UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended JUNE 30, 2002
----------------
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission file no. 0-49617
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ROYAL CASKET DISTRIBUTION CORP.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
FLORIDA 65-1129409
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SUITE 314, WASHINGTON MUTUAL BANK TOWER
2401 EAST ATLANTIC BOULEVARD
POMPANO BEACH, FLORIDA 33062
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(954) 782-5006
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(ISSUER'S TELEPHONE NUMBER)
Check whether the registrant (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) as been subject to such filing requirements for past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of the issuer's common stock
as of latest practicable date (May 21, 2002): 20,000,000 shares
Transitional Small Business Disclosure Format (CHECK ONE):
Yes No X
----- -----
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are filed with this Form 10-QSB:
PAGE
----
Accountant's Report F-1
Balance Sheets as of December 31, 2001 and June 30, 2002 F-2
Statement of Operations for periods ending December 31, 2001
and June 30, 2002 F-3
Statement of Changes in Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6
ROYAL CASKET DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
REVIEW OF FINANCIAL STATEMENTS
FOR THE QUARTER ENDED
JUNE 30, 2002
TABLE OF CONTENTS
PAGE
ACCOUNTANTS' REVIEW REPORT F-1
FINANCIAL STATEMENTS:
BALANCE SHEET F-2
STATEMENTS OF OPERATIONS F- 3
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6-7
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholder
Royal Casket Distribution Corporation
Pompano Beach, Florida
We have reviewed the accompanying balance sheet of Royal Casket Distribution
Corporation (a Florida corporation and a development stage company) as of June
30, 2002 and the related statements of operations, changes in stockholder's
equity, and cash flows for the quarter then ended, year-to-date through June 30,
2002, the period from inception, July 27, 2001 through December 31, 2001 and the
period from inception, July 27, 2001, through June 30, 2002. All information
included in these financial statements is the responsibility of the Company's
management.
A review consists primarily 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.
The financial statements for the year ended December 31, 2001 were audited by
us, and we expressed an unqualified opinion on them in our report dated May 20,
2002, but we have not performed any auditing procedures since that date.
Michaelson & Co., P.A.
West Palm Beach, FL
July 30, 2002
F-1
ROYAL CASKET DISTRIBUTION CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
June 30, 2002 Dec. 31, 2001
(Unaudited) (Audited)
------------- -------------
CURRENT ASSETS
Cash $ 215 $ 4,531
Prepaid Expenses -- 1,232
-------- --------
TOTAL ASSETS 215 5,763
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accrued Expenses 11,503 2,577
Shareholder Loans 4,646 --
-------- --------
TOTAL LIABILITIES 16,149 2,577
STOCKHOLDER'S EQUITY
Common stock; $.001 par value, 100,000,000 shares authorized, 20,000 20,000
20,000,000 shares issued and outstanding as of June 30,
2002 and December 31, 2001, respectively
Stock subscription receivable (9,500) (9,500)
(Deficit) accumulated during the development stage (26,434) (7,314)
-------- --------
TOTAL STOCKHOLDER'S EQUITY (15,934) 3,186
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 215 $ 5,763
======== ========
See Accountants' Review Report and Accompanying Notes
F-2
ROYAL CASKET DISTRIBUTION CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 2002, YEAR-TO-DATE THROUGH JUNE 30,
2002, THE PERIOD FROM JULY 27, 2001 (INCEPTION) THROUGH DECEMBER
31, 2001, AND THE PERIOD FROM JULY 27, 2001 (INCEPTION) THROUGH JUNE 30, 2002
YEAR- JULY 27, 2001 JULY 27, 2001
QUARTER TO-DATE (INCEPTION) (INCEPTION)
ENDED THROUGH THROUGH THROUGH
JUNE 30, 2002 JUNE 30, 2002 DEC. 31, 2001 JUNE 30, 2002
(Unaudited) (Unaudited) (Audited) (Unaudited)
------------- ------------- -------------- -------------
REVENUES:
Income $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
GENERAL & ADMINISTRATIVE EXPENSES:
Corporate Expense -- -- 312 312
Professional Fees 4,680 16,298 6,068 22,366
SEC Filing Services 1,080 1,758 -- 1,757
Telephone Expense 30 90 100 190
Licenses, Permits and Fees -- 159 -- 159
Rent Expense 300 586 477 1,063
Printing Expense -- -- 157 157
Miscellaneous Expenses 90 230 200 430
------------ ------------ ------------ ------------
TOTAL EXPENSES 6,180 19,120 7,314 26,434
------------ ------------ ------------ ------------
NET (LOSS) $ (6,180) $ (19,120) $ (7,314) $ (26,434)
============ ============ ============ ============
(Loss) per share data:
Basic and diluted $ (0.00) $ (0.00) $ (0.00)
============ ============ ============
Weighted average shares outstanding - basic 20,000,000 20,000,000 16,666,667
============ ============ ============
See Accountants' Review Report and Accompanying Notes
F-3
ROYAL CASKET DISTRIBUTION CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM JULY 27, 2001 (INCEPTION) THROUGH JUNE 30, 2002
(DEFICIT)
ACCUMULATED
STOCK DURING THE
COMMON STOCK SUBSCRIPTION DEVELOPMENT
SHARES AMOUNT RECEIVABLE STAGE TOTAL
---------- ---------- ------------- -------------- ---------
BALANCE AT JULY 27, 2001 -- $ -- $ -- $ -- $ --
Stock issued, 8/23/01 20,000,000 20,000 (9,500) -- 10,500
Net (loss) -- -- -- (7,314) (7,314)
---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 2001 20,000,000 20,000 (9,500) (7,314) 3,186
---------- ---------- ---------- ---------- ----------
Net (loss) -- -- -- (19,120) (19,120)
---------- ---------- ---------- ---------- ----------
BALANCE AT JUNE 30, 2002 20,000,000 $ 20,000 $ (9,500) $ (26,434) $ (15,934)
========== ========== ========== ========== ==========
See Accountants' Review Report and Accompanying Notes
F-4
ROYAL CASKET DISTRIBUTION CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR YEAR-TO-DATE THROUGH JUNE 30, 2002,
THE PERIOD FROM JULY 27, 2001 (INCEPTION) THROUGH DECEMBER 31, 2001, AND
THE PERIOD FROM JULY 27, 2001 (INCEPTION) THROUGH JUNE 30, 2002
YEAR-TO- JULY 27, 2001 JULY 27, 2001
DATE (INCEPTION) (INCEPTION)
THROUGH THROUGH THROUGH
JUNE 30, 2002 DEC. 31, 2001 JUNE 30, 2002
(Unaudited) (Audited) (Unaudited)
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $(19,120) $ (7,314) $(26,434)
Adjustments to reconcile net (loss)
to net cash (used in) operating activities:
(Increase) decrease in Prepaid Expenses 1,232 (1,232) --
Increase in Accrued Expenses 8,926 2,577 11,503
Increase in Shareholder Loans 4,646 -- 4,646
-------- -------- --------
NET CASH (USED IN) OPERATING ACTIVITIES (4,316) (5,969) (10,285)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- 10,500 10,500
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 10,500 10,500
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (4,316) 4,531 215
-------- -------- --------
CASH AT BEGINNING OF PERIOD 4,531 -- --
-------- -------- --------
CASH AT END OF PERIOD $ 215 $ 4,531 $ 215
======== ======== ========
See Accountants' Review Report and Accompanying Notes
F-5
ROYAL CASKET DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 2002, YEAR-TO-DATE THROUGH JUNE 30, 2002,
THE PERIOD FROM INCEPTION, JULY 27, 2001, THROUGH DECEMBER 31, 2001 (AUDITED),
AND THE PERIOD FROM INCEPTION, JULY 27, 2001, THROUGH JUNE 30, 2002
(See Accountants' Review Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
Royal Casket Distribution Corporation ("the Company") is a
development stage enterprise incorporated under the laws of the State
of Florida in July 2001. The Company's offices are in Pompano Beach,
Florida, its only location, and its year-end is December 31.
Although the Company does not presently conduct business operations,
its plans include purchasing caskets from manufacturers under
non-exclusive agreements and distributing them to the public in a
retail setting.
METHOD OF ACCOUNTING:
The Company reports the results of its operations using the accrual
method of accounting for both financial statement and income tax
purposes. Under this method, income is recognized when earned and
expenses are deducted when incurred. The accounting policies of the
Company are in accordance with generally accepted accounting
principles and conform to the standards applicable to development
stage companies.
INCOME TAXES:
The Company has no taxable income to date; therefore, no provision
for federal or state taxes has been made.
COMPUTATION OF NET LOSS PER SHARE:
In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, Earnings Per Share. The Company has reflected the
provisions of SFAS No. 128 in the accompanying financial statements
for the period presented. SFAS 128 replaces the presentation of
primary Earnings Per Share ("EPS") with a presentation of basic EPS,
which excludes dilution and is computed by dividing income or loss
available to common shareholders by the weighted average number of
common shares outstanding for the period. The Statement also requires
the dual presentation of basic and diluted EPS on the face of the
statement of operations for all entities with complex capital
structures. During the periods presented, the Company did not have a
complex capital structure.
F-6
ROYAL CASKET DISTRIBUTION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 2002, YEAR-TO-DATE THROUGH JUNE 30, 2002,
THE PERIOD FROM INCEPTION, JULY 27, 2001, THROUGH DECEMBER 31, 2001 (AUDITED),
AND THE PERIOD FROM INCEPTION, JULY 27, 2001, THROUGH JUNE 30, 2002
(See Accountants' Review Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
INTERIM FINANCIAL STATEMENTS:
It is management's representation that all adjustments that are
necessary for the interim financial statements not to be misleading
have been included in the accompanying statements.
2. DEVELOPMENT STAGE OPERATIONS:
The Company was formed on July 27, 2001. There have not been any
operations since inception and the Company is in the process of
raising capital and financing for its future operations. The Company
has one shareholder.
3. RELATED PARTY TRANSACTIONS:
In the second quarter of 2002, the Company incurred $1,260 in
facility and service costs provided by the sole shareholder, whose
time and offices are being utilized for the Company's operations.
Year-to-date through June 30, 2002, the Company incurred $8,926 in
these costs. During the period from July 27, 2001 (inception) through
June 30, 2002, the Company incurred $11,503 in these expenses. The
costs included $900 and $8,100, respectively, in professional
services provided by the sole shareholder during the quarters ended
June 30, 2002 and March 31, 2002. During the period from July 27,
2001 (inception) through June 30, 2002, professional services
provided by the sole shareholder totaled $9,900. The Company owed
$11,503 and $2,577 to the sole shareholder for these facility and
service costs as of June 30, 2002 and December 31, 2001,
respectively.
Also in the second quarter of 2002, the sole shareholder personally
paid for Company expenses amounting to $4,646. As of June 30, 2002,
the Company owed the sole shareholder this amount in addition to the
amounts owed for facility and service costs provided.
F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Much of the discussion in this Item 2 is "forward looking" as that
term is used in Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. Actual operations and results may materially differ
from present plans and projections due to changes in economic conditions, new
business opportunities, changed business conditions, and other developments.
Other factors that could cause results to differ materially are described in the
prospectus filed with the company's registrations statement with the Securities
and Exchange Commission.
Royal Casket (sometimes referred to as "we" or "us") is a new company
organized to engage in the retail sale of caskets. We are a development stage
company and do not have any business as of the present. We were incorporated
under the laws of Florida in July 2001, and since incorporation, our activities
have been limited to market analysis and identification of suppliers. In October
2001, we amended our Articles of Incorporation to increase the number of
authorized shares of stock to 100,000,000.
We intend to be a non-exclusive dealer for Casket Royale, a New
Hampshire company which manufactures caskets in New Hampshire. Casket Royale
presently offers about a dozen models, including adult, youth, and infant models
in wood, steel, heavy gage steel, and copper. Management intends to maintain two
or three of each model in stock for immediate sale; a larger inventory is not
deemed necessary because of the availability of overnight shipping. Casket
Royale also provides training, sales tools, and marketing aids to its dealers,
as well as overnight shipping to Florida and to most other parts of the
continental United States. We are not aware that any other dealers carry Casket
Royale caskets in the Palm Beach area, but we do not have an exclusive
arrangement with Casket Royale, and it is free to sell through other dealers
should it so choose. By the same token, Casket Royale does not require that we
limit our sales to Casket Royale products, but, while we reserve the right to do
so in the future, we do not presently intend to sell caskets made by other
manufacturers, nor do we intend initially to sell any items other than caskets.
While casket dealers in Europe typically sell other items related to funerals,
the registrant plans to focus on highly discounted caskets. At some point in the
future, we may also sell related items.
Our initial efforts will focus on selling caskets at retail in
Florida. Our initial store will be in the Palm Beach area, after which, if and
when cash flow permits, we would seek to open stores in other locations in
Florida. If experience warrants and financing is available, we would contemplate
opening operations in California and perhaps other states. No decisions have yet
been made as to expansion into other states; such decisions will be based on
population and age statistics, laws governing consumer finance, accessability
for management, and other factors.
2
As of the date of this report, Royal Casket has no significant cash
resources, and we have not engaged in any business activities which provide cash
flow. We are presently looking for suitable retail space in West Palm Beach,
Florida, in which to display our merchandise and make sales, but we do not yet
have a store and have not yet made any sales. We expect to have negotiated a
lease and commence operations by September 2002.
Our president, Don A. Paradiso, has agreed to advance the company's
start-up expenses, which are expected to amount to approximately $150,000. Such
expenses will be accounted for as contributions to capital, not loans, and will
not be repayable. Until such time as Royal Casket has leased a store, Mr.
Paradiso has also agreed to provide an office, office equipment, and management
without cost to the company. Commencing with the month after the company's
aggregate sales (gross revenues) amount to $250,000, Mr. Paradiso will commence
receiving a salary at the rate of $52,000 per year. No officer or director of
the company has received any cash remuneration to date.
It is anticipated that expenses for the first six months will include
$22,000 for salaries, $16,000 for rent, $30,000 for inventory, $2,000 for
training, and $5,000 for advertising. When we have leased a store, we intend to
hire a store manager and sales clerk. As revenues permit, we will employ
additional employees for sales, bookkeeping, and clerical functions. We will
stock Casket Royale's entire product line, but the amount of inventory we will
carry will be limited in light of the fact that Casket Royale can generally
provide overnight delivery to Florida.
Except for the monies which Mr. Paradiso has agreed to advance, we do
not have any funds or capital resources, nor do we have any commitments for
loans or lines of credit. In the future, we will seek financing from a bank with
which to finance our inventory, and will seek such other financing as may be
available for working capital. There can be no assurance that such financing
will be available, or available on terms acceptable to management.
We believe that the funds which Mr. Paradiso has agreed to provide
will be sufficient to inaugurate our business plan, but there can be no
assurance that additional monies will not be required, nor can there be any
assurance that, if they are required, such finds will be available. Royal
Casket's financial capacity will be limited, which will limit the amount of
advertising it can obtain, the number of stores it can open, and the amount of
inventory it can maintain.
Inasmuch as initial financing is being provided by Mr. Paradiso, no
in depth consideration has been given to any particular source of financing, but
managaement does hope to effect a public equity offering sometime in the future
after operations commence.
FIRST HALF COSTS AND CHANGES IN FINANCIAL CONDITION
As of the date of this report, we have not engaged in any business
activities which provide cash flow, and have not recorded any revenues from
operations. Losses from inception (July 27, 2001) have amounted to $26,434,
including $6,180 in the three months ended June 30, 2002. Such losses primarily
reflect the costs of organizing the company and in preparing and filing our
registration statement with the Securities and Exchange Commission. General and
administrative expenses decreased from $12,939 for the three months ended March
31, 2002, to $6,180. The Company attributes this decrease primarily to a
decrease in professional fees.
The company's assets decreased from $5,763 on December 31, 2001 to
$215 on June 30, 2002. This decrease resulted from the payment of expenses
relating to preparing and filing our registration statement with the Securities
and Exchange Commission, and the preparation and filing of periodic reports with
the Securities and Exchange Commission.
3
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
No matters were submitted during the period covered by this report to
a vote of security holders, through the solicitation of proxies or otherwise.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
INDEX TO EXHIBITS
(3) Charter and By-Laws
3.1 Articles of Incorporation (July 27, 2001) *
3.1a Articles of Amendment (October 29, 2001) *
3.2 By-Laws (August 23, 2001) *
(3) Instruments Defining the Rights of Security Holders
4.1 Specimen Certificate of Common Stock *
(6) Material Contracts
10.1 Employment agreement between Registrant and Don A. Paradiso
(December 3, 2001) *
(12) Additional Exhibits
21.0 Statement as to Subsidiaries (May 23, 2002) 16
(15) Letter of acknowledgment
15.1 Accountant's acknowledgment of use of reviewed financials 15
* Filed with registrant's Form 10-SB January 7, 2002, and incorporated herein
by reference.
ITEM 2. DESCRIPTION OF EXHIBITS
Not applicable.
4
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
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.
ROYAL CASKET DISTRIBUTION CORP.
-------------------------------
(Registrant)
Date AUGUST 9, 2002 By /S/ DON A. PARADISO
-------------- ------------------------------
Don A. Paradiso, President
Date AUGUST 9, 2002 By /S/ DON A. PARADISO
-------------- ------------------------------
Don A. Paradiso, principal
financial officer
5