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FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JULY 1, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File No. 000-30011
THRIFT MANAGEMENT, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
FLORIDA 65-0309540
-------------------------------- ----------------------
(State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization) Identification No.)
3141 W. Hallandale Beach Boulevard
Hallandale, Florida 33009
(Address of Principal Executive Offices)
Issuer's telephone number, including area code: (954) 985-8430
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Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the Issuer's classes of common
equity as of the latest practical date: At August 15, 2001, there were
outstanding 3,047,210 shares of Common Stock, $.01 par value.
Transitional Small Business Disclosure Format: YES [ ] NO [X]
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THRIFT MANAGEMENT, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-QSB
PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of July 1, 2001 (unaudited).............................................. 3
Consolidated Statements of Operations for the three months and six months ended
July 1, 2001 and June 25, 2000 (unaudited)........................................................... 4
Consolidated Statements of Cash Flows for the six months ended July 1, 2001
and June 25, 2000 (unaudited)........................................................................ 5
Notes to Consolidated Financial Statements (unaudited)................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................................. 9
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.............................................................. 13
Item 4. Submission of Matters to a Vote of Security Holders.................................................... 14
Item 6. Exhibits and Reports on Form 8-K....................................................................... 14
Signatures...................................................................................................... 15
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THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JULY 1, 2001
------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 181,996
Merchandise inventories 480,685
Prepaid expenses 25,103
-----------
TOTAL CURRENT ASSETS 687,784
EQUIPMENT, FIXTURES AND IMPROVEMENTS, net 619,386
PREPAID EXPENSES - NON-CURRENT 212,868
DEFERRED TAX ASSETS 311,000
OTHER ASSETS 78,100
-----------
TOTAL ASSETS $ 1,909,138
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 254,165
Accrued expenses 333,090
Notes payable short-term 101,233
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TOTAL CURRENT LIABILITIES 688,488
LONG-TERM LIABILITIES
Notes payable long-term 195,789
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TOTAL LIABILITIES 884,277
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: $.01 par value, authorized 1,500,000 shares, issued 2,500
and outstanding 250,000 shares
Common stock: $.01 par value, authorized 15,000,000 shares, issued 30,472
and outstanding 3,047,210 shares
Additional paid-in capital 4,086,499
Accumulated deficit (3,094,610)
-----------
TOTAL STOCKHOLDERS' EQUITY 1,024,861
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,909,138
===========
See accompanying notes.
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THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
JULY 1, JUNE 25, JULY 1, JUNE 25,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $ 2,261,531 $ 2,153,701 $ 4,760,389 $ 4,602,997
Cost of goods sold 1,365,763 1,367,259 2,717,381 2,826,881
----------- ----------- ----------- -----------
GROSS PROFIT 895,768 786,442 2,043,008 1,776,116
Selling, general and administrative expenses 1,076,431 1,465,032 2,180,686 2,694,064
Officer's bonus incentive -- 21,528 -- 46,254
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 1,076,431 1,486,560 2,180,686 2,740,318
----------- ----------- ----------- -----------
(LOSS) FROM OPERATIONS (180,663) (700,118) (137,678) (964,202)
Loss on disposal of fixed assets -- -- 137,316 --
Interest expense 4,940 17,453 22,393 18,604
Interest income (6,272) (17,304) (15,619) (22,525)
----------- ----------- ----------- -----------
(LOSS) BEFORE EXTRAORDINARY
ITEM (179,331) (700,267) (281,768) (960,281)
Extraordinary gain on convertible
debenture settlement -- -- 408,552 --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (179,331) $ (700,267) $ 126,784 $ (960,281)
=========== =========== =========== ===========
Basic earnings (loss) per share
(Loss) before extraordinary item $ (0.06) $ (0.28) $ (0.10) $ (0.40)
Extraordinary item, net of tax -- -- 0.14 --
----------- ----------- ----------- -----------
Net income (loss) $ (0.06) $ (0.28) $ 0.04 $ (0.40)
=========== =========== =========== ===========
Diluted earnings (loss) per share
(Loss) before extraordinary item $ (0.06) (0.28) $ (0.10) $ (0.40)
Extraordinary item, net of tax -- -- 0.14 --
----------- ----------- ----------- -----------
Net income (loss) $ (0.06) (0.28) $ 0.04 $ (0.40)
=========== =========== =========== ===========
Weighted average number of shares:
Basic: 3,047,210 2,497,210 2,961,496 2,430,781
=========== =========== =========== ===========
Diluted: 3,047,210 2,497,210 2,985,215 2,430,781
=========== =========== =========== ===========
See accompanying notes.
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THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
---------------------------
JULY 1, JUNE 25,
2001 2000
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Cash flows from operating activities:
Net income (loss) $ 126,784 $ (960,281)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 74,878 86,593
Loss on disposal of fixed assets 137,316 --
Amortization of prepaid consulting expenses paid with
common stock and warrants 86,327 376,166
Stock options issued to directors and a consultant for services -- 117,757
Extraordinary gain on convertible debenture settlement (408,552) --
Changes in assets and liabilities:
Decrease in merchandise inventories 2,200 42,723
(Increase) in prepaid expenses and other assets (54,684) (218,869)
Increase (decrease) increase in accounts payable 62,984 (98,005)
(Decrease) increase in accrued expenses (19,715) 118,801
--------- -----------
Total adjustments (119,246) 425,166
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 7,538 (535,115)
--------- -----------
Cash flows from investing activities:
Purchase of property and equipment (15,958) (29,436)
Proceeds from sale of property and equipment 8,000 --
--------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (7,958) (29,436)
--------- -----------
Cash flows from financing activities:
Options exercised -- 11,250
Proceeds from convertible debenture -- 1,000,000
Cash payment - convertible debenture settlement (200,000) --
Cash payment - notes (14,420) --
--------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (214,420) 1,011,250
--------- -----------
NET INCREASE (DECREASE) IN CASH (214,840) 446,699
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 396,836 186,666
--------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 181,996 $ 633,365
========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 4,940 $ --
========= ===========
Income taxes $ -- $ --
========= ===========
See accompanying notes.
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THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, such information reflects all adjustments (consisting solely
of normal recurring adjustments), which are, in the opinion of
management, necessary for a fair statement of results for the interim
periods.
The results of operations for the three and six months ended July 1,
2001 are not necessarily indicative of the results to be expected for
the full year.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Form 10-KSB for
the year ended December 31, 2000 of Thrift Management, Inc. (the
"Company" or "TMI").
(2) ORGANIZATION
The consolidated financial statements at July 1, 2001 include the
accounts of the Company, Hallandale Thrift Management, Inc. ("HTMI"),
Thrift Shops of South Broward, Inc. ("TSSB"), Thrift Shops of West
Dade, Inc. ("TSWD"), Hallandale Thrift, Inc. ("HTI"), North Broward
Consignment, Inc. ("NBCI"), Thrift Shops of North Lauderdale, Inc.
("TSNL"), Thrift Retail, Inc. ("TRI"), Thrift Management Canada, Inc.
("TMCI"), Thrift Export, Inc. ("TEI"), Thrift Holdings, Inc. ("THI")
and Collectiblesandart.com, Inc. ("CACI"). (HTMI, TSSB, TSWD ,HTI,
NBCI, TSNL, TRI, TMCI, TEI, THI and CACI are collectively referred to
herein as the "Subsidiaries.") All significant inter-company accounts
and transactions have been eliminated in consolidation.
(3) STOCKHOLDERS' EQUITY
In March 2000, the Company completed a private placement of a 7%
convertible debenture with a principal amount of $1,000,000 (the
"Debenture"). In January 2001, a lawsuit was filed in the United States
District Court, Southern District of New York, against the Company and
other unnamed individuals. The plaintiffs, as alleged assignees of the
original purchaser of the Debenture, alleged that the Company failed to
register the shares of the Company's common stock issuable upon
conversion of the Debenture and failed to pay penalties due as a result
of such failure.
On March 16, 2001, the Company entered into a settlement agreement
which provided for the dismissal of the lawsuit, without prejudice, in
exchange for the payment by the Company of $200,000 cash, the issuance
of 200,000 shares of common stock valued at $32,000, the fair market
value as of March 16, 2001, and the delivery of a three-year 10%
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promissory note in the principal amount of $300,000 secured by a
security interest in the Company's inventory and guaranteed by the
Company's President. As a result of the settlement, the Debenture was
deemed paid in full and satisfied.
In consideration for personally guaranteeing the promissory note, the
Company's Board of Directors granted the President five-year warrants
to purchase 500,000 shares of the Company's common stock at an exercise
price of $.0625 per share (the fair market value of the common stock as
of March 16, 2001).
All remaining capitalized expenses related to the Debenture not
amortized (which totaled $130,410) were included in the calculation of
the gain on the Debenture settlement in the three month period ending
April 1, 2001. The reversal of the accrued Debenture interest expense
in the amount of $70,962 was also included as part of the calculation
of the gain on the Debenture settlement recorded in the first quarter
of 2001. The gain on the Debenture settlement agreement recorded in the
first quarter of 2001 amounted to $408,552.
(4) CASH AND CASH EQUIVALENTS
At July 1, 2001, the Company had cash and investments in various bank
money market accounts and non-operating accounts with an aggregate
value of $181,996.
(5) STOCK OPTION PLAN
During the six months ended July 1, 2001, the Company granted a total
of 134,000 stock options to its outside directors under the Company's
1996 Stock Option Plan at exercise prices equal to the fair market
value of the common stock on dates of the grant. These options
generally vest next year and expire no later than 2006.
(6) COMMITMENTS
Effective January 1, 1999, the Board of Directors approved an agreement
providing for the prepayment of up to $155,000 of future bonuses to the
Company's President, with interest to be paid monthly by the President
at an annual rate of 8.0% and the entire prepayment payable by December
31, 2000.
In November 2000, the Company's Board of Directors modified the
President's salary and bonus prepayment arrangement. The modification
provides that, among other things, in consideration of the President's
agreement to restructure his executive employment agreement, the
repayment of such prepaid salary and bonuses by the President to the
Company will be deferred until December 31, 2002. An increase in the
amount prepaid was later approved by the Board. At July 1, 2001,
prepaid salary and bonuses amounted to $212,868, which is included in
prepaid expenses non-current in the accompanying balance sheet.
On November 28, 1999, TMI entered into an Internet product development
agreement with BFW Advertising, Inc. whereby BFW Advertising designed
and prepared a web-site for the purposes of electronic commerce,
marketing and promotion of TMI's subsidiary CACI. This agreement
provided for payment of cash and shares of capital
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stock. The total contract price of project application, design and
development was $84,960 (subject to price adjustments due to change
orders), of which $20,800 was paid in cash and $56,160 was payable in
capital stock upon final acceptance of the project, at the then market
price of the shares so transferred. In June 2001, the Company settled
the payment in shares remaining due under this agreement by the
one-time payment of $15,000 in cash.
(7) SUBSEQUENT EVENT
On August 13, 2001, the Company's shareholders approved the sale of
substantially all of the assets used by the Company in the conduct of
its retail thrift store and charitable donation collection business and
its web-site in development (the "Assets") to Thrift Ventures Inc. a
newly formed corporation owned by Marc Douglas, the Company's principal
shareholder, chairman of the Board, chief executive officer and
president. As consideration for the purchase of the Assets, Ventures
will pay to the Company $1,175,000 in the form of a three-year
promissory note bearing interest at the prime rate as of the closing
date plus 1.5%. The note will be secured by a security interest in the
Assets. The sale is currently expected to close on August 27, 2001. At
this time, management cannot readily determine the gain/loss on the
transaction to the Company.
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THRIFT MANAGEMENT, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is an analysis of the results of operations of Thrift Management,
Inc. and subsidiaries (collectively, the "Company") and the Company's liquidity
and capital resources. The Company cautions readers that certain important
factors may affect the Company's actual results and could cause such results to
differ materially from any forward-looking statements that may be deemed to have
been made in this Report or that are otherwise made by or on behalf of the
Company. For this purpose, any statements contained in this Report that are not
statements of historical fact may be deemed to be forward-looking statements
which involve risks and uncertainties. Without limiting the generality of the
foregoing, words such as "may," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements.
These risks include: risks of increases in the costs of the Company's
merchandise and the continued availability of suitable merchandise; the
Company's relationship with its suppliers, licensors and contributors; changes
in preferences of customers; competitive and general economic factors in the
markets where the Company sells and collects goods; the impact of and changes in
government regulations such as restrictions or prohibitions relating to the
contribution of charitable goods; and other factors discussed herein or from
time to time in the Company's other filings with the Securities and Exchange
Commission.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the related notes thereto of the Company
included elsewhere herein.
GENERAL
The Company currently operates six retail thrift stores that offer new and used
articles of clothing, furniture, miscellaneous household items and antiques, and
has begun development of an Internet subsidiary, a business-to-consumer site
that will offer collectibles, art and antiques. The Company obtains its
merchandise primarily from two sources: (i) purchase contracts with charitable
organizations, and (ii) various independent contract collectors from whom the
Company purchases merchandise in bulk. The Company is registered with the State
of Florida as a professional solicitor. Items from the stores that remain unsold
are sold in bulk to exporters, which ship the items to countries throughout the
Caribbean, Central and South America, and Eastern Europe.
The Company has entered into a purchase agreement dated as of June 22, 2001 (the
"Purchase Agreement") with Thrift Ventures Inc. ("Ventures"), pursuant to which
the Company will sell to Ventures substantially all of the assets used by the
Company in the conduct of its retail thrift store and charitable donation
collection business and its website in development. Ventures will also assume
substantially all of the Company's liabilities. Ventures is a newly formed
corporation owned by Marc Douglas, the Company's principal shareholder, chairman
of the board, chief executive officer and president.
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As consideration for the purchase of these assets, Ventures will pay to the
Company $1,175,000 in the form of a three-year promissory note bearing interest
at the prime rate as of the closing date plus 1.5%. The note will be secured by
a security interest in the acquired assets.
The sale of assets by the Company was approved by the Company's shareholders at
the annual meeting held on August 13, 2001. (See "Item 4 - Submission of Matters
to a Vote of Security Holders," below.) The sale is currently expected to close
on August 27, 2001. Following the closing, the Company's Board of Directors
intends to pursue an acquisition of another operating business, although there
can be no assurances it will be able to do so. During the interim period until
an acquisition is completed, the Company's business operations will cease and
its only assets will be the $1,175,000 note from Ventures, $50,000 in cash and a
directors' and officers' liability insurance policy. The Company intends to
minimize its ongoing expenses during this period, which are expected to be
limited to compliance with the Company's SEC reporting obligations, identifying
possible acquisition candidates and negotiating possible transactions, and other
incidental corporate activities.
This transaction will not affect any of the Company's outstanding securities,
and the Company intends to use its best efforts to maintain its status as a
reporting company and to maintain the listing of the common stock on the OTC
Bulletin Board.
RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JULY 1, 2001 AND
JUNE 25, 2000
Revenues for the three months ended July 1, 2001 and June 25, 2000 totaled
$2,261,531 and $2,153,701, respectively. Sales increased $107,830, or 5.0%, for
the second quarter of 2001 compared to the second quarter of 2000. The
same-store sales for the three months ending July 1, 2001 increased 6.6% as
compared to the three months ending June 25, 2000. Revenues for the second
quarter of 2000 reflected sales of $37,590 from the Company's Pompano Beach
store, which was closed in May 2000. The resulting decline in revenues offset
the increase in same-store revenues in the second quarter of 2001. The second
quarter of 2001 reflects sales of $5,774 from collectiblesandart.com as compared
to no sales in the second quarter of 2000.
The Company's gross profit for the three months ended July 1, 2001 increased
$109,326, or 13.9%, to $895,768 as compared to $786,442 for the three months
ended June 25, 2000. The gross profit margin increased from 36.5% in the second
quarter of 2000 to 39.6% in the second quarter of 2001 and is attributable to
the decrease in the cost of goods sold. The Company's cost of goods sold
decreased as a result of the Company's decreased dependency on purchases of
inventory in bulk from independent contract collectors and the increased
efficiency of the Company's solicitation programs.
Operating expenses for the three months ended July 1, 2001 decreased $410,129 or
27.6%, to $1,076,431 from $1,486,560 for the three months ended June 25, 2000,
reflecting the impact of various special expenses incurred in the second quarter
of 2001 and 2000, as described more fully below.
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Selected additional operating expenses for the three months ended July 1, 2001
and June 25, 2000 included:
JULY 1, 2001 JUNE 25, 2000
------------ --------------
Amortization of investor relations consulting expenses
paid with common stock $ -- $191,109
Amortization of financial consulting expenses paid with
warrants to purchase common stock 19,556 47,948
Amortization of debenture expenses -- 14,544
Start-up expenses of Company's Internet subsidiary 62,895 61,413
Compensation expense related to stock options issued to
outside directors for services -- 76,827
------- --------
Total $82,451 $391,841
======= ========
The $309,390 decrease in these selected additional operating expenses, and a
decrease in corporate overhead amounting to $140,640, primarily the result of
lower payroll related expenses and professional fees, was offset by an increase
in store operating expenses amounting to $39,901.
The same stores operating profit (before corporate overhead) for the three
months ended July 1, 2001 increased $37,167 or 13.9% as compared to the three
months ended June 25, 2000, which is largely the result of the 6.6% increase in
same store sales combined with the decrease of cost of goods sold, which
resulted in a 13.9% increase in same-store gross profit.
The net loss for the three months ended July 1, 2001 was $179,331 as compared to
a net loss of $700,267 for the three months ended June 25, 2000.
RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JULY 1, 2001 AND JUNE 25, 2000
Revenues for the six months ended July 1, 2001 and June 25, 2000 totaled
$4,760,389 and $4,602,997, respectively. Sales increased $157,392, or 3.4%, for
the six months of 2001 compared to the six months of 2000. The same-store sales
for the six months ended July 1, 2001 increased 7.1% as compared to the six
months ended June 25, 2000. This increase was offset by the impact of the
closing of the Company's Pompano Beach store. Revenues for the six months of
2000 reflected sales of $169,683 from the Pompano Beach store, which were not
realized in the six months of 2001. The six months of 2001 also reflect sales of
$10,808 from collectiblesandart.com as compared to no sales in the six months of
2000.
The Company's gross profit for the six months ended July 1, 2001 increased
$266,892, or 15.0%, to $2,043,008 as compared to $1,776,116 for the six months
ended June 25, 2000. The gross profit margin increased from 38.6% in the six
months of 2000 to 42.9% in the six months of 2001 and is attributable to the
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decrease in the cost of goods sold. The Company's cost of goods sold decreased
as a result of the Company's decreased dependency on purchases of inventory in
bulk from independent contract collectors and the increased efficiency of the
Company's solicitation programs.
Operating expenses for the six months ended July 1, 2001 decreased $559,632 or
20.4%, to $2,180,686 from $2,740,318 for the six months ended June 25, 2000,
reflecting the impact of various special expenses incurred in the six months of
2001 and 2000, as described more fully below.
Selected additional operating expenses for the six months ended July 1, 2001 and
June 25, 2000 included:
JULY 1, 2001 JUNE 25, 2000
------------ --------------
Amortization of investor relations consulting expenses
paid with common stock $ -- $328,219
Amortization of financial consulting expenses paid with
warrants to purchase common stock 86,327 47,948
Amortization of debenture expenses 959 15,503
Start-up expenses of Company's Internet subsidiary 145,554 109,952
Compensation expense related to stock options issued to
outside directors for services -- 117,757
-------- --------
Total $232,840 $619,379
======== ========
The $386,539 decrease in these selected additional operating expenses, and a
decrease in corporate overhead amounting to $218,337, primarily the result of
lower payroll expenses, was offset by an increase in store operating expenses
amounting to $45,244.
The same stores operating profit (before corporate overhead) for the six months
ended July 1, 2001 increased $167,557 or 23.5% as compared to the six months
ended June 25, 2000, which is largely the result of the 7.1% increase in same
store sales combined with the decrease of cost of goods sold, which resulted in
a 17.1% increase in same-store gross profit.
The net profit for the six months ended July 1, 2001 was $126,784 as compared to
a net loss of $960,281 for the six months ended June 25, 2000.
LIQUIDITY AND CAPITAL RESOURCES
At July 1, 2001, the Company had negative working capital of $704 as compared to
working capital of $1,596,410 at June 25, 2000.
Cash and cash equivalents at July 1, 2001 totaled $181,996, as compared to
$396,836 at December 31, 2000, a decrease of $214,840. Net cash provided by
operating activities totaled $7,538 for the six months ending July 1, 2001, as
compared to $535,115 net cash used in operating activities for the six months
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ending June 25, 2000. The cash used in investing activities totaled $7,958,
which includes $15,958 for the purchase of property and equipment offset by
$8,000 proceeds from sale of property and equipment. The net cash used by
financing activities in the six months of 2001 was $214,420, which included
$200,000 cash payment for the Debenture settlement and $14,420 in payment of
notes. By comparison, in 2000 the $1,011,250 cash provided by financing
activities was primarily the result of the issuance of the Debenture.
The sale of assets to Ventures, which is currently expected to close on August
27, 2001, will result in the assumption of substantially all of the Company's
liabilities to Ventures and the Company substantially reducing its business
operations until the Company is able to successfully complete an acquisition.
Until such time, the Company's source of funds will consist of $50,000 in cash
and the receipt of payments on the note from Ventures, which are due beginning
one year from the closing date. The Company currently anticipates obtaining the
$50,000 by the sale of common stock to Marc Douglas, the principal shareholder,
director and chief executive officer of both the Company and Ventures, in a
private transaction at the then-current market price of the common stock.
Assuming the receipt of that funding, the Company believes that its capital
resources will be sufficient to meet its anticipated working capital
requirements through 2001. There can be no assurances, however, that such will
be the case, and there can be no assurances that the Company would be able to
obtain additional funding, if necessary.
The Company is currently operating its Internet subsidiary
Collectiblesandart.com, Inc. on a very limited basis. The Company, to date, has
not been able to obtain additional capital in order to fully complete the
development of this operation.
INFLATION AND SEASONALITY
Although the Company cannot accurately determine precisely the effects of
inflation, management does not believe that inflation currently has a material
effect on the Company's sales or results of operations.
The Company's operations are located in South Florida, which has numerous
part-time residents during the winter. The Company's results of operations
reflect the seasonable nature of this market, with donations and sales of
merchandise being higher in the winter months.
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
In March 2001, the Company issued 200,000 shares of its common stock to
plaintiffs in a lawsuit filed against the Company as part of the Debenture
settlement agreement. The Company did not pay fees or commissions in connection
with this issuance. This issuance was exempt from registration pursuant to
Section 4 (2) of the Securities Act.
In March 2001, the Company issued five-year warrants to purchase 500,000 shares
of the Company's common stock at an exercise price of $0.0625 per share (the
fair market value as of March 16, 2001) to the Company's President in
consideration for his agreeing to guaranty the $300,000 promissory note that was
delivered in the Debenture settlement agreement.
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's annual meeting of shareholders (the "Annual
Meeting") was held on Monday, August 13, 2001.
(b) All of the current members of the Company's Board of Directors
were reelected to serve as members of the Board until the next
annual meeting of shareholders.
(c) A majority of the Company's outstanding shares of common stock and
preferred stock approved the Purchase Agreement with Ventures
(with all shares held by Marc Douglas and his affiliates voting
with the majority of the other shares ).
VOTES FOR AGAINST ABSTENTIONS BROKER NON-VOTES
- ------------------------ ----------------------- --------------------- ----------------------------
4,833,665 22,100 1,800 689,645
(d) The shareholders approved an amendment to the Company's Articles
of Incorporation to change the Company's name to TMI Holdings,
Inc. if the transaction with Ventures is completed.
VOTES FOR AGAINST ABSTENTIONS BROKER NON-VOTES
- ------------------------ ----------------------- --------------------- ----------------------------
4,841,715 14,850 1,000 689,645
(e) The shareholders also voted to ratify the appointment of Berkowitz
Dick Pollack & Brant LLP as the Company's independent public
accountants for the 2001 fiscal year.
VOTES FOR AGAINST ABSTENTIONS BROKER NON-VOTES
- ------------------------ ----------------------- --------------------- ----------------------------
5,444,547 16,850 1,000 84,813
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.1 Purchase Agreement dated as of June 22,
2001 between Thrift Management, Inc. and
Thrift Ventures Inc.
11.1 Statement re: computation of per share
earnings
(b) Reports on Form 8-K:
The Company did not file any current reports on Form 8-K during the
quarter ended July 1, 2001.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
THRIFT MANAGEMENT, INC.
By: /s/ MARC DOUGLAS
----------------------------------------
Marc Douglas, President and Chief
Executive Officer (Principal Executive
Officer)
Date: August 15, 2001
By: /s/ STEPHEN L. WILEY
----------------------------------------
Stephen L. Wiley, Chief Financial
Officer (Principal Financial Officer)
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