U.S. 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, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from: to:
Commission file number: 000-26361
Creative Beauty Supply, Inc.
(Exact name of Small Business Issuer in its charter)
NEW JERSEY 22-3392051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
380 Totowa Road, Totawa, NJ 07512
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (973-904-0004
Check mark whether the Issuer (1) has filed all reports required by
Section 13 or 15(d) of the Exchange Act 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 the filing requirements for
at least the past 90 days. YES: X NO:
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PREVIOUS FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by the court.
YES: X NO:
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date: 1,864,650
Transitional Small Business Disclosure Format. YES: NO: X
PART I FINANCIAL INFORMATION
CREATIVE BEAUTY SUPPLY, INC.
BALANCE SHEETS
ASSETS
June 30, March 31,
2000 2000
------------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $323,675 $321,509
Accounts receivable 3,226 3,634
Inventory 67,914 67,707
Prepaid expenses 1,494 2,248
-------- ---------
TOTAL CURRENT ASSETS 396,309 395,098
PROPERTY AND EQUIPMENT,
net of accumulated
depreciation 1,511 2,052
-------- --------
TOTAL ASSETS $397,820 $397,150
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 22,598 $ 16,217
Payroll taxes withheld
and accrued 1,048 55
Accrued salaries -
officer's salaries 154,327 128,654
Accrued expenses 1,656 20,509
--------- ----------
TOTAL CURRENT LIABILITIES 179,629 165,435
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001,
authorized 10,000,000 shares;
issued and outstanding
-0- shares - -
Common stock, par value
$.001, authorized 100,000,000
shares; issued and outstanding
1,864,650 shares 1,865 1,865
Additional paid-in capital 472,541 472,541
Accumulated deficit (256,215) (242,691)
--------- ----------
TOTAL STOCKHOLDERS' EQUITY 218,191 231,715
--------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $397,820 $397,150
======== ========
The accompanying note is an integral part
of these financial statements.
4
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2000 and 1999
(UNAUDITED)
2000 1999
------ ------
NET SALES $ 65,165 $ 64,879
COST OF GOODS SOLD 46,397 51,917
-------- --------
GROSS PROFIT 18,768 12,962
-------- --------
OPERATING EXPENSES:
Salaries - officers 15,000 15,000
Payroll taxes 675 675
Auto and delivery 1,755 4,329
Employee welfare 1,113 849
Insurance 779 829
Office 1,007 332
Professional fees 9,705 9,559
Rent 3,801 3,600
Store supplies 432 304
Taxes 240 250
Telephone 605 470
Utilities 585 492
Miscellaneous 285 83
Depreciation and amortization 541 569
------- -------
TOTAL OPERATING EXPENSES 36,523 37,341
------- -------
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (17,755) (24,379)
OTHER INCOME:
Interest income 4,231 4,320
--------- --------
NET LOSS $ (13,524) $(20,059)
========= =========
LOSS PER COMMON SHARE, BASIC $(.01) $(.01)
===== =====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,864,650 1,864,650
========== =========
The accompanying note is an integral part
of these financial statements.
5
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(13,524) $(20,059)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization 541 569
(Increase) decrease in operating assets:
Accounts receivable 408 208
Inventory (207) 10,665
Prepaid expenses 754 814
Increase (decrease) in operating liabilities:
Accounts payable 6,381 3,824
Payroll taxes withheld and accrued 993 350
Accrued expenses 6,820 6,902
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,166 3,273
------ -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Registration cost - (5,000)
------ ------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,166 (1,727)
CASH AND CASH EQUIVALENTS - beginning of period 321,509 324,683
-------- --------
CASH AND CASH EQUIVALENTS - end of period $323,675 $322,956
======== ========
The accompanying note is an integral part
of these financial statements.
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. 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 three months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ending March 31, 2001. The unaudited financial statements should be
read in conjunction with the financial statements and footnotes thereto
included in the Company's Form 10KSB for the year ended March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Trends and Uncertainties. Demand for the Company's products will be
dependent on, among other things, market acceptance of the Company's
concept and general economic conditions, which are cyclical in nature.
Inasmuch as a major portion of the Company's activities is the receipt
of revenues from the sales of its products, the Company's business
operations may be adversely affected by the Company's competitors and
prolonged recessionary periods.
Hair styles in the industry change drastically from season to season.
The recent trend away from straight hair will have a favorable impact
on the sales of the Company's hair products such as perms, etc.
although the extent of this impact is indeterminable.
Capital and Source of Liquidity. In April 1999, the Company renewed
its lease for a term of three (3) years commencing May 1, 1999 at a
monthly rental of $1,200 per month for the first twelve (12) months and
$1,300 a month for each of the remaining twenty four (24) months.
Additionally, management intends to lease additional warehouse space.
The increased lease amounts will have a negative effect on the cash
flow of the Company.
For the three months ended June 30, 2000, the Company did not pursue
any financing activities.
For the three months ended June 30, 1999, the Company had registration
costs of $5,000 resulting in cash flows from financing activities of
($5,000).
For the three months ended June 30, 2000 and 1999, the Company
pursued no investing activities.
Results of Operations.
March 31, 2000 compared to March 31, 1999. For the three
months ended March 31, 2000 the Company had a net loss of
($13,524). The Company had net sales of $65,165 with a cost of goods
sold of $46,397 resulting in gross profit of $18,768.
For the three months ended March 31, 1999, the Company has a net loss
of ($20,059). The Company had net sales of $64,879 with a cost of
goods sold of $51,917 resulting in gross profit of $12,962.
The Company sells approximately over 1,000 different products at
varying mark ups ranging from 10 to 30 percent. The Company has two
types of customers, beauty salons and the general public. The gross
profit margin on sales of merchandises to the general public ranges
from 20 to 30 percent depending on the product sold. The gross margin
on sales of merchandise to beauty salons is somewhat less ranging from
10 to 20 percent depending on the product sold and the discount given.
The Company had operating expenses of $36,523 for the three months
ended June 30, 2000 compared to $37,341 for the three months ended
June 30, 1999. For the three months ended June 30, 2000,
these expenses consisted of officers salaries of $15,000, auto and
delivery of $1,755, professional fees of $9,705, rent of $3,801,
insurance of $1,113, miscellaneous expenses of $285 and other
miscellaneous expenses of $4,864.
For the three months ended June 30, 1999, these expenses consisted of
officers salaries of $15,000, auto and delivery of $4,329,
professional fees of $9,559, rent of $3,600, miscellaneous of $83,
insurance of $849, office expenses of $332, telephone of $470 and
other expenses of $3,119.
Auto and delivery expenses for the three months ended June 30, 2000
were $1,755 as compared to $4,329 for the same period ending June 31,
1999, a decrease of $2,574. In 1999, the Company's delivery van
required extensive repair work to its motor and transmission while in
year 2000, no major repair were done.
Employee welfare cost (employee hospitalization cost) increased by
$264 in 2000 for the three months as compared to the same period in
1999. The increase was due to higher premiums charged by insurance
carrier.
Office supplies and expenses increased by $675 in 2000 over the same
three month period in 1999. The increase was mainly due to the
purchase of computer supplies that were necessary in order to resolve
Y2K issues.
Assets for the three months ended June 30, 2000 increased by
approximately $670. Liabilities for the three months ended June 30,
2000 increased by approximately $14,190. Working capital at June 30,
2000 was approximately $216,680 and at March 31, 2000, it was
$230,663, a decrease of approximately $13,983. The increase was a
direct result of additional accrued salaries for Carmine Catizone of
$7,500 and an increase in accounts payable, suppliers $6,381.
Sales for the three months ended March 31, 2000 was $65,164 as
compared to $64,879 for three months ended March 31, 1999, a slight
increase. Sales are basically flat. The Company has not been able
to increase its customer base. The Company, in 1999, increased its
prices, therefore, increasing its gross profit on sales. The gross
profit percentage for the three months ended June 30, 1999 was
approximately 20% as compared to the gross profit percentage for the
three months ended June 30, 2000 of approximately 28%.
Plan of Operation. During the next twelve months, the Company intends
to obtain new product lines by negotiating with various manufacturers,
hire new sales representatives and hire technician to conduct product
knowledge classes
If the Company does not achieve the milestones within the above time
schedule, their operating costs will be higher and the Company will
lose even more money.
The Company's liquidity will be decreased due to little or no increase
in revenue and higher operating costs.
The Company is not delinquent on any of its obligations even though the
Company has had limited operating revenues. The Company intends to
market its products utilizing cash made available from the sale of its
products. The Company is of the opinion that revenues from the sales
of its products and the proceeds from the sale of its securities will
be sufficient to pay its expenses.
The Company does not have nor does it intend to have pension and/or
other post-retirement benefits in the future.
The Company does not have any or intends to have any derivative
instruments or hedging activities.
9
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Not applicable.
(b) Not applicable.
10
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.
Creative Beauty Supply, Inc.
(Registrant)
Dated: August 7, 2000
By: /s/ Carmine Catizone
----------------------------
Carmine Catizone, President