $1,981,225 $2,232,032
The accompanying notes are an integral part of these financial
statements.
Page 2 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
June 30,
1996 1995
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 335,486 $ 555,985
OTHER LIABILITIES
Deferred Income Tax Liability (Note 4) 16,852 15,828
TOTAL LIABILITIES 352,338 571,813
COMMITMENTS AND CONTINGENCIES
(Note 3)
SHAREHOLDERS' EQUITY
Common Stock (Par Value
$.00001) 350,000,000 shares
authorized, 248,461,935
shares issued and outstanding 2,485 2,485
Paid-In Capital 1,441,597 1,441,597
Retained Earnings 184,805 216,137
TOTAL SHAREHOLDERS' EQUITY 1,628,887 1,660,219
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,981,225 $2,232,032
The accompanying notes are an integral part of these financial
statements.
Page 3 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For The Period July 1, 1993 to June 30, 1996
Total
Number $.00001 Share-
of Par Paid-In Retained holders'
Shares Value Capital Earnings Equity
BALANCES AT
JULY 1, 1993 248,461,935 $2,485 $1,441,597 $ 29,263 $1,473,345
Net Income for
the Year Ended
June 30, 1994 71,878 71,878
BALANCES AT
JUNE 30, 1994 248,461,935 2,485 1,441,594 101,141 1,545,223
Net Income for
the Year Ended
June 30, 1995 114,996 114,996
BALANCES AT
JUNE 30, 1995 248,461,935 2,485 1,441,594 216,137 1,660,219
(Loss) for
the Year Ended
June 30, 1996 (31,332) (31,332)
BALANCES AT
JUNE 30, 1996 248,461,935 $2,485 $1,441,594 $184,805 $1,628,887
The accompanying notes are an integral part of these financial statements.
Page 4 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended June 30,
1996 1995 1994
REVENUES
Sales - Net $1,610,409 $2,907,587 $2,127,327
COST OF GOODS SOLD
Beginning Inventory 807,279 810,385 561,479
Purchase and Freight 1,106,998 1,795,974 1,470,378
Direct Labor 212,716 359,610 285,578
2,126,993 2,965,969 2,317,435
Less: Inventory - End of Period 903,353 807,279 810,385
1,223,640 2,158,690 1,507,050
GROSS MARGIN 386,769 748,897 620,277
Interest Income 11,193 14,068 14,493
General and Administrative
Expenses (391,837) (521,783) (466,189)
Interest Expense -0- (718) (2,475)
Depreciation and Amortization Expense (39,741) (48,505) (47,509)
INCOME (LOSS) BEFORE INCOME TAXES (33,616) 191,959 118,597
Income Tax Expense (Benefit) (Note 4) (2,284) 76,963 46,719
NET INCOME (LOSS) $ (31,332) $ 114,996 $ 71,878
Earnings (Loss) Per Share NIL NIL NIL
Weighted Average Number of Shares
of Common Stock Outstanding 248,461,935 248,461,935 248,461,935
The accompanying notes are an integral part of these financial statements.
Page 5 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended June 30,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (31,332) $114,996 $ 71,878
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization
Expense 39,741 48,505 47,509
Change in Assets and Liabilities:
Decrease (Increase) in Accounts
Receivable 190,105 (204,584) (103,961)
Decrease (Increase) in Inventory (96,074) 3,106 (248,906)
Decrease (Increase) in Prepaid
Expenses (29,066) (5,206) 7,180
Decrease (Increase) in Deferred
Taxes - Current -0- -0- 4,814
Decrease (Increase) in Deposits -0- -0- 14,500
Decrease (Increase) in Deferred
Taxes - Noncurrent -0- -0- 2,467
Increase (Decrease) in Accounts
Payable and Accrued Expenses (220,499) 53,148 203,729
Increase (Decrease) in Deferred
Income Tax Liability 1,024 9,296 6,532
Net Cash Provided By (Used In)
Operating Activities (146,101) 19,261 5,742
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (17,135) (82,157) (50,950)
Net Cash (Used In) Investing
Activities (17,135) (82,157) (50,950)
The accompanying notes are an integral part of these financial statements.
Page 6 of 11
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
For The Years Ended June 30,
1996 1995 1994
CASH FLOWS FROM FINANCING ACTIVITIES
Net Borrowings (Repayment) Under
Short-Term and Long-Term Debt -0- (11,250) (15,000)
Net Cash Provided By (Used In)
Financing Activities -0- (11,250) (15,000)
Net Increase (Decrease) in Cash and
Cash Equivalents (163,236) (74,146) (60,208)
Cash and Cash Equivalents at
Beginning of Period 450,718 524,864 585,072
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 287,482 $450,718 $524,864
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest $ -0- $ 718 $ 2,475
Income Taxes $ 52,519 $ 41,407 $ 18,639
The accompanying notes are an integral part of these financial statements.
Page 7 of 11
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounts of the Company and its consolidated 100%
owned subsidiary, Lite King Corporation, are included in
the consolidated financial statements. All intercompany
balances and transactions have been eliminated.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less.
ACCOUNTS RECEIVABLE
Accounts receivable are judged as to collectibility by
management and an allowance for bad debts is established
as necessary. As of each balance sheet date, no reserve
was considered necessary.
INVENTORY
Inventories are stated at the lower of cost or market.
Cost is determined by the first-in, first-out method.
Inventories consist of:
6/30/96 6/30/95
Raw Materials $766,527 $627,270
Work-in-Process 27,412 61,503
Finished Goods 109,414 118,506
$903,353 $807,279
MAJOR CUSTOMERS
During the years ended June 30, 1996 and 1995, three
customers accounted for approximately 43%, 24%, 15%, and
31%, 30%, 25%, respectively, of total revenues. The loss
of any one of these customers could have a material
adverse effect on the financial condition of the company.
PROPERTY AND EQUIPMENT
Renewals and betterments are capitalized; maintenance and
repairs are expensed as incurred.
Depreciation is calculated using the straight line method
over the asset's estimated useful life, which generally
approximates 10 years.
Page 8 of 11
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(Continued)
REVENUE RECOGNITION POLICY
The company recognizes sales, for both financial
statement purposes and for tax purposes, when the
products are shipped to customers.
SHAREHOLDERS' EQUITY
The company issued 50,000,000 units, consisting of one
share common stock, $.00001 par value, one redeemable
Class A Common Stock Purchase warrant and one redeemable
Class B Common Stock Purchase warrant, and 152,000,000
shares to officers of the company and other individuals.
As of June 30, 1994, June 30, 1993 and June 30, 1992,
37,224,425 Class "A" and 9,237,510 Class "B" warrants
were exercised, and the balance of the warrants have
expired.
NOTE 2: ACQUISITION
On February 26, 1990 Daine Industries, Inc. purchased the
assets of Lite King Corporation. The purchase price was
$738,079, which was paid $663,079 in cash and $75,000 in
a note (see footnote 4).
The acquisition was accounted for by the purchase method
of accounting and, accordingly, the purchase price has
been allocated to assets acquired based on their fair
market value at the date of acquisition.
NOTE 3: COMMITMENTS AND CONTINGENCIES
The company is currently in a lease for office and factory
space requiring minimum annual base rental payments for
the fiscal periods shown as follows:
1997 $ 54,667
1998 58,000
1999 58,333
2000 60,333
2001 62,000
Total $293,333
In addition to annual base rental payments, the company
must pay an annual escalation for real estate taxes.
Certain officers and directors of the company have been
included as defendants in a class action entitled "Barker
et al v. Power Securities Corp., et al" in the Western
District of New York, which action alleges violations of
the securities laws, in trading certain securities
including those of the company and its affiliated
Page 9 of 11
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(Continued)
company, Davin Enterprises Inc., by all of the
defendants. Certain officers and directors of the
company, who are also officers and directors of Davin
Enterprises Inc., deny the allegations and believe the
suit to be without merit. The alleged violations refer
to Section 10b and Rule 10b-5 of the Securities and
Exchange Act of 1934.
The company has undertaken to advance any expenses
necessary and incurred by the officers and directors in
the litigation subject to an undertaking by such officer
and director to repay the advances if it be ultimately
determined that the officer or director is not entitled
to be indemnified. At this date, expenses are not
material. In the event that the plaintiffs were to
prevail against the officers and directors and a judgment
was issued against them, this may have a material adverse
effect on the company's future financial condition.
Management feels that an estimate of the possible range
of loss cannot be made at this time.
NOTE 4: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state
income tax rates. The company has been following APB
Opinion No. 11 for reporting income taxes in prior years.
Beginning with the year ended June 30, 1993, the company
adopted FAS 109 for reporting income taxes. This did not
have a material effect on the financial statements.
Income tax expense for June 30, 1996 is principally due to
state and local income taxes based upon capital. Deferred
tax liabilities relate to depreciation timing differences.
June 30,
1996 1995 1994
Current tax expense (benefit):
Income tax at
statutory rates $ 3,143 $67,666 $56,645
Operating loss
carryback (5,930) -0- (13,992)
Other differences (521) -0- (2,466)
(3,308) 67,666 40,187
Deferred tax expense:
Depreciation 1,024 9,297 6,532
Total Tax Expense
(Benefit) $(2,284) $76,963 $46,719
Page 10 of 11
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(Continued)
NOTE 5: POSTRETIREMENT EMPLOYEE BENEFITS
The company does not have a policy to cover employees for
any health care or other welfare benefits that are
incurred after employment (postretirement). Therefore,
no provision is required under SFAS's 106 or 112.
Page 11 of 11
Our examination was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The information
contained in the following Schedules is presented for purposes of
additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by
the Securities and Exchange Commission. Such information has been
subjected to the auditing procedures applied in the examination of
the basic financial statements and, in our opinion, is fairly
stated in all material respects the financial data required to be
set forth therein in relation to the basic financial statements
taken as a whole.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 7, 1996
SCHEDULE V
DAINE INDUSTRIES, INC.
PROPERTY AND EQUIPMENT
For The Year Ended June 30, 1996
Column A Column B Column C Column D Column E Column F
Classification Balance at Additions Retirements Other Changes Balance at
Beginning At Cost Add (Deduct) End of
of Period Describe Period
EQUIPMENT $369,890 $14,983 $384,873
STRAIGHT LINE BASIS
10 YEAR LIFE
IMPROVEMENTS $7,635 $2,152 $9,787
STRAIGHT LINE BASIS
5 YEAR LIFE
-------- -------- --------
TOTAL $377,525 $17,135 $394,660
======== ======== ========
SCHEDULE VII
DAINE INDUSTRIES, INC.
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
For The Year Ended June 30, 1996
Column A Column B Column C Column D Column E Column F
Description Balance at Additions Retirements Other Changes Balance at
Beginning Charged to Add (Deduct) End of
of Period Costs and Describe Period
Expenses
ACCUMULATED
DEPRECIATION $128,801 $39,741 $168,542
STRAIGHT LINE BASIS
5 & 10 YEAR LIFE
SCHEDULE X
DAINE INDUSTRIES, INC.
STATEMENT OF EXPENSES AMOUNTING TO
1% OR MORE OF NET SALES
For the Year Ended June 30, 1996
ITEM AMOUNT
Officers Salaries $87,173
Utilities 18,859
Insurance - Employee Group 45,641
Insurance - General 47,119
Professional Fees 31,738
Total $230,530
<TABLE>
SCHEDULE XIII
DAINE INDUSTRIES, INC.
CAPITAL SHARES
FOR THE PERIOD FROM JULY 1, 1995 TO JUNE 30, 1996
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G
Number of Shares Shares Outstanding Number of Shares Number of Shares
Included in as Shown on or Held by Affiliates Reserved for
Column C Which Included in Related for Which Statements Options, Common
Are: Balance Sheet Under Are Filed Herewith: Stock And Other
Caption "Capital Rights
Shares"
Number of (1) (2)
Shares Held by Not Held (1) (2)
Issued or for by or for Persons Others (1) (2)
Name of Number and not Account Account (1) (2) Included Directors Other
Issuer and of Shares Retired of of Number Amount of In Officers
Title of Authorized or Issuer Issuer Which Consolidated And
Issue by Charter Canceled Thereof Thereof Shown Statements Employees
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Daine
Industries
Inc.
Common Stock 350,000,000 248,461,935 0 0 248,461,935 2,485 None None None None
</TABLE>
SCHEDULE XVI
DAINE INDUSTRIES, INC.
SUPPLEMENTAL STATEMENT OF OPERATIONS INFORMATION
For the Year Ended June 30, 1996
Column A Column B
Item Charged to costs and
expenses for the period
Maintenance and Repairs $ 10,488
Depreciation 39,741
Taxes, Other Than Income Taxes - Payroll 24,684
State and Local Income Taxes 4,289
Commercial Rent Tax 2,356
Rent 54,000
Advertising Costs 6,407
Total $141,965
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
Name Title Date
Arthur Seidenfeld President and Director September 18, 1996
Principal Executive Officer
and Principal Financial Officer
Anne Seidenfeld Treasurer, Secretary September 18, 1996
and Director
Gerald Kaufman Director September 18, 1996
