SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the quarterly period ended December 31, 1999 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
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)
240 Clarkson Avenue Brooklyn, New York 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(Registrant's Telephone Number, Including Area Code)
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 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 ninety days.
Yes / X / No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date. 248,461,935
10Q-1
DAINE INDUSTRIES, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEET 2
STATEMENTS OF SHAREHOLDERS' EQUITY 3
STATEMENTS OF OPERATIONS 4-5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-10
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Shareholders
DAINE INDUSTRIES, INC.
Brooklyn, New York 11226
We have reviewed the accompanying balance sheet of DAINE INDUSTRIES,
INC. as of December 31, 1999 and the related statements of operations,
shareholders' equity and cash flows for the six month periods ended
December 31, 1999 and 1998, in accordance with standards established by
the American Institute of Certified Public Accountants. All information
included in these financial statements is the representation of
management of DAINE INDUSTRIES, INC.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of interim
financial information, applying analytical review procedures to
financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope
than an examination 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 financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of June 30, 1999, and the
related consolidated statements of operations, shareholders' equity and
cash flows for the year then ended (not presented herein); and in our
report dated August 6, 1999, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as
of June 30, 1999 is fairly stated in all material respects in relation
to the consolidated balance sheet from which it has been derived.
GREENBERG & COMPANY LLC
Springfield, New Jersey
January 13, 2000
Page 1 of 10
DAINE INDUSTRIES, INC.
BALANCE SHEET
Dec. 31, 1999
(Unaudited) June 30, 1999
A S S E T S
CURRENT ASSETS
Cash and Cash Equivalents $ 101,121 $ 111,126
Total Current Assets 101,121 111,126
FIXED ASSETS, At Cost
Machinery and Equipment 31,032 31,032
Less: Accumulated Depreciation (25,030) (22,370)
6,002 8,662
TOTAL ASSETS $ 107,123 $ 119,788
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
CURRENT LIABILITIES
Accounts Payable & Accrued Expenses $ 2,500 $ 6,500
Total Current Liabilities 2,500 6,500
TOTAL LIABILITIES 2,500 6,500
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) (1,339,459) (1,330,794)
TOTAL SHAREHOLDERS' EQUITY 104,623 113,288
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 107,123 $ 119,788
See Accountants' Review Report and notes to the financial statements.
Page 2 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For The Period July 1, 1998 to December 31, 1999
Total
Number $.00001 Retained Share-
of Par Paid-In Earnings holders'
Shares Value Capital (Deficit) Equity
BALANCES AT
JULY 1, 1998 248,461,935 $2,485 $1,441,594 $ 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
(Audited) 248,461,935 2,485 1,441,594 (1,330,794) 113,288
Net Income (Loss)
for the six
months ended
Dec. 31, 1999
(Unaudited) (8,665) (8,665)
BALANCES AT
DEC. 31, 1999
(Unaudited) 248,461,935 $2,485 $1,441,597 $(1,339,459) $ 104,623
See Accountants' Review Report and notes to the financial statements.
Page 3 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For The Three Months Ended
December 31,
1999 1998
Interest Income $ 1,184 $ 1,432
General and Administrative Expenses (1,044) (9,295)
Depreciation and Amortization Expense (1,330) (1,330)
Income (Loss) Before Income Taxes (1,190) (9,193)
Income Tax Expense (Benefit) -0- -0-
Income (Loss) from Continuing
Operations (1,190) (9,193)
Spun Off Operations
Income (Loss) from operation of
Lite King Corp subsidiary (net of
applicable income tax (benefit) of
$20,197) -0- (47,376)
NET INCOME (LOSS) $(1,190) $(56,569)
Basic and Diluted Earnings (Loss)
Per Share NIL NIL
Weighted Average Number of
Shares Outstanding 248,461,935 248,461,935
See Accountants' Review Report and notes to the financial statements.
Page 4 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For The Six Months Ended
December 31,
1999 1998
Interest Income $ 2,243 $ 3,197
General and Administrative Expenses (7,747) (14,320)
Depreciation and Amortization Expense (2,660) (2,660)
Income (Loss) Before Income Taxes (8,164) (13,783)
Income Tax Expense (Benefit) 501 1,309
Income (Loss) from Continuing
Operations (8,665) (15,092)
Spun Off Operations
Income (Loss) from operation of
Lite King Corp subsidiary (net of
applicable income tax expense
$7,271) -0- 19,107
NET INCOME (LOSS) $(8,665) $ 4,015
Basic and Diluted Earnings (Loss)
Per Share NIL NIL
Weighted Average Number of
Shares Outstanding 248,461,935 248,461,935
See Accountants' Review Report and notes to the financial statements.
Page 5 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended
December 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (8,665) $ 4,015
Adjustment to Reconcile Net Income to
Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization Expense 2,660 2,660
Change in Assets and Liabilities:
Increase (Decrease) in Accounts Payable
& Accrued Expenses (4,000) (3,500)
Cash flows (used in) from Spunoff
Operations -0- (26,534)
Net Cash Provided By (Used In) Operating
Activities (10,005) (23,359)
Cash and Cash Equivalents at
Beginning of Period 111,126 165,322
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $101,121 $141,963
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest $ -0- $ -0-
Taxes $ 501 $ 1,309
See Accountants' Review Report and notes to the financial statements.
Page 6 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
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.
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.
Page 7 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
(Continued)
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.
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.
Page 8 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
(Continued)
NOTE 3: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state
income tax rates.
December 31,
1999 1998
Current tax expense:
Income tax at statutory rates $ 501 $ 1,309
Total Tax Expense $ 501 $ 1,309
The tax effect of significant temporary differences, which
comprise the deferred tax assets and liabilities are as
follows:
12/31/99 6/30/99
Deferred tax asset:
Operating loss carryback $25,060 $20,060
Valuation allowance (25,060) (20,060)
Net deferred tax asset $ -0- $ -0-
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 that year
of approximately $59,000 must be carried forward for tax
purposes until 2019. The loss of $8,665 for the six months
ended December 31, 1999 generates a tax benefit of
approximately $2,700 and expires in 2020. The tax benefits
associated with the losses have been fully reserved in the
valuation allowance due to Daine's lack of operating
profitability.
NOTE 4: 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 9 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
(Continued)
NOTE 5: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the company for the
period July 1, 1999 to December 31, 1999 have been prepared by
management from the books and records of the company, and
reflect, in the opinion of management, all adjustments
necessary for a fair presentation of the financial position
and operations of the company as of the period indicated
herein, and are of a normal recurring nature.
Page 10 of 10
Part 1. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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 the Registrant
operated 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 six months ended December 31, 1999, the Registrant's
only revenues consisted of interest income which amounted to $2,243.
Total expenses amounted to $10,908, consisting of general and
administrative expenses (primarily legal and accounting fees) of $7,747,
depreciation and amortization expense of $2,660 and income tax expense
of $501, resulting in a net loss of $8,665.
For the six months ended December 31, 1998, the Registrant had net
income of $4,015. The net income of $4,015 was the result of interest
income of $3,197, general and administrative expenses (primarily legal
and accounting expenses) of $14,320, depreciation and amortization
expenses of $2,660, income tax expense of $1,309, resulting in a loss
from continuing operations of $15,092. This loss was balanced by income
from the operations of its Lite King Corp subsidiary (net of applicable
income tax expense of $7,271) of $19,107 resulting in net income of
$4,015. Lite King Corp is a former wholly owned subsidiary of the
Registrant which was spun off to the Registrant's shareholders during
1999.
At December 31, 1999, the Registrant had total assets of $107,123,
consisting of current assets of $101,121 (cash and cash equivalents),
and fixed assets of $6,002. At June 30, 1999, the Registrant had total
assets of $119,788, consisting of cash and cash equivalents (current
assets) of $111,126 and fixed assets of $8,662.
At December 31, 1999, the Registrant's total liabilities consisted
of accounts payable and accrued expenses of $2,500. At June 30, 1999
total liabilities amounted to $6,500. Shareholders equity at December
31, 1999 amounted to $104,623 as compared with $113,288 as of June 30,
1999.
The Registrant is actively seeking candidates for either
acquisition or merger. No assurance can be given that such acquisition
or merger will occur in the near future.
Year 2000 Compliance
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 no assurance
that unanticipated costs may arise in implementing these requirements.
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters To A Vote of Security Holders. None.
Item 5. Other Materially Important Events. None.
Item 6. Exhibits and Reports on Form 8-K. None.
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.
By: Arthur Seidenfeld
President
Dated: February 9, 2000
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