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 13, 2000, 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 13,
2000 was 1,242,374.
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 the
Registrant 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 presplit. 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, 2000, the Registrant had
a net loss of $32,522. For the year ended June 30, 1999, the
Registrant had a net loss of $97,486.
Item 2. Properties
As of June 30, 2000, the Registrant owned no property. The
Registrant's office is located in the office of Lite King Corp., an
affiliated company.
Item 3. Legal Proceedings
None.
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, 1998 * *
Quarter ended December 31, 1998 * *
Quarter ended March 31, 1999 * *
Quarter ended June 30, 1999 * *
Quarter ended September 30,1999 * *
Quarter ended December 31, 1999 * *
Quarter ended March 31, 2000 * *
Quarter ended June 30, 2000 * *
*there were no pink sheet market makers for the Registrant's common
stock; no price information was available.
On September 13, 2000, there was no market for the shares of
the Registrant.
Number of shareholders of record on September 13, 2000 was
669.
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,
2000 1999 1998
Interest Income $ 4,438 $ 5,598 $ 8,494
Net Income (Loss) (32,522) (97,486) (41,376)
Net Income (Loss)
Per Share $(.03) $(.08) $(.03)
Total Assets 86,766 119,788 1,916,848
Long Term Debt -0- -0- -0-
Dividends -0- -0- -0-
Item 7. Management's Discussion And Analysis of Results of
Operations.
The accounts of the Registrant and its former consolidated
100% owned subsidiary, Lite King Corp. are included in the
consolidated financial statements through June 30, 1998 and the
1998 total assets figure listed above reflects the combined assets
of the Registrant and Lite King Corp.
The Registrant's net loss for the year ended June 30, 2000 can
be primarily attributed to general and administrative expenses
(primarily accounting and legal expenses) of $28,418 and
depreciation and amortization expense of $8,662 offset by income
tax benefits of $120. For the year ended June 30, 1999, general
and administrative expenses (primarily accounting and legal
expenses) amounted to $57,724 and depreciation and amortization
expense of $5,320, income tax expense of $3,199 and a loss from
operations of the Lite King Corp. subsidiary of $36,841.
Interest income declined to $4,438 during the year ended June
30, 2000 from $5,598 generated during the year ended June 30, 1999.
For the year ended June 30, 1999, interest income amounted to
$5,598, lower than interest income of $8,494 generated during the
fiscal year ended June 30, 1998. The varying interest income
figures listed above reflects declining cash balances from fiscal
years 1998-2000.
The Registrant generated higher general and administrative
expenses in fiscal year 1999 as compared with fiscal year 1998
expenses (1999-$57,724) (1998-$40,884). These figures are
primarily related to accounting and legal expenses. No salaries
were paid to officers of the Registrant during fiscal years 1998,
1999 and 2000.
The Registrant has financed its activities primarily from
operating activities. For fiscal years 1998, 1999 and 2000, cash
flows from investing activities have not been material. For fiscal
years 2000 and 1998, cash flows from financing activities have been
immaterial. During fiscal year 1999, cash was used in financing
activities from the spinoff of Lite King Corp. (amounting to
$686,723).
As of June 30, 2000, the Registrant had total assets of
$86,766, total liabilities of $6,000 and shareholders' equity of
$80,766. June 30, 2000 figures for the Registrant include current
assets of $86,766 (cash and cash equivalents), current liabilities
of $6,000 consisting of accrued expenses, and shareholders equity
of $80,766, consisting of common stock of $2,485, paid in capital
of $1,441,597 and an accumulated deficit of $1,363,316. The
current ratio (current assets to current liabilities) at June 30,
2000 was approximately 14:1.
As of June 30, 1999, the Registrant had total assets of
$119,788, total liabilities of $6,500 and shareholders' equity of
$113,288. June 30, 1999 figures for the Registrant include current
assets of $111,126 (cash and cash equivalents), fixed assets of
$8,662, current liabilities of $6,500 (accrued expenses), and
shareholders' equity of $113,288, consisting of common stock of
$2,485, paid in capital of $1,441,597 and an accumulated deficit of
$1,330,794. The current ratio (current assets to current
liabilities) at June 30, 1999 was approximately 17:1.
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.
Management is currently seeking out private companies for a
possible merger/acquisition, although no assurance can be given
that any of its efforts will lead to an eventual merger/acquisition
in the near future. At the present time, management is currently
considering several projects for potential merger/acquisition,
although no assurance can be given that any will lead to
merger/acquisition.
On July 24, 2000 the Registrant effected a one (1) for two
hundred (200) reverse split of its common stock and reduced the
number of authorized shares from 350,000,000 to 50,000,000. This
reverse split was completed to make the Registrant more presentable
to future merger/acquisition candidates.
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 49 President and Director Next annual
meeting
Anne Seidenfeld 87 Treasurer,Secretary
and Director Next annual
meeting
Gerald Kaufman 59 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
Modern Technology Corp. 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, 2000.
Item 11. Management - Remuneration and Transactions
The officers of the Registrant did not receive salaries from
the Registrant during the year ended June 30, 2000 with the
exception of the salaries received from Lite King Corp.
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 (effective for
200/1 reverse split on July 24, 2000):
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 360,000 29.0%
Arthur Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 180,000 14.5%
Anne Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 100,000 8.0%
American Israel Ventures Corp.
461 Beach 124 Street
Belle Harbor, New York 75,000 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 180,000 14.5%
Anne Seidenfeld 100,000 8.0%
Gerald Kaufman 15,000 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.
Item 14. Exhibits, Financial Statements and Schedules.
a) Financial Statements and Financial Statement Schedules.
Balance Sheets - June 30, 2000 and 1999.
Statement of Shareholders' Equity For the Period July 1, 1997
to June 30, 2000.
Statement of Operations For the Years Ended June 30, 2000,
1999 and 1998.
Statement of Cash Flows For the Years Ended June 30, 2000,
1999, and 1998.
Notes to the Financial Statements For the Years Ended June 30,
2000, 1999 and 1998.
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 20, 2000
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. 20, 2000
Anne Seidenfeld Treasurer, Secretary
and Director Sept. 20, 2000
Gerald Kaufman Director Sept. 20, 2000
DAINE INDUSTRIES, INC.
FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS - ASSETS 2
BALANCE SHEETS
- LIABILITIES AND SHAREHOLDERS' EQUITY 3
STATEMENTS OF SHAREHOLDERS' EQUITY 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7-10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Shareholders
DAINE INDUSTRIES, INC.
Brooklyn, New York
We have audited the accompanying balance sheets of DAINE
INDUSTRIES, INC. as of June 30, 2000 and 1999 and the related
statements of operations, statements of shareholders' equity and
cash flows for each of the three years in the period ended June 30,
2000. 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, 2000 and 1999, and the results of
its operations and its cash flows for each of the three years in
the period ended June 30, 2000, in conformity with generally
accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
July 27, 2000
Page 1 of 10
DAINE INDUSTRIES, INC.
BALANCE SHEETS
A S S E T S
June 30,
2000 1999
CURRENT ASSETS
Cash and Cash Equivalents $ 86,766 $111,126
Total Current Assets 86,766 111,126
FIXED ASSETS, At Cost
Machinery and Equipment 31,032 31,032
Less: Accumulated Depreciation (31,032) (22,370)
-0- 8,662
TOTAL ASSETS $ 86,766 $119,788
See accompanying summary of accounting policies and notes to the
financial statements.
Page 2 of 10
DAINE INDUSTRIES, INC.
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,
2000 1999
CURRENT LIABILITIES
Accrued Expenses $ 6,000 $ 6,500
Total Current Liabilities 6,000 6,500
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock (Par Value
$.00001) 50,000,000 shares
authorized, 1,242,374
shares issued and outstanding 12 12
Paid-In Capital 1,444,070 1,444,070
Retained Earnings (Deficit) (1,363,316) (1,330,794)
TOTAL SHAREHOLDERS' EQUITY 80,766 113,288
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 86,766 $ 119,788
See accompanying summary of accounting policies and notes to the
financial statements.
Page 3 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For The Period July 1, 1997 to June 30, 2000
Common Stock Total
Number $.00001 Retained Share-
of Par Paid-In Earnings holders'
Shares Value Capital (Deficit) Equity
BALANCES AT
JULY 1, 1997 1,242,374 $12 $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 1,242,374 12 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 1,242,374 12 1,441,597 (1,330,794) 113,288
Net Income (Loss)
for the Year Ended
June 30, 2000 (32,522) (32,522)
BALANCES AT
JUNE 30, 2000 1,242,374 $12 $1,441,597 $(1,363,316) $ 80,766
See accompanying summary of accounting policies and notes to the financial
statements.
Page 4 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
For The Years Ended June 30,
2000 1999 1998
Interest Income $ 4,438 $ 5,598 $ 8,494
General and Administrative
Expenses (28,418) (57,724) (40,884)
Depreciation and Amortization
Expense (8,662) (5,320) (5,320)
INCOME (LOSS) BEFORE INCOME TAXES (32,642) (57,446) (37,710)
Income Tax Expense (Benefit) (120) 3,199 (9,728)
INCOME (LOSS) FROM CONTINUING
OPERATIONS (32,522) (60,645) (27,982)
Spun-off Operations:
Income (loss) from operation of
Lite King Corp subsidiary (less
applicable income tax expense of
$-0-, $352 and $198, respectively) -0- (36,841) (13,394)
NET INCOME (LOSS) $(32,522) $(97,486) $(41,376)
Earnings (Loss) Per Share $(.03) $(.08) $(.03)
Weighted Average Number of Shares
of Common Stock Outstanding 1,242,374 1,242,374 1,242,374
See accompanying summary of accounting policies and notes to the financial
statements.
Page 5 of 10
DAINE INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended June 30,
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(32,522) $ (97,486) $ (41,376)
Adjustment to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Depreciation and Amortization
Expense 8,662 5,320 5,320
Loss from Spunoff Operations -0- 36,841 13,394
Change in Assets and Liabilities:
Increase (Decrease) in Accounts
Payable and Accrued Expenses (500) 500 3,500
Net Cash Provided By (Used In)
Continuing Operations (24,360) (54,825) (19,162)
Net Cash Provided By (Used In)
Spunoff Operations -0- 136,841 301,404
Net Cash Provided By (Used In)
Operating Activities (24,360) 83,816 282,242
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures-Spunoff Operations -0- -0- (359)
Net Cash (Used In) Investing
Activities -0- -0- (359)
CASH FLOWS FROM FINANCING ACTIVITIES
Spinoff of Lite King Corp -0- (723,564) -0-
Net Cash (Used In) Financing
Activities -0- (723,564) -0-
Net Increase (Decrease) in Cash and
Cash Equivalents (24,360) (639,748) 281,883
Cash and Cash Equivalents at
Beginning of Period 111,126 750,874 468,991
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 86,766 $ 111,126 $ 750,874
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest $ -0- $ -0- $ -0-
Income Taxes $ 501 $ 2,922 $ 12,024
See accompanying summary of accounting policies and notes to the financial
statements.
Page 6 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
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 was 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
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.
Page 7 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
(Continued)
PROPERTY AND EQUIPMENT, At Cost
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 FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
(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
Sales, net $1,080,031 $1,521,660
Interest income 15,434 15,238
Depreciation
expense 27,443 38,460
NOTE 3: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state income
tax rates.
Current income tax expense for June 30, 1998 and 1999 is
principally due to state and local income taxes based upon
capital. Deferred tax liabilities relate to depreciation
timing differences.
Page 9 of 10
DAINE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998
(Continued)
June 30,
2000 1999 1998
Current tax expense (benefit):
Income tax at
statutory rates $ -0- $3,199 $ 7,016
Other differences (120) -0- (2,496)
(120) 3,199 4,520
Deferred tax expense (benefit):
Depreciation -0- -0- 6,615
Operating loss
carryback -0- -0- (20,863)
-0- -0- (14,248)
Total Tax Expense
(Benefit) $(120) $3,199 $(9,728)
The tax effect of significant temporary differences, which
comprise the deferred tax assets and liabilities are as
follows:
June 30,
2000 1999
Deferred tax asset:
Operating loss
carryback $36,060 $20,060
Valuation allowance (36,060) (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. Daine has generated operating loss
carryforwards of approximately $90,000 which must be carried
forward for tax purposes until 2020. The tax benefits
associated with these 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.
NOTE 5: SUBSEQUENT EVENT
On July 24, 2000 the Company effected a one (1) for two hundred
(200) reverse split of the Company's common stock and reduced
the number of authorized shares from 350,000,000 to 50,000,000.
The effective date of the reverse split is July 24, 2000 and
all share and per share amounts are retroactively restated to
give effect for the reverse split within these financial
statements.
Page 10 of 10
