MIDLAND INC
10QSB, 1999-11-16
FOOD STORES
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended: September 30, 1999

OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number:  0-24736

                                  Midland, Inc.
                                  -------------
        (Exact name of small business issuer as specified in its charter)

                 Colorado                                   84-1078201
                 --------                                   ----------
    (State or other jurisdiction of                     (I.R.S. employer
    incorporation or organization)                   identification number)

1073 4th Street, No. 3, Stone Mountain, Georgia                30083
- -----------------------------------------------                -----
   (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number:  (770) 413-8734

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 Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest  practicable date: As of November 12, 1999, there
were 3,696,807  shares of common stock  outstanding and 16,228,638  common share
equivalents.

<PAGE>
<TABLE>
<CAPTION>


I. PART I  FINANCIAL INFORMATION

Item 1. Financial Statements


                                  MIDLAND, INC.
                                 BALANCE SHEETS

                                                                September 30,   December 31,
                                                                    1999            1998
                                                                    ----            ----
                                                                 (Unaudited)

ASSETS:

CURRENT ASSETS
<S>                                                              <C>            <C>
  Cash                                                           $        43    $        43
  Restricted cash-escrow                                                 867         37,381
  Note receivable                                                     90,000         90,000

TOTAL CURRENT ASSETS                                                  90,910        127,424

INVESTMENT (Note C)                                                   23,125         23,125

TOTAL ASSETS                                                     $   114,035    $   150,549

LIABILITIES AND SHAREHOLDERS' DEFICIT:

CURRENT LIABILITIES
  Accounts payable                                               $   192,544    $   209,116
  Notes payable                                                       45,000         45,000
  Accrued interest                                                    26,041         26,041
  Accrued payroll taxes                                                8,510          8,510
  Accrued income tax                                                     800            800

TOTAL CURRENT LIABILITIES                                            272,895        289,467

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
  Series A preferred stock, $0.40 par value, 360,000
         shares authorized, 295,911 issued and outstanding           118,365        118,365
  Series B preferred stock, $0.40 par value, 149,259
         shares authorized, no shares issued or outstanding             --             --
  Common stock, $0.40 par value, 10,000,000 shares authorized,
         3,696,807 shares issued and outstanding                   1,106,928      1,106,928
  Additional paid in capital                                       1,789,134      1,789,134
  Accumulated deficit                                             (3,173,287)    (3,153,345)

TOTAL SHAREHOLDERS' DEFICIT                                         (158,860)      (138,918)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                      $   114,035    $   150,549

</TABLE>
<PAGE>


                                  MIDLAND, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                For the nine months ended
                                          September 30, 1999  September 30, 1998
                                          ------------------  ------------------

SALES                                         $      --          $      --
COST OF SALES                                        --                 --
Gross profit                                         --                 --
OPERATING EXPENSES
  General and administrative                       39,942            237,613
TOTAL OPERATING EXPENSES                           39,942            237,613
LOSS FROM OPERATIONS                              (39,942)          (237,613)
OTHER INCOME (EXPENSES)
  Interest income                                    --                2,188
  Release of debt                                  20,000               --
LOSS BEFORE INCOME TAXES                          (19,942)          (235,425)
Provision for income tax                             --                 --
NET LOSS                                      $   (19,942)       $  (235,425)
Net loss per common share                           (.001)              (.07)
Weighted average number
    of shares outstanding                       3,696,807          3,272,513



<PAGE>

                                  MIDLAND, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                   For the nine months ended
                                               September 30, 1999  June 30, 1998
                                               ------------------  -------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                          $   (19,942)     $  (235,425)
Adjustments to reconcile net loss to net cash
  used in operating activities:                          --               --
Changes in operating assets and liabilities:             --               --
Increase (decrease) in:
  Subscription receivables                               --           (100,000)
  Accounts payable                                    (16,572)          (7,726)
  Accounts payable: related party                        --           (153,000)
  Accrued expenses                                       --              2,026
NET CASH USED IN OPERATING ACTIVITIES                 (36,514)        (494,125)
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in subsidiary                               --           (529,967)
CASH FLOWS FROM FINANCING ACTIVITIES
  Net proceeds from long term debt                       --               --
  Proceeds from sale of series A preferred stock         --            106,881
  Proceed from sale of common stock                      --            259,822
  Proceeds from additional paid in capital               --            888,006
NET CASH PROVIDED BY FINANCING ACTIVITIES                --          1,254,709

NET INCREASE (DECREASE) IN CASH                       (36,514)         230,617
CASH, BEGINNING OF PERIOD                              37,424            7,984
CASH, END OF PERIOD                               $       910      $   238,601



<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Results of  Operations:  The Company has had  recurring  losses from  operations
since  inception  and had a net capital  deficiency  at December 31,  1998,  and
September 30, 1999, each of which raised substantial doubts about the ability of
the Company to  continue as a going  concern.  The  Company,  as a result of the
cessation of its coffee business,  the recision of two separate acquisitions and
the failure of its other reported acquisitions, had no operations during 1999 or
1998; thus, no meaningful  comparison can be made to prior periods.  The Company
generated no sales or cost of sales during the period, and incurred only general
and administrative  expenses in regards of its operations.  Daymar  Corporation:
The  Company  settled an account  payable in the amount of $25,000  with  Daymar
Corporation  through its  agreement to pay $5,000 in cash.  The  settlement  was
effective on execution  and delivery of the agreement and the payment of $1,500,
which  resulted  in income of $20,000  to the  Company  during the period  under
consideration,  as well as a  reduction  of cash in the  amount of $1,500  and a
reduction in accounts payable of $21,500,  leaving an account payable of $3,500.
Brother's  Gourmet  Coffee:  Brother's  Gourmet  Coffee has agreed to settle its
account for  $50,000;  however,  the Company does not  presently  have the funds
necessary to bring the account to a close;  thus,  accounts payable at September
30, 1999,  include the full amount due this  creditor.  This  account  comprises
almost  all of the  stated  accounts  payable  at the  end of the  period  under
consideration.  Legal  counsel to  Brothers  Gourmet  Coffee has stated that the
offer will remain  outstanding  indefinitely  or until  Brothers  Gourmet Coffee
indicates it is no longer willing to settle the debt for the $50,000 agreed.  As
of the date of this report, the offer remains  outstanding.  DayStar Litigation:
On May 14, 1998,  Business Growth Fund of Southern  California,  LP, and Daystar
Partners,  Inc.,  sued the  Company  in Los  Angeles  Superior  Court  (Case No.
BC191159)  alleging that the Company  failed to deliver to them Common Stock and
warrants which they claim to have been entitled as a result of their  agreements
concerning  certain  bridge loans to the Company  during  1996,  the proceeds of
which were used,  in part,  to provide for the  secondary  offering  made by the
Company in August,  1996, and further  claiming moneys due to them in regards of
their exercise of certain bridge loan warrants  issued them. The Company has not
been  served  with the suit,  but has  responded  by  letter  to the  plaintiffs
informing  them  that they  have no basis  for the suit and  seeking  to find an
accommodation  so as to avoid the  incurrence of unnecessary  legal fees.  Legal
counsel to the Company has orally informed management that the law suit has been
unilaterally withdrawn by the plaintiffs.

In 1999 the sole efforts of the Company have been directed towards (1) obtaining
an audit of its financial  statements  for 1999 and 1998,  (2) the filing of the
appropriate  periodic  reports  with  the  Securities  and  Exchange  Commission
required under the  Securities  Exchange Act of 1934 and (3) obtaining a listing
of the  securities  of the  Company  on the  Bulletin  Board  maintained  by the
National Association of Securities Dealers,  Inc. Management has been successful
in the first two of these  endeavors.  Regarding the third, the Company obtained
the services of a  broker/dealer  who  sponsored the common stock of the Company
for trading;  however,  management determined not to pursue this application due
to the failure of the broker/dealer to adequately and timely respond to the NASD
and to keep the Company informed on the progress of the application.

Liquidity and Capital  Resources:  The Company,  from inception and until August
14, 1996, the date on which a secondary offering of stock was concluded, had two
sources of working  capital for its operations  and  expansion,  those being the
cash flow generated from existing  operations and the extension of credit by its
coffee supplier. The Company,  during the final quarter of 1995 and until August
14,  1996,  relied on a series  of  bridge  loans to  provide  for the  expenses
incurred in conducting the secondary  public  offering.  The secondary  offering
closed on August 14, 1996,  and a substantial  portion of the proceeds  received
from the  offering  were used to repay the  bridge  loans  incurred.  During the
fourth  quarter of 1996,  the Company  negotiated a release of its contract with
Ralph's  and  subsequently  received  the  release  of  liabilities  aggregating
$707,234  from  creditors  following  the  cessation  of its coffee  business in
exchange for partial payments against the debt owed. The Company,  subsequent to
August 14, 1996, and through  December,  1997,  relied on the proceeds  received
from the  exercise of  outstanding  bridge loan  warrants  registered  under the
secondary offering to provide liquidity.  Since December,  1997, the Company has
principally relied on the cash proceeds resulting from the Fisher settlement and
the exercise of Series A Warrants to provide operating capital.

<PAGE>


                            PART II-OTHER INFORMATION

Item 1.  Litigation.

DayStar  Litigation:   On  May  14,  1998,  Business  Growth  Fund  of  Southern
California,  LP, and  Daystar  Partners,  Inc.,  sued the Company in Los Angeles
Superior Court (Case No.  BC191159)  alleging that the Company failed to deliver
to them Common  Stock and warrants  which they claim to have been  entitled as a
result of their agreements concerning certain bridge loans to the Company during
1996,  the proceeds of which were used,  in part,  to provide for the  secondary
offering made by the Company in August, 1996, and further claiming moneys due to
them in regards of their exercise of certain  bridge loan warrants  issued them.
The Company has not been served with the suit,  but has  responded  by letter to
the  plaintiffs  informing them that they have no basis for the suit and seeking
to find an  accommodation  so as to avoid the  incurrence of  unnecessary  legal
fees.  Legal counsel to the Company has orally informed  management that the law
suit has been unilaterally withdrawn by the plaintiffs.

Item 2.  Change in Securities.

This item is not applicable to the Company.

Item 3.  Defaults Upon Senior Securities.

This item is not applicable to the Company.

Item 4.  Submission of Matters to a Vote of Security Holders.

This item is not applicable to the Company.

Item 5.  Other Information.

This item is not applicable to the Company.

Item 6.  Exhibits and Reports on Form 8 K.

This item is not applicable to the Company.

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  registrant  has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, this 15th day of November, 1999.

MIDLAND, INC.
(Registrant)

By: /s/ Roger F. Tompkins
- -------------------------
Roger F. Tompkins, Chief Executive,
Financial and Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant in the
capacity on this 15th day of November, 1999.

By: /s/ Roger F. Tompkins
- -------------------------
Roger F. Tompkins, Director



<TABLE> <S> <C>

<ARTICLE> 5

<S>                                           <C>
<PERIOD-TYPE>                                9-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               SEP-30-1999
<CASH>                                             910
<SECURITIES>                                         0
<RECEIVABLES>                                   90,000
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                90,910
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                 114,035
<CURRENT-LIABILITIES>                          272,895
<BONDS>                                              0
                                0
                                    118,365
<COMMON>                                     1,106,928
<OTHER-SE>                                 (1,384,153)
<TOTAL-LIABILITY-AND-EQUITY>                   114,035
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                   39,942
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                               (19,942)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                           (19,942)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (19,942)
<EPS-BASIC>                                   (.001)
<EPS-DILUTED>                                   (.001)



</TABLE>


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