UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED: SEPTEMBER 30, 2001
COMMISSION FILE NUMBER:000-27087
LITEGLOW INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
UTAH 65-05164035
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 N.W. 33rd Court, Unit 112, Pompano Beach, Florida 33069
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(Address, including zip code, of principal executive offices)
(954) 971-4569
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all documents
and reports required to be filed by Sections 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filings for the past 90 days. YES X NO
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APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 30, 2001, the number of the Company's shares of par value
$.001 common stock outstanding was 4,273,287.
1
LITEGLOW INDUSTRIES, INC.
FORM 10-Q
SEPTEMBER 30, 2001
INDEX
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheets.......................................................3
Statements of Operation..............................................4
Statements of Cash Flow..............................................5
Notes to Financial Statements........................................6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations........................7
PART II - OTHER INFORMATION..........................................9
SIGNATURES..........................................................10
2
LITEGLOW INDUSTRIES, INC.
BALANCE SHEET
SEPTEMBER 30, 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 41,155
Accounts receivable 890,472
Inventory 578,592
Prepaid expenses 82,562
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Total current assets 1,592,781
Property and equipment less accumulated depreciation 191,632
Goodwill, net 178,448
Loan costs, net 14,357
Deposits 37,151
Advances to stockholders 20,464
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$ 2,034,833
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ 3,900
Current maturities of capital leases 34,288
Line of credit 1,126,016
Loans from shareholders 137,775
Accounts payable and accrued expenses 381,508
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Total current liabilities 1,683,487
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Long term capital lease obligations less
current maturities 64,664
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Stockholders' equity (deficit):
Preferred stock par value $.001
issued and authorized 1,000,000 1,000
Common stock, $.001 par value; authorized
10,000,000 shares 4,273,287 shares issued and outstanding 4,274
Additional paid-in capital 3,413,971
Retained deficit (3,132,563)
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Total stockholders' equity (deficit) 286,682
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$ 2,034,833
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See accompanying notes
3
LITEGLOW INDUSTRIES, INC.
STATEMENT OF OPERATIONS
(unaudited)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
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Sales $ 4,042,047 $ 3,363,654 $ 1,888,325 $ 1,255,819
Cost of sales 1,883,738 1,525,111 960,106 520,119
----------- ----------- ----------- -----------
Gross profit 2,158,309 1,838,543 928,219 735,700
Selling, general and administrative expenses 1,875,346 1,828,148 677,694 716,233
----------- ----------- ----------- -----------
Income from operations 282,963 10,395 250,525 19,467
----------- ----------- ----------- -----------
Other income (expenses):
Interest expense (102,258) (48,743) (31,947) (8,720)
Lawsuit settlement 132,606
Gain on disposal of assets 5,167 6,748 7,087 (7,600)
----------- ----------- ----------- -----------
Total other income (expenses) 35,515 (41,995) (24,860) (16,320)
----------- ----------- ----------- -----------
Income (loss) before income taxes 318,478 (31,600) 225,665 3,147
Income tax expense (benefit) - - - -
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Net income (loss) $ 318,478 $ (31,600) $ 225,665 $ 3,147
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Net loss per common share:
Basic:
Net income (loss) per common share .07 (.01) .05 .00
Diluted:
Net income (loss) per common share .03 (.01) .02 .00
Weighted average shares outstanding basic 4,273,287 4,273,287 4,273,287 4,273,287
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Weighted average shares outstanding diluted 9,273,287 4,273,287 9,273,287 9,273,287
========== ========== ========== ==========
See accompanying notes
4
LITEGLOW INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2001 2000
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Cash flows from operating activities:
Net income (loss) $ 318,487 $ (31,600)
Adjustments to reconcile net income to net:
Cash provided by (used for) operating activities
Depreciation and amortization 62,598 36,954
Deferred tax liability (60,897)
Non cash compensation 100 37,333
Gain on disposal of equipment (5,167) -
Settlement of debt (85,000) -
Changes in assets and liabilities:
Accounts receivable (339,484) (243,452)
Inventory 61,212 (92,860)
Prepaid expenses (17,331) 86,577
Deposits and other assets - (13,290)
Deferred loan costs (21,500) -
Accounts payable and accrued expenses (584,203) 296,925
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Net cash provided from (used for) operations (610,288) 15,690
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Net cash used in investing activities:
Proceeds from sale of equipment 50,260 12,000
Purchase of equipment (19,018) (34,050)
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Net cash used for investing activities 31,242 (22,050)
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Cash flows from (used in ) financing activities
Repayments to stockholder (63,139) (24,970)
Proceeds from line of credit 727,349 -
Payments of long term debt and leases (61,402) (83,044)
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Net cash provided by financing activities 650,665 (108,014)
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Net increase (decrease) in cash
and cash equivalents 23,762 (114,374)
Cash and cash equivalents, beginning of period 17,393 112,005
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Cash and cash equivalents, end of period $ 41,155 $ (2,369)
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Supplemental disclosure:
Interest paid $ 102,258 $ 48,743
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Assets acquired with debt $ 47,857 $ -
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See accompanying notes
<PAGE 5
LITEGLOW INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
NOTE 1: FINANCIAL STATEMENTS
The Company
The accompanying financial statements represent those of Liteglow
Industries, Inc. (the "Company"). The Company was incorporated April 25,
1984, in the State of Utah and qualified to do business the State of Florida
on May 23, 1997. The Company primarily engages in the business of designing,
manufacturing and marketing a diverse line of automotive aftermarket
accessory and specialty products. The Company initially focused its efforts
on developing a line of 12-volt automotive accessories designed to enhance
vehicle appearance, including neon license plate frames and neon under-car
lighting kits.
Significant Accounting Policies
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements included in its Annual Report on Form
10-KSB for the fiscal year ended December 31, 2000.
The balance sheet as of September 30, 2001, the statements of operation and
cash flows for the three and nine months ended September 30, 2001, and 2000
have been prepared by the Company, without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at September 30, 2001, and for all periods presented, have been
made.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these financial statements be read in conjunction with the financial
statements and notes thereto as of December 31, 2000.
NOTE 2: NET INCOME PER SHARE
Net income per share is computed by dividing net income by the average number
of common shares outstanding, increased by common stock equivalents
determined using the treasury stock method.
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LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
SEPTEMBER 30, 2001
PART I - FINANCIAL INFORMATION
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Financial Statements appearing elsewhere in this Report. It includes an
analysis of the three and nine months ended September 30, 2001, and 2000,
respectively.
Forward-Looking Statements
- --------------------------
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward-looking statements"
as defined in the Securities Act of 1933 and the Securities Exchange Act of
1934, as amended. These forward-looking statements rely on a number of
assumptions concerning future events, and are subject to a number of risks
and uncertainties and other factors, many of which are outside the control
of the Company, that could cause actual results to differ materially from
such statements.
Readers are cautioned not to put undue reliance on such forward-looking
statements, each of which speaks only as of the date hereof. Factors and
uncertainties that could affect the outcome of such forward-looking
statements include, among others, market and industry conditions, increased
competition, changes in governmental regulations, general economic
conditions, pricing pressures, and the Company's ability to continue its
growth and expand successfully into new markets and services. The Company
disclaims any intention or obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
SEPTEMBER 30, 2001
Results of Operations
Three and Nine Months Ended September 30, 2001 and 2000
Net sales for the nine months ended September 30, 2001 were $4,042,047
compared to net sales of $3,363,654 for the nine months ended
September 30, 2000. For these same periods, costs of sales were $1,883,738
compared to $1,525,111 for 2001 and 2000 respectively. The gross profit
for the nine months ended September 30, 2001 and 2000 was $2,158,309 and
$1,838,543, respectively. The company's selling, general and administrative
expenses increased to $1,875,346 from $1,828,148 for the nine months ended
September 30, 2001 and 2000, respectively. The company had income from
operations of $282,963 for the nine months ended September 30, 2001 compared
to $10,395 for the nine months ended September 30, 2000.
Net sales for the quarter ended September 30, 2001 were $1,888,325 compared
to net sales of $1,255,819 for the quarter ended September 30, 2000. For
these same periods, cost of sales were $960,106 compared to $520,119 for 2001
and 2000, respectively. The gross profit for the quarter ended September 30,
2001 and 2000 was $928,219 and $735,700, respectively. The company's
selling, general and administrative expenses decreased to $677,694 from
$716,233, respectively. The company had income from operations of $250,525
compared to $19,467 for the quarter ended September 30, 2001 and 2000
respectively.
The company decreased its inventory during the first nine months of 2001 by
$61,211 compared to an increase of $92,860 for the same quarter of 2000. The
company continues making efforts to better anticipate inventory needs. As a
consequence the Company was able to utilize existing inventory to meet
current sales needs.
Liquidity and Capital Resources
Total current assets decreased to $1,592,781 at September 30, 2001 compared
to $1,697,111 at September 30, 2000 primarily as a result of reducing its
inventory levels. The Company's total assets decreased to $2,034,833 at
September 30, 2001 compared to $2,173,620 at September 30, 2000 primarily as
a result of lowering its inventory levels and the continuing depreciation and
amortization of certain assets.
The Company's accounts payable and accrued expenses decreased to $381,508 at
September 30, 2001 compared to $742,384 at September 30, 2000, however loans
payable to shareholder increased to $137,775 at September 30, 2001 compared
to $-0- at September 30, 2000. The Company's total current liabilities
increased to $1,683,487 at September 30, 2001 from $1,198,484 at September
30, 2000 primarily due to short-term borrowings.
The Company's net cash used by operations was $610,288 for the nine months
ended September 30, 2001 compared to net cash provided from operations of
$15,690 for the nine months ended September 30, 2000. The Company
successfully obtained a new financing agreement that resulted in
approximately $727,349 of new borrowings through September 30, 2001.
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LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
SEPTEMBER 30, 2001
Liquidity and Capital Resources (continued)
The Company closed its consumer sales division located in Orlando, Florida,
which eliminated approximately 7 employees and is expected to reduce
operating expenses of payroll, travel, shows and advertising by
approximately $350,000 annually. The costs of its remaining Orlando
operation is currently being analyzed to determine whether additional
savings can be obtained by moving it to its Pompano Beach, Florida location.
The Company believes that the selling, general and administrative costs need
to be reviewed and efforts are currently under way to reduce its operating
expenses.
Subsequent Event
In October, 2001 the Company increased its line of credit from $1,200,000
to $2,000,000. The increase was needed in order to bring inventory levels
to amounts sufficient to satisfy its current orders. The existing line of
credit was amended to accommodate the $800,000 increase, however,
substantially all other terms and conditions of the line of credit agreement
was unchanged.
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LITEGLOW INDUSTRIES, INC.
FORM 10-Q
SEPTEMBER 30, 2001
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
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None
Item 2 - Changes in Securities
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None
Item 3 - Defaults upon Senior securities
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None
Item 4 - Submission of Matters to Vote of Security Holders
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None
Item 5 - Other information
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None
Item 6 - Exhibits and reports on Form 8-K
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None
b) There were no reports filed on Form 8-K during the quarter
ended September 30, 2001.
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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.
LITEGLOW INDUSTRIES, INC.
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Registrant
Date: November 9, 2001 /s/ Spencer Krumholtz
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Spencer Krumholz, President
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