<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 33-20432
WHITESTONE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-2228828
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2255 Glades Road, Suite 324A, Boca Raton, FL 33431
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(Address of Principal Executive Office) (Zip Code)
(407) 347-6498
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(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 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
--- ---
The number of shares of registrant's Common Stock, $.0001 par value,
outstanding as of September 30, 1995 was 13,003,179 shares.
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WHITESTONE INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet -- September 30, 1995 F-3
Statements of Operations -- Three months ended F-4
September 30, 1995 and 1994; and nine months ended September 30,
1995 and 1994
Statements of Cash Flows -- Three months ended F-5
September 30, 1995 and 1994; and nine months ended September 30,
1995 and 1994
Notes to Financial Statements F-6
Item 2. Management's Discussion and Analysis of F-7
Plan of Operation
PART II - OTHER INFORMATION F-9
SIGNATURES F-10
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WHITESTONE INDUSTRIES, INC.
BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)
ASSETS
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<S> <C>
ASSETS: $ -
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES: $ -
===========
STOCKHOLDERS' EQUITY:
Preferred stock, $ .01 par value; 1,000,000 shares authorized;
none issued and outstanding -
Common stock, $ .0001 par value; 20,000,000 shares
authorized, 13,003,179 shares issued and outstanding 1,300
Additional paid-in capital 1,004,014
Accumulated deficit (1,005,314)
-----------
TOTAL STOCKHOLDERS' EQUITY $ -
===========
</TABLE>
See notes to financial statements
F-3
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WHITESTONE INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
-------------------------------- ---------------------------------
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES - - - -
----------- ----------- ----------- -----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS - - - -
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (158,689) (162,552) (6,536) (64,457)
----------- ----------- ----------- -----------
NET LOSS $ (158,689) $ (162,552) $ (6,536) $ (64,457)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE
Continuing $ - $ - $ - $ -
Discontinued ($ 0.012) ($ 0.015) ($ 0.001) ($ 0.006)
----------- ----------- ----------- -----------
$ ($ 0.$12) ($ 0.0$5) ($ 0.$01) ($ 0.006)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 13,003,179 10,984,429 13,003,179 10,984,429
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
F-4
<PAGE> 5
WHITESTONE INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------
1995 1994
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CASH FLOWS FROM CONTINUING OPERATIONS:
Net loss $ - $ -
--------- ---------
NET CASH PROVIDED BY CONTINUING OPERATIONS - -
CASH FLOW FROM DISCONTINUED OPERATIONS
Net loss (158,689) (162,552)
Depreciation and amortization - 110,005
Net changes in assets and liabilities in discontinued -
business 108,752
NET CASH PROVIDED BY INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 317,188 -
Distributions of capital (158,499) -
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 158,689 -
--------- ---------
NET INCREASE (DECREASE) IN CASH - 56,205
CASH AT BEGINNING OF PERIOD - 33,489
--------- ---------
CASH AT END OF PERIOD $ - $ 89,694
========= =========
</TABLE>
See notes to financial statements
F-5
<PAGE> 6
WHITESTONE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions on Form 10-QSB and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, such financial
statements reflect all adjustments necessary for a fair statement of the results
of operations and financial position for the interim periods presented.
Operating results for the nine months ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1995.
For a more complete understanding of the Company's financial position and
results of operations, reference is made to the financial statements of
Whitestone Industries, Inc. and related notes thereto previously filed with the
Company's Form 10-KSB for the year ended December 31, 1994.
NOTE 2 - DISCONTINUED OPERATIONS
In October 1995 (effective July 1, 1995), the Company sold its oil and gas
business (including all related assets and liabilities) to Magnum Petroleum,
Inc. ("Magnum") in exchange for $300,000 in cash, 85,159 shares of Magnum common
stock and 50,000 options to purchase Magnum common stock at prices from $4.00 to
$4.25. Substantially all of this consideration was subsequently transferred to
the Company's then president and majority stockholder in settlement of amounts
owed to him by the Company and for his assumption of all remaining liabilities
of the Company outstanding as of that date. Accordingly, the results of the oil
and gas properties are shown separately as "discontinued operations". The
Company's 1994 financial information has been reclassified to conform with the
1995 presentation.
NOTE 3 - SUBSEQUENT EVENTS
a. In October 1995 the Company distributed all of its assets, including Magnum
Securities to its then President and majority stockholder to retire certain
debts owed to him, and for his assumption of all remaning liabilities of the
Company outstanding as of that date.
F-6
<PAGE> 7
In October 1995, the Company spun off Whitestone Games, a wholly owned
subsidiary to its stockholders.
The net effect of all the above transactions has been reported as a distribution
of capital.
b. On December 7, 1995, the Company, Whitestone Group, Ltd., a British Virgin
Islands limited partnership organized under the laws of British Virgin Islands
("WGL"), Golden Bear Entertainment Corporation, a California corporation
("GBEC"), and Donald Yu, ("Yu") entered into a Stock Purchase and Exchange
Agreement (the "Agreement"), which was effective on December 7, 1995. Pursuant
to the Agreement, WGL contributed back to the Company its right and interest in
6,700,000 shares of its 8,700,000 shares of the Company's common stock, in
exchange for the Company's interest in certain securities. Prior to December 7,
1995, WGL owned approximately 64.2% of the outstanding capital stock interest of
the Company. Upon consummation of the transaction, WGL owned approximately 5.9%
of the outstanding capital stock interest of the Company.
Pursuant to the Agreement, the Company acquired all of the capital stock of GBEC
in exchange for the distribution to Mr. Yu, the sole stockholder of GBEC, of (I)
3,200,000 shares of restricted common stock of the Company and (II) 500,000
shares of newly issued shares of Series A Convertible Preferred Stock (the
"Series A Preferred Stock") that are convertible into 78,400,000 (subject to
certain anti-dilution provisions) shares of common stock of the Company. The
common stock and the Series A Preferred Stock issued to Mr. Yu represents
approximately 79.89% of the outstanding capital stock interest of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
LIQUIDITY AND CAPITAL RESOURCES
In October 1995 the Company distributed all of its assets, including Magnum
Securities to its then president and majority stockholder to retire certain
debts owed to him and for his assumption of all remaning liabilities of the
Company outstanding as of that date.
In October 1995, the Company spun off Whitestone Games, a wholly owned
subsidiary to its stockholders.
The net effect of all the above transactions has been reported as a distribution
of capital.
F-7
<PAGE> 8
RESULTS OF OPERATIONS
In October 1995 (effective July 1, 1995), the Company sold its oil and gas
business (including all related assets and liabilities) to Magnum Petroleum,
Inc. ("Magnum") in exchange for $300,000 in cash, 85,159 shares of Magnum common
stock and 50,000 options to purchase Magnum common stock at prices from $4.00 to
$4.25. Substantially all of this consideration was subsequently transferred to
the Company's then president and majority stockholder in settlement of amounts
owed to him by the Company and for his assumption of all remaining liabilities
of the Company outstanding as of that date. Accordingly, the results of the oil
and gas properties are shown separately as "discontinued operations". The
Company's 1994 financial information has been reclassified to conform with the
1995 presentation.
F-8
<PAGE> 9
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 SECURITIES HOLDERS - NONE
Item 5. OTHER INFORMATION - NONE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
On December 7, 1995 the Company filed a report of Form 8-K.
F-9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WHITESTONE INDUSTRIES, INC.
By: /s/ Hernan Saide
--------------------------------
President and, President as
Chief Executive Officer
Date: December 7, 1995
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F-10
<PAGE> 11
EXHIBIT INDEX
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EXHIBIT 27.1 FINANCIAL DATA SCHEDULE FOR NINE-MONTHS
EXHIBIT 27.2 FINANCIAL DATA SCHEDULE FOR THREE-MONTHS
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT SEPTEMBER 30, 1995 AND THE STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1995 AS INCLUDED IN FORM 10-QSB FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,300
<OTHER-SE> (1,300)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (158,689)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (158,689)
<EPS-PRIMARY> (0.012)
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT SEPTEMBER 30, 1995 AND THE STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1995 AS INCLUDED IN FORM 10-QSB FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,300
<OTHER-SE> (1,300)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (6,536)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,536)
<EPS-PRIMARY> (0.001)
<EPS-DILUTED> 0
</TABLE>
