MIDLAND INC
10QSB, 1999-04-12
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: March 31, 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:  (303) (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 March 31, 1999,  there
were 3,696,807  shares of common stock  outstanding and 16,228,638  common share
equivalents.

<PAGE>

I. PART I  FINANCIAL INFORMATION

Item 1. Financial Statements


                                  MIDLAND, INC.
                                 BALANCE SHEETS

                                                   March 31,        December 31,
       ASSETS                                        1999               1998
       ------                                        ----               ----
                                                  (Unaudited)

ASSETS

CURRENT ASSETS
  Cash                                            $        43       $        43
  Restricted cash-escrow                                8,134            37,381
  Note receivable                                      90,000            90,000

TOTAL CURRENT ASSETS                                   98,177           127,424

INVESTMENT (Note C)                                    23,125            23,125

 TOTAL ASSETS                                     $   121,302       $   150,549

 LIABILITIES AND
    SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable                                $   209,116       $   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                             289,467           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                         (3,182,592)       (3,153,345)

TOTAL SHAREHOLDERS' DEFICIT                          (168,165)         (138,918)

TOTAL LIABILITIES AND
   SHAREHOLDERS' DEFICIT                          $   121,302       $   150,549


   The accompanying notes are an integral part of these financial statements.


<PAGE>

                                  MIDLAND, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                   For the three months ended
                                                  March 31,           March 31,
                                                    1999                1998
                                                    ----                ----

SALES                                            $         0        $         0

COST OF SALES                                              0                  0

Gross profit                                               0                  0

OPERATING EXPENSES
  General and administrative                          29,247            220,863
  Depreciation                                             0                  0

TOTAL OPERATING EXPENSES                                   0            220,863

LOSS FROM OPERATIONS                                       0           (220,863)

OTHER INCOME (EXPENSES)
  Interest income                                          0              1,264
  Interest expense                                         0                  0

LOSS BEFORE INCOME TAXES                             (29,247)          (219,599)

Provision for income tax                                   0                800

NET LOSS                                         $   (29,247)       $   219,599)

Net loss per common share                              (.001)              (.08)

Weighted average number
   of shares outstanding                           3,696,807          2,823,207



   The accompanying notes are an integral part of these financial statements.


<PAGE>

                                  MIDLAND, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                      For the three months ended
                                                        March 31,      March 31,
                                                          1999           1998
                                                          ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                             $ (29,247)     $(219,599)

  Adjustments to reconcile net
    loss to net cash used in
    operating activities:
         Depreciation                                          0              0
  Gain on sale of property
    and equipment                                              0              0

Changes in operating assets and liabilities:

  Accounts receivables                                         0              0
  Inventory                                                    0              0
  Prepaid expenses                                             0              0
  Other assets                                                 0              0

Increase (decrease) in:

  Subscription receivables                                     0       (100,000)
  Accounts payable                                             0         (7,726)
  Accounts payable: related party                              0       (153,000)
  Accrued expenses                                             0          1,013
  Bank overdraft                                               0              0

NET CASH USED IN
     OPERATING ACTIVITIES                                      0       (479,312)

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in subsidiary                                     0       (329,000)

CASH FLOWS FROM FINANCING ACTIVITIES

  Payments on long term debt                                   0              0
  Net proceeds from long term debt                             0              0
  Proceeds from sale of
   series A preferred stock                                    0         86,202
  Proceed from sale of
   common stock                                                0        156,215
  Proceeds from additional
   paid in capital                                             0        720,143

NET CASH PROVIDED BY
   FINANCING ACTIVITIES                                        0        962,560

NET INCREASE (DECREASE) IN CASH                          (29,247)       154,248

CASH, BEGINNING OF PERIOD                                 37,381          7,984

CASH, END OF PERIOD                                    $   8,134      $ 162,232



   The accompanying notes are an integral part of these financial statements.


<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, 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.

At March 31,  1998,  the  Company  reported a cash  balance of  $162,232  and an
investment in subsidiary of $329,000.  (The  subsidiary was  ArconEnergy.)  This
cash was  misappropriated by Mr. Daniel W. Fisher and/or invested in ArconEnergy
, and  became  the  basis of a law suit  which  was  subsequently  settled.  The
subsidiary  investment  was then  written off as a loss.  At that date there was
also a  subscription  receivable  in the amount  $100,000  from Mr. King and his
StockstoWatch.com which was subsequently written off as uncollectible.  Accounts
payable  at March  31,  1998,  aggregated  $121,000  to  related  parties.  This
represented  a  $153,000  decrease  from year end  which  was the  result of the
delivery of 90,000  shares of Series A Preferred  Stock to a former  officer and
director  in  exchange  for his  services  from  August 29,  1997,  through  and
including  January 22,  1998.  The sum of  $153,000  was accrued at year end for
these services and an additional  $27,000 was incurred  during the first quarter
of 1998,  all of which was  satisfied  through the  delivery  of the stock.  The
remaining $121,000 in related party accounts payable was subsequently  satisfied
as well.

In the final quarter of 1998, the Company made a loan to an unaffiliated  entity
of  approximately  $90,000  on a short term  basis at an above  market  rate and
invested $23,125 in common stock from this entity.



<PAGE>



In the first  quarter of 1999 the sole business of the Company has been directed
towards  obtaining an audit of its  financial  statements  for 1999 and 1998 and
towards the filing of the  appropriate  annual and  quarterly  reports  with the
Securities  and  Exchange   Commission.   Management  was  successful  in  these
endeavors. Secondly, management has dedicated itself towards obtaining a listing
of the  securities  of the  Company  on the  Bulletin  Board  maintained  by the
National  Association of Securities  Dealers,  Inc. The Company has obtained the
services of a  broker/dealer  who is sponsoring  the  securities for trading and
management  is currently in the process of answering  the  questions of the NASD
prior to the re-listing of the securities.

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.

                            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.



<PAGE>


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. If served, the Company intends to vigorously defend the suit.

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 9th day of April, 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 9th day of April, 1999.

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


<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                                           <C>
<PERIOD-TYPE>                                3-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               MAR-31-1999
<CASH>                                           8,176
<SECURITIES>                                    23,125
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               121,302
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                 121,302
<CURRENT-LIABILITIES>                          289,467
<BONDS>                                              0
                                0
                                    118,365
<COMMON>                                     1,106,928
<OTHER-SE>                                 (1,393,458)
<TOTAL-LIABILITY-AND-EQUITY>                   121,302
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                   29,247
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                               (29,247)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                           (29,247)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (29,247)
<EPS-PRIMARY>                                   (.001)
<EPS-DILUTED>                                   (.001)
        


</TABLE>


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