SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q SB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended November 30, 1999 Commission file number _________________
SILK BOTANICALS.COM, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0886132
------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
975 S. Congress Ave. #102
Delray Beach, Fl. 33445
-----------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: ( 561) 265 - 3600
Indicate by check mark whether 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 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: [Y] No: [ ]
REGISTRANT IS A CORPORATION
TABLE OF CONTENTS
ITEM 1. Financial Statements
The following Unaudited financial statements are file herewith:
Balance Sheet as of November 30, 1999 and
May 31, 1999 Page 3
Consolidated Statements of Operations for the Three and Six
Months Ended November 30, 1999 and 1998 Page 4
Consolidated Statements of Cash Flows for the Six months Ended
November 30, 1999 and 1998 Page 5
ITEM 2. Results of Operations and Management's Discussion and
Analysis of Financial Condition Page 7
Signatures Page 9
The statements, insofar as they relate to the period
subsequent to May 31, 1999, are Unaudited.
2
Item 1. Financial Information
SILKBOTANICALS.COM, INC.
BALANCE SHEETS
(see notes to financial statements)
NOVEMBER 30, MAY 31,
1999 1999
--------- ---------
(unaudited)
ASSETS:
Current assets:
Cash in Banks $ 23,215 $ --
Accounts receivable 67,144 --
Inventory 52,078 57,353
--------- ---------
Total current assets 142,437 57,353
Property and equipment 1,248 1,500
License rights, net of valuation allowance
accumulated amortization 38,960 42,500
--------- ---------
$ 182,645 $ 101,353
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Short-term Debt $ 25,525 $ --
Accounts payable 42,877 21,414
Accounts payable due to related party 142,202 101,353
--------- ---------
Total current liabilities 210,604 122,767
--------- ---------
Stockholders' deficit:
Series A preferred stock, $.001 par value, 1,900 shares
authorized, issued and outstanding 2 2
Preferred stock, $.001 par value, 4,998,100 authorized,
none issued and outstanding -- --
Common stock, $.001 par value, 25,000,000 shares authorized
6,250,000 shares issued and outstanding 6,250 6,250
Additional paid-in capital 671,458 671,458
Deficit accumulated during the development stage -- (699,124)
Retained deficit (705,669) --
--------- ---------
Total stockholders' deficit (27,959) (21,414)
--------- ---------
$ 182,645 $ 101,353
========= =========
3
SILKBOTANICALS.COM, INC.
STATEMENT OF OPERATIONS
(unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
-----------------------------------------------------------------
1999 1998 1999 1998
----------- --------- ----------- -----------
Revenues $ 281,244 $ -- $ 168,782 $ --
Cost of goods sold 196,871 -- 118,148 --
----------- --------- ----------- -----------
Gross profit 84,373 -- 50,634 --
Operating expenses:
General and administrative 90,918 -- 55,536 --
----------- --------- ----------- -----------
Total 90,918 -- 55,536 --
----------- --------- ----------- -----------
Net loss (6,545) -- (4,902) --
Preferred dividend requirement 5,700 -- 2,850 --
----------- --------- ----------- -----------
Net loss available to common
shareholders (12,245) -- (7,752) --
----------- --------- ----------- -----------
Net loss per share of common stock:
Basic and diluted $ -- $ -- $ -- $ --
Weighted average number of common
shares outstanding 6,250,000 6,250,000 6,250,000 6,250,000
4
SILKBOTANICALS.COM, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
NOVEMBER 30,
1999 1998
-------- ----
Cash flows from operating activities:
Net loss $ (6,545) $ --
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 3,792 --
Changes in assets and liabilities:
Increase in accounts receivable (67,144) --
(Increase) decrease in inventory 5,275 --
Increase in accounts payable 21,463 --
Increase in due to related parties 40,849 --
Net cash used in operation activities (2,310) --
Cash flow from financing activities
Bank lines 25,525 --
Net increase in cash 23,215 --
Cash at beginning of period -- --
Cash at end of period $ 23,215 $ --
======== ====
5
SILK BOTANICALS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Silk Botanicals.Com, Inc.
(The Company) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q SB. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six-month period
ended November 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended May 31, 2000.
6.
Item 2. Results of Operations and Management's Discussion & Analysis of
Financial Condition
2. REVENUES
Sales revenue for the second quarter of operations increased to $168,782, which
was a 50% increase over sales revenue for the first quarter of $112,462. Cost of
goods sold remained constant at 70.0% producing a gross profit of $50,634 or
30.0%. General and administrative operating expenses were $55,536 or 32.9% of
sales, producing a net loss of $4,902 or 2.9%.
For the six months ended November 30, 1999, revenues were $281,244. The cost of
goods sold was $196,871 with a gross profit of $84,373 or 30.0%. Operating
expenses
were $90,918 or 32.7%, producing a net loss of $6,545 or 2.3%. The Company
maintained $52,078 of inventory as of November 30th. The turnover of such
inventory would be annualized at 7.56 times per year.
3. YEAR 2000
The Company anticipates that it will not incur any costs associated with its
computer system as it relates to the conversion to the Year 2000. Surveys of
financial institutions and vendors used by The Company also indicate compliance.
4. OTHER EVENTS
During the second quarter, The Company began production of its website which
will include all in-line Living Silk, Forever Fresh and Silk Botanicals
products. The website will include a shopping cart which will enable customers
to order product on line. The website is expected to be completed in the third
quarter ending February 28, 2000. The Company also completed production of its
brochure for the natural trunk tree category. This brochure, in addition to the
waterlook illusion brochure and floral and greenery brochure, completes the
in-line products The Company offers for wholesale.
7
5. FORWARD LOOKING INFORMATION
Certain statements in this section and elsewhere in this report are
forward-looking in nature and relate to trends and events that may affect The
Company's future financial position and operating results. The words "expect",
"anticipate", "intend", and "project" and similar words or expressions are
intended to identify forward-looking statements. These statements speak only as
of the date of this report. The statements are based on current expectations,
are inherently uncertain, are subject to risks, and should be viewed with
caution. Actual results and experience may differ materially from the forward-
looking statements as a result of many factors, including: changes in economic
conditions in the various markets served by The Company's operations, increased
competition, and other unanticipated events and conditions. It is not possible
to foresee or identify all such factors. The Company makes no commitment to
update any forward-looking statement or to disclose any facts, events, or
circumstances after the date hereof which may affect the accuracy of any
forward-looking statement, except as may be required by law.
6. SUBSEQUENT EVENTS
During the month of December , The Company executed sales rep agreements with
a) an organization in Atlanta to cover six (6) southeast states, with b) an
organization in Dallas to cover six (6) southwest states, and with c) a rep
organization in Illinois to cover five (5) Midwestern states. All rep
organizations maintain permanent showrooms in their respective cities and have
road sales people, as well as showroom people for all categories of Silk
Botanicals' merchandise.
In December, The Company was approved as a vendor for two major supermarket
chains and commenced deliveries to select locations. In early January 2000, The
Company received an initial purchase order agreement from a large national
discount department store chain, and has commenced delivery of product to select
locations. The Company also received commitments from a national retailer who
operates over 200 stores, for anticipated deliveries to begin in March 2000.
The company's chief supplier/manufacturer has been running at 25% capacity.
Therefore, the company expects to be able to fill all orders that these newly
reached sales arrange- ments may reasonably be expected to produce.
8
SILK BOTANICALS.COM, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
See Part 1
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) 27 Financial Data Schedule
(b) None
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.
SILK BOTANICALS. COM, INC.
A Florida Corporation
BY: /S/ JOSEPH R. BERGMANN
--------------------------
Joseph R. Bergmann
President
Date: January 14, 2000
9
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
27 Financial Data Schedule