-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KrR4WXqUVmpzN2z9jAfEPgVCwAqd3qRyolY7GHBxeSrKr0BDppO6ILoAacDN7O0S XInfYlDHQMxfh6CAXejzXw== /in/edgar/work/0001005477-00-007782/0001005477-00-007782.txt : 20001115 0001005477-00-007782.hdr.sgml : 20001115 ACCESSION NUMBER: 0001005477-00-007782 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEINS HOLDINGS INC /NV/ CENTRAL INDEX KEY: 0000811036 STANDARD INDUSTRIAL CLASSIFICATION: [9995 ] IRS NUMBER: 880222660 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-11986-LA FILM NUMBER: 762628 BUSINESS ADDRESS: STREET 1: 21800 OXNARD STREET STREET 2: SUITE 440 CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8185986780 MAIL ADDRESS: STREET 1: 21800 OXNARD STREET STREET 2: SUITE 440 CITY: WOODLAND HILLS STATE: CA ZIP: 91367 FORMER COMPANY: FORMER CONFORMED NAME: TELEMALL COMMUNICATIONS INC/NV DATE OF NAME CHANGE: 19960905 FORMER COMPANY: FORMER CONFORMED NAME: VEGAS VENTURES INC DATE OF NAME CHANGE: 19960905 10-Q 1 0001.txt FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 or |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to N/A Commission File No. 33-11986-LA STEIN'S HOLDINGS, INC. (Exact name of registrant as specified in its charter) Nevada, USA 88-022660 (State of Incorporation) (IRS Employer Identification No.) 21800 Oxnard Street, #440, Woodland Hills, California 91367 (Address of principal executive offices) Registrant's Telephone Number, (818) 598-6780 - -------------------------------------------------------------------------------- (Former name, former address and fiscal year, if changed since last report) Indicate by check mark if 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 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. |X| Yes |_| No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. |_| Yes |_| No APPLICABLE ONLY TO CORPORATE ISSUERS State number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Class Outstanding at September 30, 2000 Common Stock, $.001 4,401,166 shares par value ---------------- Outstanding Securities Transitional Small Business Disclosure Format (check one): Yes |_| No |X| STEIN'S HOLDINGS, INC. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Financial statements are unaudited and included herein beginning on page F1 and are incorporated herein by this reference. BASIS OF PRESENTATION The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the year ended December 31, 1999. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the nine months ended September 30, 2000 are not necessarily indicative of results that may be expected for the year ending December 31, 2000. The financial statements are presented on the accrual basis. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Except for disclosures that report the Company's historical results, the statements set forth in this section are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that may cause actual results to differ materially from those in the forward-looking statements are in the Company's annual report on Form 10-K for the year ended December 31, 1999 and in the Company's other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update any forward-looking statements or comments on the reasons why actual results may differ therefrom. Stein's Holdings, Inc. (the "Company"), formerly known as Vegas Ventures, Inc. and TeleMall Communications, Inc., acquired 100% of Multi-Source Capital, Ltd. in April, 1999, pursuant to which the Company's name was changed to "Stein's Holdings, Inc." At that time, the Company assumed an agreement previously entered into by MSC to acquire College Connection, Inc. d.b.a. Stein's Bakery ("Stein's Bakery"), a wholesale and retail bakery operation located in Dallas, Texas. As of the date of this report, the proposed acquisition of Stein's Bakery has not occurred and most likely will not occur. Stein's Bakery filed for protection under Chapter 11 of the United States Bankruptcy Code on October 13, 2000. The president of Stein's Bakery is Randy Sutton, former CEO and director of the Company. In September, 1999, the Company lent $37,500 to the Bakery for the purchase of certain equipment. The Bakery agreed to make payments of interest only until September, 2000 when all accrued interest and unpaid principal are due. No payments were ever made and it is unlikely that the Company will be repaid this loan. The Company has been investing its capital in the stock market and investigating other business opportunities that the Company may be interested in acquiring. To date, none of these other business activities have proven to be significantly attractive to the Company. As a consequence of its acquisition of MSC, the Company became the majority shareholder of another publicly traded company, 20/20 Web Design, Inc. ("20/20 Web"), a Nevada corporation formerly known as Trump Oil Corporation. 20/20 Web merged with MSC's wholly owned subsidiary and MSC received eighty percent of the issued and outstanding shares of 20/20 Web as a result of that merger. 20/20 Web is presently seeking a business to acquire. 20/20 Web lent $195,000 to Stein's Bakery in December, 1999 and has been attempting to secure repayment of the loan. Given the bankruptcy filing of Stein's Bakery, it is doubtful that the loan will be repaid or when it might be repaid. 20/20 Web wrote off the debt during the first quarter of 2000. During the quarter ended September 30, 2000, the Company acquired 80% of the issued and outstanding shares of Universal Services and Acquisitions, Inc. ("USI"), a Colorado corporation, in exchange for agreeing to pay the legal, accounting and other fees necessary to make USI current under the reporting obligations of the Securities Exchange Act of 1934. The Company intends to make the necessary filings on behalf of USI and seek out suitable businesses to whom sell its interest in USI. The Company may also seek suitable merger candidates and merge USI with another company. At the present time, the Company has no candidates in mind with whom to sell or merge USI. Results of Operations The Company realized a net loss of ($166,470) from operations for the three month period ended September 30, 2000 compared to a gain of $36,962 for the three month period ended September 30, 1999. For the three month period ended September 30, 2000, the Company had revenues of ($70,013), composed primarily of unrealized losses on the securities it owns. During this period, the Company's subsidiaries had no revenues, compared to no revenues during the previous year's period. The subsidiaries' revenues and expenses are consolidated and reported in the Company's consolidated financial statements contained herein. The Company had revenues of $111,222 for the three month period ended September 30, 1999. The net loss per share for the three month period ended September 30, 2000 was ($.04) per share compared to a net gain per share of $.01 for the three month period ended September 30, 1999. The Company realized a net loss of ($356,298) for the nine months ended September 30, 2000 compared to a net loss of ($284,610) for the nine months ended September 30, 1999. The Company had revenues of $171,318 for the nine month period ended September 30, 2000 compared to revenues of ($93,050) for the nine month period ended September 30, 1999. The net loss per share for the nine month period ended September 30, 2000 was ($.08) per share compared to a net loss per share of ($.11) for the nine month period ended September 30, 1999. The Company had costs and expenses of $150,219 for the three month period ended September 30, 2000 compared to costs and expenses of $70,790 for the three month period ended September 30, 1999. The Company's expenses consist of salaries, professional fees, rent expense and interest expense along with general office expenses. The Company's assets at September 30, 2000 were $678,278 compared to assets of approximately $735,000 at September 30, 1999. The difference is due to the market price fluctuation of securities owned by the Company. The Company's liabilities at September 30, 2000 were approximately $355,000 compared to liabilities of approximately $42,000 at September 30, 1999. Much of the difference between this two periods is due to the Company's margin account payable. The largest liability of the Company at September 30, 2000 is its margin account payable of approximately $261,000 compared to no margin account payable for the prior year's period. The Company's current liabilities at September 30, 2000 consist of its margin account payable of approximately $261,000 and accounts payable of approximately $73,000. At September 30, 1999, the Company's current liabilities consisted of a note payable of $25,000 and corporation income taxes of approximately $14,000. Total shareholder equity decreased from $653,071 at September 30, 1999 to $328,315 at September 30, 2000. Liquidity and Capital Resources As of September 30, 2000, the Company had working capital of approximately $275,000 consisting of $632,992 in current assets and $355,449 in current liabilities. The Company had working capital of approximately $680,000 at September 30, 1999 consisting of $722,606 in current assets and $39,795 in current liabilities. The Company has adequate working capital for its current operations. if the Company is presented with other business opportunities, it may have to raise additional capital, of which there can be no assurance that it will be successful in locating other sources of capital or financing. The Company had an agreement to acquire Stein's Bakery in Lewisville, Texas which given Stein's Bakery filing a petition under Chapter 11 of the United States Bankruptcy Code makes it highly probable that this acquisition will not be consummated. The Company intends to seek out other opportunities to acquire an operating business for the Company. The Company has sufficient assets to continue to operate its business at the present time. Effect of Inflation Inflation did not have any significant effect on the operations of the Company during the three months ended September 30, 2000. Further, inflation is not expected to have any significant effect on future operations of the Company. PART II OTHER INFORMATION Items 1, 2, 3 and 4 are Inapplicable Item 5. Other Matters. Resignation of Officers and Directors. On October 27, 2000, the Company accepted the resignation of Irving M. Einhorn, Chairman of the Board. Mr. Einhorn resigned due to the lack of time to deal with the affairs of the Company. The Company appointed Mehrdad Alborz, an attorney in Los Angeles, to replace Mr. Einhorn until the annual meeting of shareholders and until his successor is elected and qualified. Mr. Alborz is a sole practitioner. Item No. 6 - Exhibits and Reports on Form 8-K (a) No reports on Form 8-K were filed during the three months ended September 30, 2000. (b) Exhibits 99 Financial Statements for the periods ended September 30, 2000 and 1999 27 Financial Data Schedule 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. Stein's Holdings, Inc. Date November 8, 2000 /s/ Charles Smith --------------------------------- Charles Smith, CEO, CFO STEIN'S HOLDINGS, INC. CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 TABLE OF CONTENTS Page No. -------- INDEPENDENT ACCOUNTANTS' REVIEW REPORT .............................. 1 FINANCIAL STATEMENTS Consolidated Balance Sheets................................... 2 Consolidated Statements of Operations......................... 3 Consolidated Statement of Changes in Stockholders' Equity..... 4 - 5 Consolidated Statements of Cash Flows......................... 6 - 7 Notes to Consolidated Financial Statements.................... 8 - 15 INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors and Stockholders Stein's Holdings, Inc. Woodland Hills, California We have reviewed the accompanying balance sheets of Stein's Holdings, Inc. as of September 30, 2000 and 1999, and the related statements of operations, changes in stockholders' equity and cash flows for the nine months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Stein's Holdings, Inc. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit 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 accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Moffitt & Company, P.C. Scottsdale, Arizona October 16, 2000 STEIN'S HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) ASSETS
2000 1999 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 257 $ 204,052 Trading securities 427,261 428,596 Notes receivable 22,200 38,500 Loans receivable 10,774 0 Corporation income tax refund 0 9,458 Deferred tax asset 172,500 42,000 ----------- ----------- TOTAL CURRENT ASSETS 632,992 722,606 PROPERTY AND EQUIPMENT 10,094 12,245 OTHER ASSETS Goodwill 35,192 0 ----------- ----------- TOTAL ASSETS $ 678,278 $ 734,851 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 ----------- ----------- CURRENT LIABILITIES Accounts payable $ 72,802 $ 388 Accrued liabilities 2,100 0 Margin accounts payable 260,547 0 Note payable 20,000 25,000 Corporation income taxes payable 0 14,407 ----------- ----------- TOTAL CURRENT LIABILITIES 355,449 39,795 ----------- ----------- LONG-TERM LIABILITIES Deferred income tax payable 1,200 2,098 ----------- ----------- MINORITY INTEREST (DEFICIENCY) IN CONSOLIDATED SUBSIDIARY (6,686) 39,887 ----------- ----------- STOCKHOLDERS' EQUITY Convertible preferred stock Authorized 10,000,000 shares, par value $10 per share Issued and outstanding -0- shares 0 0 Common stock Authorized 50,000,000 shares, par value $.001 per share Issued and outstanding 4,401,166 shares at September 30, 2000 4,401 0 4,379,230 shares at September 30, 1999 0 4,379 Paid in capital in excess of par value of stock 2,924,005 2,568,508 Retained earnings (deficit) (2,600,091) (1,919,816) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 328,315 653,071 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 678,278 $ 734,851 =========== ===========
See Accompanying Notes and Independent Accountants' Review Report. 2 STEIN'S HOLDINGS, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2000 2000 1999 1999 ----------- ----------- --------- --------- REVENUES Realized and unrealized gains (losses) on trading securities $ (72,213) $ 167,832 $111,222 $ (98,677) Dividends and interest 2,200 3,486 0 5,627 ----------- ----------- --------- --------- TOTAL REVENUES (70,013) 171,318 111,222 (93,050) ----------- ----------- --------- --------- COSTS AND EXPENSES Loss on worthless subsidiary 0 195,657 0 0 General and administrative expenses 140,360 415,057 70,790 238,053 Interest expense 9,859 15,960 0 1,532 ----------- ----------- --------- --------- TOTAL COSTS AND EXPENSES 150,219 626,674 70,790 239,585 ----------- ----------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES (REFUND) AND MINORITY INTEREST (220,232) (455,356) 40,432 (332,635) INCOME TAXES (REFUND) (42,000) (53,424) 5,000 (42,000) ----------- ----------- --------- --------- INCOME (LOSS) BEFORE MINORITY INTEREST (178,232) (401,932) 35,432 (290,635) MINORITY INTEREST IN (LOSS) OF SUBSIDIARY 11,762 45,634 1,530 6,025 ----------- ----------- --------- --------- NET INCOME (LOSS) $ (166,470) $ (356,298) $ 36,962 $(284,610) =========== =========== ========= ========= NET INCOME (LOSS) PER COMMON SHARE Basic and diluted $ (.04) $ (.08) $ .01 $ (.11) =========== =========== ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic and diluted 4,401,166 4,401,166 2,478,605 2,478,605 =========== =========== ========= =========
See Accompanying Notes and Independent Accountants' Review Report. 3 STEIN'S HOLDINGS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
Deficit Convertible Paid in Accumulated Preferred Stock Common Stock Capital in Retained During ------------------------ -------------------- Excess of Earnings Development Shares Amount Shares Amount Par Value (Deficit) Stage ---------- ------------ --------- --------- ----------- -------------- ------------- BALANCE, JANUARY 1, 1999 510,000 $ 5,100,000 44,376 $ 44 $1,189,154 $ 0 $ (1,507,386) CANCELLATION OF PREFERRED STOCK (510,000) (5,100,000) 0 0 290,687 0 0 ISSUANCE OF COMMON STOCK FOR SERVICES, AT PAR 0 0 62,500 62 0 0 0 PRIVATE PLACEMENT OF STOCK THROUGH SUBSIDIARY COMPANIES 0 0 0 0 227,140 0 0 MERGER WITH 20/20 WEB DESIGN, INC 0 0 0 0 177,566 (94,180) 0 ISSUANCE OF COMMON STOCK FOR MERGER OF MULTI-SOURCE CAPITAL LTD 0 0 4,247,754 4,248 560,986 (33,640) 0 ISSUANCE OF COMMON STOCK FOR CASH 0 0 5,000 5 24,995 0 0 RENT 0 0 4,000 4 19,996 0 0 ACCOUNTS PAYABLE 0 0 2,000 2 9,998 0 0 TRANSFER OF DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE TO RETAINED EARNINGS 0 0 0 0 0 (1,507,386) 1,507,386
See Accompanying Notes and Independent Accountants' Review Report. 4 STEIN'S HOLDINGS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
Deficit Convertible Paid in Accumulated Preferred Stock Common Stock Capital in Retained During ----------------------- --------------------- Excess of Earnings Development Shares Amount Shares Amount Par Value (Deficit) Stage --------- --------- --------- --------- ----------- ----------- ----------- MERGER WITH 20/20 WEB DESIGN, INC 0 $ 0 0 $ 0 $ 278,386 $ (367,248) $ 0 ISSUANCE OF COMMON STOCK FOR CASH 0 0 13,610 14 67,986 0 0 ACCOUNTS PAYABLE 0 0 11,926 12 75,131 0 0 CONSULTING SERVICES 0 0 10,000 10 1,980 0 0 NET (LOSS) FOR THE YEAR ENDED DECEMBER 31, 1999 0 0 0 0 0 (241,339) 0 --------- --------- --------- --------- ----------- ----------- ----------- BALANCE DECEMBER 31, 1999 0 0 4,401,166 4,401 2,924,005 (2,243,793) 0 NET (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 0 0 0 0 0 (356,298) 0 --------- --------- --------- --------- ----------- ----------- ----------- BALANCE, SEPTEMBER 30, 2000 0 $ 0 4,401,166 $ 4,401 $ 2,924,005 $(2,600,091) $ 0 ========= ========= ========= ========= =========== =========== ===========
See Accompanying Notes and Independent Accountants' Review Report. 5 STEIN'S HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 2000 1999 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $(356,298) $(284,610) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Depreciation 3,122 1,366 Minority interest in (loss) of subsidiary (45,634) (6,025) Loss on investment in subsidiary 195,000 0 Common stock issued for services 0 20,000 Changes in operating assets and liabilities: Trading securities (33,374) 263,202 Corporation income tax refund 0 9,458 Accounts receivable 28,136 0 Deferred tax assets (52,413) (42,000) Prepaid insurance 507 0 Accounts payable 67,508 (31,632) Accrued liabilities (57) (1,197) Corporation income taxes payable (5,177) 0 --------- --------- NET CASH FLOWS (USED) BY OPERATING ACTIVITIES (198,680) (71,438) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (2,751) (7,469) Changes in notes and loans receivable 5,527 (38,500) Acquisition of subsidiary (62,557) 0 --------- --------- NET CASH FLOWS (USED) BY INVESTING ACTIVITIES (59,781) (45,969) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on margin accounts payable 260,547 (40,168) Proceeds from issuance of common stock 0 320,140 Repayment of note payable (5,000) 0 --------- --------- NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 255,547 279,972 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,914) 162,565 See Accompanying Notes and Independent Accountants' Review Report. 6 STEIN'S HOLDINGS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 2000 1999 ------- -------- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 3,171 $ 41,487 ------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 257 $204,052 ======= ======== SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION Interest paid $13,860 $ 1,532 ======= ======== Taxes paid $ 0 $ 0 ======= ======== NON CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock for rent and accounts payable $ 0 $ 20,000 ======= ======== Cancellation of preferred stock $ 0 $290,687 ======= ======== See Accompanying Notes and Independent Accountants' Review Report. 7 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Stein's Holdings, Inc., a Nevada corporation, was incorporated on November 3, 1986. The company's main activities and sources of income are derived from daily trading in the stock markets. 20/20 Web Design, Inc. and Universal Services and Acquisitions, Inc. are in the business of managing and acquiring subsidiary companies. Principles of Consolidation The consolidated financial statements include the accounts of Stein's Holdings, Inc. and its 80% owned subsidiaries, 20/20 Web Design, Inc. and Universal Services and Acquisitions, Inc. All material inter-company accounts and transactions have been eliminated. Methods of Accounting The companies have adopted the accrual method of accounting. In addition, Stein's Holdings, Inc. records the sale of trading securities on the "trade date". Trading Securities The company has adopted Statement of Financial Accounting Standards No. 115. This statement requires that trading securities be recorded as follows: A. Balance sheet - recorded at fair market value as a current asset. B. Unrealized holding gains and losses - included in the statement of income as current earnings. C. Dividends and interest income - included in the statement of income as current earnings. D. Cash flows from purchase, sales, and maturities of trading securities shall be classified as cash flows from operating activities. Cash and Cash Equivalents For purposes of the statement of cash flows, the company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the See Accompanying Notes and Independent Accountants' Review Report. 8 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income. The company depreciates its property and equipment for financial reporting purposes using the straight-line method based upon the following useful lives of the assets: Computer hardware 5 years Computer software 3 years Accounting Estimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Compensated Absences Employees of the corporation are entitled to paid vacations, sick days and other time off depending on job classification, length of service and other factors. It is impractical to estimate the amount of compensation for future absences and, accordingly, no liability has been recorded in the accompanying financial statements. The corporation's policy is to recognize the costs of compensated absences when paid to employees. Net (Loss) Per Share The company adopted Statement of Financial Accounting Standards No. 128 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by See Accompanying Notes and Independent Accountants' Review Report. 9 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net (Loss) Per Share (Continued) dividing net income (loss) available to common shareowners by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. NOTE 2 DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The company has financial instruments, none of which are held for trading purposes. The company estimates that the fair value of all financial instruments at September 30, 2000, as defined in FASB 107, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the company using available market information and appropriate valuation methodologies. Considerable judgement is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the company could realize in a current market exchange. NOTE 3 NOTES RECEIVABLE
2000 1999 ------- ------- College Connection, Inc., DBA Stein's Bakery The loan dated September 9, 1999 requires monthly interest payments of $344 and a balloon payment of principal and interest on September 1, 2000. The company has not received any payments on the loan and wrote the loan off as uncollectible $ 0 $37,500 National Healthcare Technology, Inc. On March 20, 2000 the company loaned National Healthcare Technology, Inc. $20,000. The loan is unsecured, bears interest at 12% and is due on June 1, 2000. In the event the note and accrued interest are not paid when due, then the company may elect to have National issue shares of its common stock (restricted) for the loan at a price to be agreed upon by both companies. As of September 30, 2000, the company has not elected to convert the loan into stock 22,200 0 Universal Services and Acquisitions, Inc. Open loan, no interest, collateral or due date 0 1,000 ------- ------- $22,200 $38,500 ======= =======
See Accompanying Notes and Independent Accountants' Review Report. 10 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 4 PROPERTY AND EQUIPMENT Property and equipment consist of the following: 2000 1999 ------- ------- Computer hardware $13,592 $10,841 Computer software 4,785 4,785 ------- ------- 18,377 15,626 Less accumulated depreciation 8,283 3,381 ------- ------- Total property and equipment $10,094 12,245 ======= ======= The depreciation expense for the nine months ended September 30, 2000 and 1999 was $3,122 and $1,366 respectively. NOTE 5 GOODWILL Goodwill represents the excess of the purchase price of Universal Services and Acquisitions, Inc. over the fair value of the company's net assets and will be amortized on a straight-line basis over forty years from September 30, 2000. NOTE 6 NOTE PAYABLE The note payable is unsecured, bears interest at 10% and is due on demand. NOTE 7 INCOME TAXES
2000 1999 --------- --------- (Loss) from operations before income taxes $(455,356) $(332,635) --------- --------- The provision for income taxes is estimated as follows: Currently payable $ 0 $ 0 --------- --------- Deferred payable $ 1,200 $ 0 --------- --------- Deferred asset $ 172,500 $ (42,000) --------- --------- Estimated tax (refund) $ (53,424) $ (42,000) ========= ========= A reconciliation of the provision for income taxes compared with the amounts at the U.S. Federal statutory income tax rate was as follows: Tax (refund) at U.S. Federal statutory income tax rate $ (53,424) $ (42,000) ========= =========
See Accompanying Notes and Independent Accountants' Review Report. 11 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 7 INCOME TAXES (CONTINUED) Deferred income tax asset and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws The net deferred asset is: $172,500 $42,000 ======== ======= The net deferred tax liability is: $ 1,200 $ 2,098 ======== ======= Temporary differences that give rise to deferred tax assets and liabilities included the following: Deferred Tax at September 30, 2000 --------------------------- Assets Liabilities -------- ----------- Net operating and capital losses carryforwards $345,000 $ 0 Property and equipment related 0 1,200 -------- ------ 345,000 1,200 Less valuation allowance 172,500 0 -------- ------ Total deferred taxes $172,500 $1,200 ======== ====== Balance, January 1, 2000 $120,500 Applied to nine months ended September 30, 2000 52,000 -------- Balance, September 30, 2000 $172,500 ======== NOTE 8 NET OPERATING LOSS CARRYFORWARD As of January 1, 2000, the company had net operating loss carryforwards of $679,810 and capital loss carryforwards in the amount of $28,560 which can be carried forward until the year 2019. NOTE 9 CONVERTIBLE PREFERRED STOCK PREFERENCES No rights or preferences have been assigned to the preferred stock except for the convertible privilege. NOTE 10 INTEREST The company incurred interest expense for the nine months ended September 30, 2000 and 1999 of $9,859 and $1,532, respectively. See Accompanying Notes and Independent Accountants' Review Report. 12 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 11 RENT The company rents its facilities on a month to month basis. The rent expense for the nine months ended September 30, 2000 and 1999 was $29,629 and $20,000, respectively. NOTE 12 INSURANCE The company does not carry liability or worker's compensation insurance. NOTE 13 SEGMENT REPORTING The company has two reportable segments: Stein's Holdings, Inc. - Trading securities. 20/20 Web Design, Inc. and Universal Services and Acquisitions, Inc. - management of subsidiary company operations. The company evaluates segment performance based on income from operations. All inter-company transactions between segments have been eliminated. Segment results for the nine months ended September 30, 2000 are as follows: 20/20 Web Design, Inc. Stein's and Universal Services Holdings, Inc. and Acquisitions, Inc. -------------- ---------------------- Net sales $ 167,833 $ 0 (Loss) from continuing operations (226,259) (32,515) Assets 678,189 89 Capital expenditures 2,751 0 A reconciliation from the segment information to the consolidated balances for (loss) from operations and assets is set forth below: Segment (loss) from operations $(258,774) Consolidated (loss) from continuing operations (258,774) Segment assets 678,278 Consolidated total assets 678,278 See Accompanying Notes and Independent Accountants' Review Report. 13 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 14 STOCK OPTIONS The company does not have any stock options outstanding at September 30, 2000. NOTE 15 LOSS ON WORTHLESS SUBSIDIARY Management believes the investment in Stein's Cake Box Inc. is uncollectible and therefore elected to write-off the $195,657 investment as uncollectible. NOTE 16 CASH IN BANK At September 30, 1999, the company had $203,785 deposited in one banking institution. Only $100,000 of the balance was insured by the Federal Deposit Insurance Corporation. NOTE 17 BUSINESS COMBINATION - UNIVERSAL SERVICES AND ACQUISITIONS, INC. On September 30, 2000, the company completed its acquisition of Universal Services and Acquisitions, Inc. (Universal). Universal is in the business of managing and acquiring subsidiary companies. The acquisition, recorded under the purchase method of accounting, included the purchase of 8,930,000 shares of stock for $29,000 plus assumed liabilities. A portion of the purchase price has been allocated to assets acquired and liabilities assumed based on estimated fair market value at the date of acquisition with the balance allocated to goodwill. The following unaudited pro forma summary presents information as if Universal had been acquired as of the beginning of Stein's Holding, Inc. fiscal years 1999 and 1998. The pro forma amounts include certain adjustments, primarily to recognize amortization, and do not reflect any benefits from economies which might be achieved from combining operations. The pro forma information does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined companies:
Nine Months Ended 1999 1998 September 30, 2000 ---------- ---------- ------------------ Revenues $ (3,417) $ 0 $ 171,318 Net income (loss) after Amortization of goodwill (242,219) (880) (356,958) Earnings (loss) per share Basic and diluted $ (.06) $(.00) $ (.08)
See Accompanying Notes and Independent Accountants' Review Report. 14 STEIN'S HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 18 BUSINESS COMBINATION - MULTI-SOURCE CAPITAL LTD. In May 1999, the company completed a merger with Multi-Source Capital Ltd. by exchanging 4,247,754 shares of Section 144 restricted common stock for 100% of the outstanding shares of Multi-Source Capital Ltd. The merger has been accounted for as a pooling of interest and the company recorded the merger as follows: Book value of net assets received of $531,594 for 4,247,754 shares of .001(cent) par value shares. The following unaudited information presents certain income statement data of the separate companies for the period preceding the merger: Stein's Multi-Source Holdings, Inc. Capital Ltd. -------------- ------------ Net sales $ 0 $(203,741) Net (loss) 0 278,596 There were no material transactions between the companies prior to the merger. The effects of conforming Multi-Source Capital Ltd.'s accounting policies to those of Stein's Holdings, Inc. were not material. NOTE 19 UNAUDITED FINANCIAL INFORMATION The accompanying financial information as of September 30, 2000 is unaudited. In managements opinion, such information includes all normal recurring entries necessary to make the financial information not misleading. See Accompanying Notes and Independent Accountants' Review Report. 15 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 257 427,261 22,200 0 0 632,991 18,377 8,283 678,278 355,449 0 0 0 4,401 328,315 678,278 0 171,318 0 0 415,057 195,657 15,960 (455,356) (53,424) (401,932) 0 0 0 (356,298) (.08) (.08)
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