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, 1999
Commission File Number 2-80891-NY
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)
240 Clarkson Avenue, Brooklyn NY 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(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:
Common stock, par value $.00001
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 17, 1999, 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 the Registrant at September 17,
1999 was 248,461,935.
DAINE INDUSTRIES, INC.
Part 1
Item 1. Business.
Daine Industries, Inc. ("The Registrant") was incorporated on
September 24, 1987 and is currently seeking to acquire an operating
business. From February 1990 until November 19, 1998 operated the
business of Lite King Corp. and currently is a public vehicle to
acquire an operating business.
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 ("Lite King"), a manufacturer and
assembler of wiring devices, cord sets and sockets. On November
19, 1998, the Registrant filed a Form 10-SB to spin-off Lite King
Corp's shares of common stock to its shareholders on a pro rata
basis. The Registrant owned all of the 2,484,620 outstanding
shares of Lite King which was distributed to its shareholders as of
November 30, 1998 on the basis of one share of Lite King for each
100 shares of Daine held. The distribution of stock certificates
of Lite King was made in May 1999.
Management of the Registrant believe the two companies as
separate entities may create additional value for the shareholders.
There is no assurance of any trading market developing. Management
will attempt to use the Registrant as a "shell" vehicle to acquire
an operating business.
During the fiscal year ended June 30, 1999, the Registrant had
revenues of $1,080,031 and a net loss of $97,486. The accounts of
Lite King Corp were included in the financial statements through
March 31, 1999 (reflecting a nine month period). Through March 31,
1999 Lite King Corp incurred a loss of $36,841 for the nine month
period ended March 31, 1999.
The Registrant has evaluated the impact of the Year 2000 issue
on the business and does not expect to incur significant costs with
year 2000 compliance. The Registrant believes that all software
and hardware requirements to enable it to cope with the Year 2000
issue have been or are being currently implemented. However, there
can be assurance that unanticipated costs may arise in implementing
these requirements.
Item 2. Properties
As of June 30, 1999, the Registrant owned no property. The
Registrant utilizes some space in the offices of Lite King Corp.,
an affiliated company.
Item 3. Legal Proceedings
Certain officers and directors of the Company had 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 alleged violations of the securities laws in trading
certain securities including those of the Company and its former
affiliated company, Davin Enterprises Inc., by all of the
defendants. A motion was submitted to the judge by the attorney
for the class to discontinue the action against the officers and
directors of the Company, which motion was granted on September
13, 1999. As a result, this case has been terminated and all
allegations against the defendants have been dismissed. The
Company had 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 were
not entitled to be indemnified. The expenses incurred were not
material.
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, 1997 * *
Quarter ended December 31, 1997 * *
Quarter ended March 31, 1998 * *
Quarter ended June 30, 1998 * *
Quarter ended September 30, 1998 * *
Quarter ended December 31, 1998 * *
Quarter ended March 31, 1999 * *
Quarter ended June 30, 1999 * *
*there were no pink sheet market makers for the Registrant's common
stock; no price information was available.
On September 17, 1999, there was no market for the shares of
the Registrant.
Number of shareholders of record on September 17, 1999 was
674.
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,
1999 1998 1997 1996 1995
Net Sales $1,080,031 $1,521,660 $1,850,407 $1,610,409 $2,907,587
Interest Income 21,032 23,732 9,037 11,193 14,068
Net Income (Loss) (97,486) (41,376) (8,909) (31,332) 114,996
Net Income (Loss)
Per Share NIL NIL NIL NIL NIL
Total Assets 119,788 1,916,848 1,782,416 1,981,225 2,232,032
Long Term Debt -0- -0- -0- -0- -0-
Dividends -0- -0- -0- -0- -0-
Item 7. Management's Discussion And Analysis of Results of
Operations.
It is not feasible to compare operations for the fiscal year
ended June 30, 1999 with the year ended June 30, 1998 since the
Registrant's results for the fiscal year ended June 30, 1999
includes only 9 months of operations for Lite King Corp as compared
with a full year's operations for Lite King for fiscal year ended
June 30, 1998. The accounts of the Registrant and its consolidated
former 100% owned subsidiary, Lite King Corp, are included in the
consolidated financial statements through March 31, 1999.
For the fiscal year ended June 30, 1999 Lite King Corp
experienced declining gross margins due to its inability to pass
along price increases to its customers. Through March 31, 1999,
Lite King incurred a loss of $36,841.
Sales declined 18% from fiscal year 1997 to fiscal year 1998.
This decrease of approximately $328,000 was due to a downturn in
orders from blow molded figurine customers who buy cord sets from
Lite King Corp. In addition, during fiscal year 1998 Underwriters
Laboratories mandated changes in fused plugs and wire used by Lite
King Corp. in seasonal outdoor cord sets. The Company also
experienced increased competition from cord set manufacturers based
in China, where labor costs are considerably lower than those
experienced by Lite King Corp.
During fiscal year 1997 these blow molded figurine
manufacturers purchased at normal levels, accounting for a 14%
increase in sales of about $240,000 for fiscal year 1997 (as
compared with fiscal year 1996 sales).
Gross margins for fiscal year 1998 was 27% as compared with
30% in fiscal year 1997 and 24% in fiscal year 1996. The decrease
in fiscal year 1998 gross margins was due to the inability of
passing along price increases to company customers as higher unit
labor costs were absorbed by Lite King Corp. Fiscal year 1997
gross margins increased as compared with fiscal year 1996 gross
margins due to higher prices charged to company customers.
General and administrative expenses declined by approximately
$71,000 between fiscal year 1998 and fiscal year 1997. This
decline can be attributed to lower amounts for underwriters
laboratories fees $8,000; group insurance expenses $12,000; general
insurance expense $35,000; legal and accounting expense $18,000;
rent expense (real estate taxes) $35,000; and utilities expense
$4,000 - offset by higher officers' salaries $22,000 and
maintenance expense $8,000. The declines in these expense
categories are consistent with lower levels of sales activities.
Increased officers' salaries were paid to Lite King's president and
treasurer.
General and administrative expenses increased by approximately
$120,000 between fiscal year 1996 and fiscal year 1997. The
increase can be attributed to increases in underwriters
laboratories fees $12,000; officers salaries $41,000; insurance
expense $21,000; and rent expense $32,000. The increase in
underwriters laboratories fees relate to new product listings. The
increase in rent expense relate to real estate taxes due for prior
periods presented by Lite King Corp's landlord and are escalations
in city real estate taxes paid by Lite King as part of its lease.
Increased officer's salaries were paid to Lite King Corp's
president and treasurer.
Net loss increased by about $32,467 between fiscal year 1998
and fiscal year 1997. The loss of $41,376 in fiscal year 1998 can
be attributed to a 18% decline in sales in fiscal year 1998 and a
related decline in general and administrative expenses. The
reduction of the net loss from $31,332 in fiscal year 1996 to a net
loss of $8,909 in fiscal year 1997 can be attributed to a 14%
increase in sales offset by a rise in general and administrative
expenses.
There has been a downward trend in sales as sales decreased
between fiscal year 1997 to 1998 due to the factors discussed
above.
The Registrant (through Lite King Corp) has financed its
activities primarily from operating activities. For fiscal year
1999 and 1998 cash flows from investing activities have not been
material.
During fiscal years 1997, 1998 and 1999, cash flows from
financing activities have been immaterial.
As of June 30, 1999, the Registrant had total assets of
$119,788, total liabilities of $6,500 and shareholders' equity of
$113,288. A comparison with total assets, liabilities and
shareholders' equity figures at June 30, 1998 would not be
meaningful since June 30, 1998 figures include the assets,
liabilities and shareholders' equity of Lite King Corp, the
ownership of which was spun out to the Registrant's shareholders
during the fiscal year ended June 30, 1999.
June 30, 1999 figures for the Registrant incude current assets
of $111,126 (cash and cash equivalents), fixed assets of $8,662,
current liabilities of $6,500 (accounts payable andd accrued
expenses) and shareholders' equity of $113,288, consisting of
common stock of $2,485, paid in capital of $1,441,597 and a
retained deficit of $1,330,794. The current ratio (current assets
to current liabilities) at June 30, 1999 was approximately 17:1.
Management is currently in discussion with several private
companies regarding a possible merger/acquisition, although no
assurance can be given that any of these discussions will lead to
a completed transaction in the future.
Item 8. Financial Statements
Attached.
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 48 President and Director Next annual meeting
Anne Seidenfeld 86 Treasurer,Secretary
and Director Next annual meeting
Gerald Kaufman 58 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, has been president and a director of the
Registrant since its formation. Mr. Seidenfeld 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 is also President and Director of Modern Technology Corp.,
a public company and Lite King Corp, a publicly traded company
engaged in the manufacture and sale of electrical cord sets. He
was also President and a Director of Davin Enterprises, Inc. ( a
publicly traded company that went public in Sept. 1987), from 1987
until December 1997 when Davin merged with Creative Masters
International, a manufacturer of replica cars. From July 1994
until April 1997, he was also treasurer-secretary of Soft Sail Wind
Power Inc., a newly established company engaged in wind energy
research and development activities. From December 1996 until
December 1998, he was President and Director of Coral Development
Corp., a public company which merged with Omnicomm Systems Inc., a
company engaged in the computer software/internet field. He is
president of Excess Materials, Inc., a 70% owned subsidiary of the
Registrant engaged in the internet e-commerce field.
Anne Seidenfeld, Treasurer-Secretary and Director, received
her diploma from Washington Irving High School, New York City, in
1931. Mrs. Seidenfeld is the Treasurer, Secretary and Director of
Modern Technology Corp. and Lite King Corp. She is treasurer and
secretary of Excess Materials Inc. She was Treasurer, Secretary
and Director of Coral Development Corp. from December 1996 to
December 1998 and was treasurer, secretary and director of Davin
Enterprises, Inc. from 1987 until December 1997.
Gerald Kaufman, Director, has been a practicing attorney for
over thirty years. He has served as a director of the Registrant,
along with being a director of Modern Technology Corp. since 1990
and a director of Lite King Corp since 1998. 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 required to be filed by officers or
directors during the fiscal year ended June 30, 1999.
Item 11. Management - Remuneration and Transactions
The officers of the Registrant did not receive salaries from
the Registrant during the year ended June 30, 1999 with the
exception of the salaries received from Lite King Corp. During the
year ended June 30, 1999 the president of the Registrant, Arthur
Seidenfeld received a salary of $92,250 from Lite King Corp. Anne
Seidenfeld, treasurer and secretary of the Registrant received a
salary of $30,600.
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.
240 Clarkson Ave
Brooklyn, 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 48%
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 Lite
King 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, 1999 and 1998.
Consolidated Statement of Shareholders' Equity For the Period
July 1, 1996 to June 30, 1999.
Consolidated Statement of Operations For the Years Ended June
30, 1999, 1998 and 1997.
Consolidated Statement of Cash Flows For the Years Ended June
30, 1999, 1998, and 1997.
Notes to the Financial Statements For the Years Ended June 30,
1999, 1998 and 1997.
b) Schedules
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 17, 1999
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
indicted.
Name Title Date
Arthur Seidenfeld President and Director
Principal Executive
Officer and Principal
Financial Officer Sept. 17, 1999
Anne Seidenfeld Treasurer, Secretary
and Director Sept. 17, 1999
Gerald Kaufman Director Sept. 17, 1999
DAINE INDUSTRIES, INC.
FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7-10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
DAINE INDUSTRIES, INC.
240 Clarkson Avenue
Brooklyn, NY 11226
We have audited the accompanying consolidated balance sheets of
DAINE INDUSTRIES, INC. as of June 30, 1999 and 1998 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, 1999. 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, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in
the period ended June 30, 1999, in conformity with generally
accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 6, 1999
Page 1 of 10
DAINE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
A S S E T S
June 30,
1999 1998
CURRENT ASSETS
Cash and Cash Equivalents $111,126 $ 750,874
Accounts Receivable -0- 392,787
Inventory -0- 595,194
Prepaid Expenses -0- 13,978
Deferred Taxes -0- 14,248
Total Current Assets 111,126 1,767,081
FIXED ASSETS, At Cost
Machinery and Equipment 31,032 394,145
Leasehold Improvements -0- 9,787
Less: Accumulated Depreciation (22,370) (260,265)
8,662 143,667
OTHER ASSETS
Deposits -0- 6,100
TOTAL ASSETS $119,788 $1,916,848
See accompanying summary of accounting policies and notes to the
financial statements.
Page 2 of 10
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,
1999 1998
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 6,500 $ 329,823
Total Current Liabilities 6,500 329,823
OTHER LIABILITIES
Deferred Income Tax Liability -0- 8,423
TOTAL LIABILITIES 6,500 338,246
COMMITMENTS AND CONTINGENCIES
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 (Deficit) (1,330,794) 134,520
TOTAL SHAREHOLDERS' EQUITY 113,288 1,578,602
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 119,788 $1,916,848
See accompanying summary of accounting policies and notes to the
financial statements.
Page 3 of 10
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For The Period July 1, 1996 to June 30, 1999
Total
Number $.00001 Retained Share-
of Par Paid-In Earnings holders'
Shares Value Capital (Deficit) Equity
BALANCES AT
JULY 1, 1996 248,461,935 $2,485 $1,441,597 $ 184,805 $1,628,887
Net Income (Loss)
for the Year Ended
June 30, 1997 (8,909) (8,909)
BALANCES AT
JUNE 30, 1997 248,461,935 2,485 1,441,597 175,896 1,619,978
Net Income (Loss)
for the Year Ended
June 30, 1998 (41,376) (41,376)
BALANCES AT
JUNE 30, 1998 248,461,935 2,485 1,441,597 134,520 1,578,602
Net Income (Loss)
for the Year Ended
June 30, 1999 (97,486) (97,486)
Lite King Corp
spinoff to Daine
stockholders (1,367,828) (1,367,828)
BALANCES AT
JUNE 30, 1999 248,461,935 $2,485 $1,441,597 $(1,330,794) $ 113,288
See accompanying summary of accounting policies and notes to the financial
statements.
Page 4 of 10
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended June 30,
1999 1998 1997
Interest Income $ 5,598 $ 8,494 $ 9,037
General and Administrative
Expenses (57,724) (40,884) (29,978)
Depreciation and Amortization
Expense (5,320) (5,320) (5,523)
INCOME (LOSS) BEFORE INCOME TAXES (57,446) (37,710) (26,464)
Income Tax Expense (Benefit) 3,199 (9,728) (129)
INCOME (LOSS) FROM CONTINUING
OPERATIONS (60,645) (27,982) (26,335)
Spun-off Operations:
Income (loss) from operation of
Lite King Corp subsidiary (less
applicable income tax expense of
$352, 198 and $2,887, respectively) (36,841) (13,394) 17,426
NET INCOME (LOSS) $(97,486) $(41,376) $ (8,909)
Earnings (Loss) Per Share NIL NIL NIL
Weighted Average Number of Shares
of Common Stock Outstanding 248,461,925 248,461,925 248,461,925
See accompanying summary of accounting policies and notes to the financial
statements.
Page 5 of 10
DAINE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended June 30,
1999 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (97,486) $ (41,376) $ (8,909)
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization
Expense 32,763 43,780 47,943
Change in Assets and Liabilities:
Decrease (Increase) in Accounts
Receivable 355,281 109,472 17,676
Decrease (Increase) in Inventory 13,192 11,933 296,226
Decrease (Increase) in Prepaid
Expenses (7,359) (3,127) 27,386
Decrease (Increase) in Deferred
Taxes - Current -0- (14,248) -0-
Increase (Decrease) in Accounts
Payable and Accrued Expenses (249,416) 183,996 (189,659)
Increase (Decrease) in Income Tax
Payable -0- (1,573) 1,573
Increase (Decrease) in Deferred
Income Tax Liability -0- (6,615) (1,814)
Net Cash Provided By (Used In)
Operating Activities 46,975 282,242 190,422
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures -0- (359) (8,913)
Net Cash (Used In) Investing
Activities -0- (359) (8,913)
CASH FLOWS FROM FINANCING ACTIVITIES
Spinoff of Lite King Corp (686,723) -0- -0-
Net Cash (Used In) Financing
Activities (686,723) -0- -0-
Net Increase (Decrease) in Cash and
Cash Equivalents (639,748) 281,883 181,509
Cash and Cash Equivalents at
Beginning of Period 750,874 468,991 287,482
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 111,126 $ 750,874 $ 468,991
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest $ -0- $ -0- $ -0-
Income Taxes $ 2,922 $ 12,024 $ 3,000
See accompanying summary of accounting policies and notes to the financial
statements.
Page 6 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Daine Industries, Inc. (Daine) is a Delaware corporation.
Daine owned 100% of the stock of Lite King Corp. (LKC) a New
York corporation through November 19, 1998. Daine's principal
purpose is to acquire and merge with an operating company.
LKC's principal business is the manufacture and assembly of
electrical wiring devices, cord sets and sockets. LKC's
customers consist of manufacturers of lamps, chandeliers,
Christmas and Halloween illuminated decorations, novelties,
point of purchase displays, signs, and other electrical
specialties. The customers are located throughout North
America.
NOTE 2: 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 through March 31, 1999. LKC
incurred a loss of $36,841 through March 31, 1999. (See
spinoff) All significant 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. The carrying
amount reported in the accompanying balance sheets approximates
fair value.
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:
6/30/98
Raw Materials $506,875
Work-in-Process 65,427
Finished Goods 22,892
$595,194
Page 7 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
(Continued)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentration of credit risk are accounts receivable. During
the years ended June 30, 1999 and 1998, three customers
accounted for approximately 62%, 15%, 6%, and 38%, 28%, 18%,
respectively, of total revenues. The Company performs ongoing
credit evaluations of its customers but generally does not
require collateral to support customer receivables. 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.
REVENUE RECOGNITION POLICY
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped
to customers.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." SFAS 109 has as its basic
objective the recognition of current and deferred income tax
assets and liabilities based upon all events that have been
recognized in the financial statements as measured by the
provisions of the enacted tax laws.
Valuation allowances are established when necessary to reduce
deferred tax assets to the estimated amount to be realized.
Income tax expense represents the tax payable for the current
period and the change during the period in the deferred tax
assets and liabilities.
Page 8 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
(Continued)
SPINOFF
In April of 1999, Daine Industries Inc. distributed all
2,484,620 issued and outstanding shares of Lite King Corp. to
the shareholders of Daine Industries Inc. on a pro rata basis.
Daine did not recognize any gain or loss on the distribution
and also relies on Internal Revenue Code section 355 to treat
the distribution as a nontaxable stock dividend to Daine's
shareholders.
The following financial information relating to Lite King Corp
is provided pursuant to APB 30 (the amounts provided for the
year ended June 30, 1999 only included the operations of Lite
King through March 31, 1999).
For the Year Ended June 30,
1999 1998 1997
Sales, net $1,080,031 $1,521,660 $1,850,407
Interest income 15,434 15,238 -0-
Depreciation
expense 27,443 38,460 42,420
NOTE 3: COMMITMENTS AND CONTINGENCIES
Certain officers and directors of the company had 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 alleged violations of the securities
laws, in trading certain securities including those of the
company and its former affiliated company, Davin Enterprises
Inc., by all of the defendants. A motion was been submitted
to the judge by the attorney for the class to discontinue the
action against the officers and directors of the Company,
which motion was granted on September 13, 1999. As a result,
this case has been terminated and all allegations against the
defendents have been dismissed.
The company had 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 was ultimately determined that the
officer or director was not entitled to be indemnified. The
expenses incurred were not material.
Page 9 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999, 1998 AND 1997
(Continued)
NOTE 4: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state income
tax rates.
Income tax expense for June 30, 1997 is principally due to
state and local income taxes based upon capital. Deferred tax
liabilities relate to depreciation timing differences.
June 30,
1999 1998 1997
Current tax expense (benefit):
Income tax at
statutory rates $3,551 $ 7,016 $ 7,767
Other differences -0- (2,298) (1,872)
3,551 4,718 4,572
Deferred tax expense (benefit):
Depreciation -0- 6,615 (1,814)
Operating loss
carryback -0- (20,863) (1,323)
-0- (14,248) (3,137)
Total Tax Expense
(Benefit) $3,551 $(9,530) $ 2,758
The tax effect of significant temporary differences, which
comprise the deferred tax assets and liabilities are as
follows:
June 30,
1999 1998
Deferred tax asset
Operating loss
carryback $20,060 $14,248
Valuation allowance (20,060) -0-
Net deferred tax asset $ -0- $14,248
Deferred tax liability
Depreciation $ -0- $ 8,423
During the year ended June 30, 1999, Daine distributed the
stock of its subsidiary Lite King to Daine shareholders in a
tax free spinoff. Therefore, Daine will not be filing a
consolidated tax return with Lite King for the year ended June
30, 1999 and the loss that Daine has generated for this year of
approximately $59,000 must be carried forward for tax purposes
until 2019. The tax benefits associated with this loss have
been fully reserved in the valuation allowance due to Daine's
lack of operating profitability.
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 10 of 10
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 111126
<SECURITIES> 0
<RECEIVABLES> 0
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<CURRENT-ASSETS> 111126
<PP&E> 31032
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0
0
<COMMON> 2485
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<TOTAL-LIABILITY-AND-EQUITY> 119788
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