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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: September 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
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PART I FINANCIAL INFORMATION
CREATIVE BEAUTY SUPPLY, INC.
BALANCE SHEETS
ASSETS
September 30, March 31,
2000 2000
Unaudited
CURRENT ASSETS:
Cash and cash equivalents $ 301,070 $ 321,509
Accounts receivable 3,112 3,634
Inventory 74,528 67,707
Prepaid Expenses 1,702 2,248
--------- --------
TOTAL CURRENT ASSETS 380,412 395,098
PROPERTY AND EQUIPMENT,
Net of accumulated depreciation 970 2,052
------- --------
TOTAL ASSETS $ 381,382 $ 397,150
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable -trade $ 19,941 $ 16,217
Payroll taxes withheld and
accrued 1,034 55
Accrued salary -officer 161,250 128,654
Accrued expenses-other 1,444 20,509
-------- --------
TOTAL CURRENT LIABILITIES 183,669 165,435
-------- --------
STOCKHOLDER'S EQUITY
Preferred stock, par value $.001,
Authorized 10,000,000 shares,
Issued and outstanding -0- - -
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 (276,693) (242,691)
--------- ---------
TOTAL SHARHOLDERS'S EQUITY 197,713 231,715
-------- ---------
TOTAL LIBILITIES AND
STOCKHOLDERS EQUITY $ 381,382 $ 397,150
========= =========
The accompanying note is an integral part of these financial statements.
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CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended Sept. 30 Three Months Ended Sept. 30
------------------------- -------------------------
2000 1999 2000 1999
--------- ------------ ---------- ----------
NET SALES $124,232 $ 126,656 $ 59,067 $ 61,777
COST OF GOODS
SOLD 88,448 100,352 42,051 48,435
-------- --------- --------- ---------
GROSS PROFIT 35,784 26,304 17,016 13,342
-------- --------- --------- ---------
OPERATING EXPENSES:
Salaries - officers 30,000 30,192 15,000 15,192
Payroll taxes 1,397 1,241 722 566
Auto and delivery 3,726 6,868 1,971 2,539
Employee welfare 3,162 1,973 2,049 1,124
Insurance 1,562 1,641 783 812
Office 1,591 768 584 436
Professional fees 24,279 14,464 14,574 4,905
Rent 7,602 7,200 3,801 3,600
Store supplies 757 747 325 443
Taxes 240 250 - 0
Telephone 1,269 950 664 480
Utilities 1,075 883 490 391
Miscellaneous 381 393 96 310
Depreciation and
Amortization 1,082 1,138 541 569
---------- ---------- --------- ----------
TOTAL OPERATING
EPENSES 78,123 68,708 41,600 31,367
---------- ---------- --------- ----------
LOSS FROM OPERATIONS
BEFORE OTHER INCOME (42,339) (42,404) (24,584) (18,025)
OTHER INCOME
Interest income 8,337 8,531 4,106 4,211
--------- ----------- ----------- ---------
NET LOSS (34,002) $ (33,873) $ (20,478) (13,814)
========= =========== ============= ==========
LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.02) $ (0.02) $ (0.01) $ (0.01)
========== =========== ============= ===========
WEIGHTED AVERAGE
NUMBER OFCOMMON SHARES
OUTSTANDING $1,864,560 $ 1,862,099 $ 1,864,650 $1,864,650
========== =========== ============ ===========
The accompanying note is an integral part of these financial statements.
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CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
---- ----
CASH FLOWS FROM OERATING ACTIVITIES: $(34,002) $(33,873)
Net loss
Adjustments to reconcile net loss to
Net cash from operating activities:
Depreciation and amortization 1,082 1,138
(Increase) decrease in operating assets:
Accounts receivable 522 (389)
Inventory (6,821) 15,468
Prepaid Expenses 546 1,521
Increase (decrease) in operating liabilities:
Accounts payable 3,724 380
Payroll taxes withheld and accrued 979 (11)
Accrued expenses 13,531 15,163
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (20,439) (603)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Registration Costs - (5,000)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (20,439) (5,603)
CASH AND CASH EQUIVALENTS -beginning of period 321,509 324,683
-------- ---------
CASH AND CASH EQUIVALENTS -end of period $ 301,070 $319,080
========= ========
The accompanying note is an integral part of these financial statements.
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CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principals 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 financials 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 six months ending September
30,2000 are not necessarily indicative of the results that may be
expected for the year ended March 31,2001. The unaudited financials
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.
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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 six months ended September 30, 2000, the Company did not
pursue any financing activities.
For the six months ended September 30, 1999, the Company had
registration costs of $5,000 resulting in cash flows from financing
activities of ($5,000).
For the six months ended September 30, 2000 and 1999, the Company
pursued no investing activities.
Results of Operations.
Assets for the six months ended September 30, 2000 decreased by approx.
$14,700.
Liabilities for the six months ended September 30, 2000 increased by
approx. $18,200.
Working capital at September 30, 2000 was approx. $196,743 and at March
31, 2000 it was $230,663, a decrease approx. $33,920. The decrease was
a direct result of an increase in accrued salaries for Carmine in the
amount of $15,000, an increase in accounts payable to suppliers of
$3,724 and a decrease in cash used in operations of $20,439.
Stockholders Equity decreased by the loss for the six months. There
were no equity transactions during the period.
Sales for the six months ended September 30,2000 was $124,232 as
compared to $126,856 for the six months ended September 30, 1999, a
slight decrease. 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 six months ended September 30, 1999 was approx
20% as compared to the gross profit percentage for the six months ended
September 30,2000 of approx. 28%.
There were no increases in salaries.
Auto and delivery expenses for the six months ended September 30, 2000
were $3,726 as compared to $6,868 for the same period ending September
30, 1999, a decrease of $3,142. In 1999 the company's delivery van
required extensive repair work to its motor and transmission while in
2000 no major repairs were done.
Employee welfare cost (employee hospitalization cost) increased by
$1,189 in 2000 for the six 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 $823 in 2000 over the same six
month period in 1999. The increase was mainly due to the purchase of
computer supplies that were necessary in order resolve Y2K issues.
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Professional fees increased by approx. $9,815 for the six months ended
September 30,2000 as compared to the same six month period in 1999.
This was due to increased cost for legal and accounting services for
quarterly and annual SEC filings and increased cost to the stock
transfer agent for maintaining the Company's stock records and services.
Rent increased due the Company's lease expiring in April and increased
monthly rental payments for the next three years
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.
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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) The Company filed an 8-K to report the change in accountants
on August 1, 2000.
(b) Not applicable.
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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.
Creative Beauty Supply, Inc.
(Registrant)
Dated: November 7, 2000
By: /s/ Carmine Catizone
----------------------------
Carmine Catizone, President