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: JUNE 30, 2002
COMMISSION FILE NUMBER:000-27087
LITEGLOW INDUSTRIES, INC.
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
UTAH 65-05164035
- -----------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 N.W. 33rd Court, Unit 112, Pompano Beach, Florida 33069
- -----------------------------------------------------------------------
(Address, including zip code, of principal executive offices)
(954) 971-4569
- -----------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -----------------------------------------------------------------------
(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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 2002, the number of the Company's shares of par value
$.001 common stock outstanding was 3,780,082.
1
LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
JUNE 30, 2002
INDEX
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet........................................................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
JUNE 30, 2002
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 51,667
Accounts receivable 2,603,196
Inventory, net 2,002,278
Prepaid expenses 78,421
--------------
Total current assets 4,735,562
Property and equipment less accumulated depreciation 341,487
Goodwill, net 175,660
Deferred loan costs 9,166
Deposits 45,481
--------------
$ 5,307,356
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 38,756
Current maturities of capital leases 25,741
Line of credit 2,122,710
Loans payable stockholder 113,508
Accounts payable and accrued expenses 1,781,376
--------------
Total current liabilities 4,082,091
--------------
Long-term debt less current maturities 10,133
Long term capital lease obligations less current maturities 43,451
--------------
53,584
--------------
Stockholders' equity:
Preferred stock par value $.001
issued and authorized 1,000,000 1,000
Common stock, $.001 par value; authorized
10,000,000 shares 3,780,082 shares issued and outstanding 3,780
Additional paid-in capital 3,356,542
Retained deficit (2,189,641)
--------------
Total stockholders' equity 1,171,681
--------------
$ 5,307,356
==============
See accompanying notes
3
LITEGLOW INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Six Six Three Three
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Sales $6,559,870 $2,153,322 $3,766,195 $1,177,656
Cost of sales 3,578,820 923,632 2,091,868 519,921
--------- --------- --------- ---------
Gross profit 2,981,050 1,229,690 1,674,327 657,735
Selling, general and administrative expenses 2,004,889 1,197,252 1,084,683 593,595
--------- --------- --------- ---------
Income from operations 976,161 32,438 589,644 64,140
--------- --------- --------- ---------
Other income (expenses):
Interest expense (88,555) (70,312) (49,090) (46,922)
Gain (loss) on disposal of assets (40,000) (1,919) - 5,333
Settlements - 132,606 - 132,606
--------- --------- --------- ---------
Total other income (expenses) ( 128,555) 60,375 (49,090) 91,017
--------- --------- --------- ---------
Income before income taxes 847,606 92,813 540,554 155,157
Income tax expense (benefit) - - - -
--------- --------- --------- ---------
Net income $ 847,606 $ 92,813 $ 540,554 $ 155,157
========= ========= ========= =========
Net income per common share:
Basic:
Net income per common share .22 .02 .14 .04
Diluted:
Net income per common share .10 .01 .06 .02
Weighted average shares outstanding basic 3,868,756 4,273,287 3,806,749 4,273,287
========= ========= ========= =========
Weighted average shares outstanding diluted 8,868,756 9,273,287 8,806,764 9,273,287
========= ========= ========= =========
See accompanying notes
4
LITEGLOW INDUSTRIES, INC.
STATEMENTS OF CASH FLOW
(unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
2002 2001
------------ ------------
Cash flows from operating activities:
Net income $ 847,606 $ 92,813
Adjustments to reconcile net income to net:
Cash provided by (used for) operating activities
Depreciation and amortization 37,242 42,388
Non- cash compensation - 100
Gain on disposal of equipment - 1,919
Settlement of debt - (85,000)
Changes in assets and liabilities:
Accounts receivable (1,350,663) 72,401
Inventory (928,748) (53,771)
Prepaid expenses (180) 9,326
Deposits and other assets (100)
Deferred loan costs 2,834 (21,500)
Accounts payable and accrued expenses 940,358 (356,980)
--------- ---------
Net cash (used for) operations (451,651) (298,304)
--------- ---------
Net cash (used in) provided from investing activities:
Proceeds from sale of equipment - 16,227
Purchase of equipment (147,079) -
--------- ---------
Net cash used for investing activities (147,079) 16,227
--------- ---------
Cash flows from (used in) financing activities:
Repayment from (loan to) stockholder (9,842) (38,391)
Purchase and retirement of treasury stock (24,250) -
Proceeds from line of credit, net 671,548 333,151
Proceeds from long term debt 80,000 -
Payments of long term debt and leases (69,071) (30,076)
--------- ---------
Net cash provided by financing activities 648,385 264,684
--------- ---------
Net (decrease) in cash and cash equivalents 49,655 (17,393)
Cash and cash equivalents, beginning of period 2,012 17,393
--------- ---------
Cash and cash equivalents, end of period $ 51,667 $ -
========= =========
Supplementary disclosure of cash flow information:
Interest paid $ 88,555 $ 70,312
========= =========
Assets acquired with debt $ 40,000 $ 47,584
========= =========
See accompanying notes
5
LITEGLOW INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
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. 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, 2001.
The balance sheet as of June 30, 2002, the statements of operation and cash
flows for the three and six months ended June 30, 2002, and 2001, 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 June 30, 2002, 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, 2001.
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.
6
LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
JUNE 30, 2002
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 six months ended June 30, 2002, and 2001,
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.
7
LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
JUNE 30, 2002
Results of Operations
Three and Six Months Ended June 30, 2002 and 2001
Net sales for the six months ended June 30, 2002 were $6,559,870 compared to
net sales of $2,153,322 for the six months ended June 30, 2001. For these
same periods, costs of sales increased to $3,578,820 from $923,632 for 2002
and 2001 respectively. The gross profit for the six months ended June 30,
2002 and 2001 was $2,981,050 and $1,229,690, respectively. The Company's
selling, general and administrative expenses increased to $2,004,889 from
$1,197,252 for the six months ended June 30, 2002 and 2001, respectively.
The Company had income from operations of $976,161 for the six months
ended June 30, 2002 compared to a net income from operations of $32,438
for the six months ended June 30, 2001.
Net sales for the quarter ended June 30, 2002 were $3,776,195 compared to
net sales of $1,177,656 for the quarter ended June 30, 2001. For these
same periods, cost of sales increased to $2,091,868 from $519,921 for
2002 and 2001, respectively. The gross profit for the quarter ended
June 30, 2002 and 2001 was $1,674,327 and $657,735, respectively. The
Company's selling, general and administrative expenses increased to
$1,084,683 from $593,595, respectively. The Company had income from
operations of $589,644 compared to $64,140 for the quarters ended
June 30, 2002 and 2001 respectively.
The Company increased its inventory during the first six months of 2002
by $928,748 compared to an increase of $53,771 for the six months of 2001.
The company is making efforts to better anticipate inventory needs.
Liquidity and Capital Resources
Total current assets increased to $4,735,562 at June 30, 2002 compared to
$1,228,067 at June 30, 2001 primarily as a result of increasing its accounts
receivable and inventory levels. The Company's total assets increased to
$5,307,356 at June 30, 2002 compared to $1,717,701 at June 30, 2001
primarily as a result of increasing its current assets described above and
due to the purchase of fixed assets.
The company's accounts payable and accrued expenses increased to $1,781,376
at June 30, 2002 compared to $582,144 at June 30, 2001, however loans
payable to shareholder decreased to $113,508 at June 30, 2002 compared
to $182,239 at June 30, 2001 primarily due to the Company's increased
purchasing due to higher sales volume and improved cash flow enabling
the Company to rely less on shareholder loans. The Company's total
current liabilities increased to $4,082,091 at June 30, 2002 from
$1,568,679 at June 30, 2001 primarily due to the increased sales volume
which increased the amounts carried in trade payables and other short term
borrowings.
The Company's net cash used for operations was $451,651 for the six months
ended June 30, 2002 compared to net cash used from operations of $298,304
for the six months ended June 30, 2001
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.
8
LITEGLOW INDUSTRIES, INC.
FORM 10-QSB
JUNE 30, 2002
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 Vote of Security Holders
-------------------------------------------------
None
Item 5 - Other information
-----------------
During April, 2002, the Company purchased from the open market 150,000
shares of its own stock at approximately $.16 per share for a total price
of $24,250. These shares were later retired.
Item 6 - Exhibits and reports on Form 8-K
On or about May 17, 2002, the Company filed a report on Form 8-K announcing
that Target Stores is now carrying the Company's merchandise in
approximately 1,000 stores.
On or about May 23, 2002, the Company filed a report on Form 8-K announcing
that O'Reilly Automotive is now carrying the Company's merchandise in
approximately 800 stores.
9
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.
Registrant
Date: 7/30/02 /s/Spencer Krumholz
----------------- ---------------------------
Spencer Krumholz, President
10