UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
Commission File Number: 0-50773
Creative Beauty Supply of New Jersey Corporation
(Exact name of Registrant as specified in its charter)
NEW JERSEY 56-2415252
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
266 Cedar Street, Cedar Grove, New Jersey 07009
(Address of principal executive offices, including zip code)
(973) 239-2952
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes [ ] No [x]
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 [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
2
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer," and "smaller reporting company" in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller Reporting Company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [x] No [ ]
As of March 23, 2011, no market price existed for voting and non-voting
common equity held by non-affiliates of the registrant.
As of March 23, 2011, the registrant had outstanding 10,532,150 shares
of Common Stock with a par value of $0.001 per share.
DOCUMENTS INCORPORATED BY REFERENCE
None
3
TABLE OF CONTENTS
ITEM PAGE
PART I
1. BUSINESS 4
1A. RISK FACTORS 5
1B. UNRESOLVED STAFF COMMENTS 5
2. PROPERTIES 5
3. LEGAL PROCEEDINGS 5
4. (REMOVED AND RESERVED) 5
PART II
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES 6
6. SELECTED FINANCIAL DATA 6
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION 6
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 8
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 8
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES 8
9A. CONTROLS AND PROCEDURES 9
9B. OTHER INFORMATION 11
PART III
10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS, AND CORPORATE GOVERNANCE 12
11. EXECUTIVE COMPENSATION 14
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 15
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE 16
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 16
PART IV
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 18
4
PART I
ITEM 1. BUSINESS
Creative Beauty Supply of New Jersey Corporation was incorporated in
the state of New Jersey on October 1, 2003. It was formed pursuant to a
resolution of the board of directors of Creative Beauty Supply Inc.
("CBS"), as a wholly owned subsidiary of that company, a publicly
traded New Jersey corporation.
On January 1, 2004, the assets and liabilities of CBS were contributed
at book value to Creative NJ, and CBS approved a spin-off of this
subsidiary to its shareholders. The spin-off was approved in
contemplation of a merger which occurred on March 19, 2004 between CBS
and Global Digital Solutions, Inc., a Delaware corporation, upon
approval by vote of the stockholders of CBS and Global Digital whereby
the former shareholders of CBS became the owners of 100 percent of the
common stock of Creative NJ. The common shares were transferred upon
completion of the Form 10SB. CBS is the predecessor of Creative NJ.
Pursuant to the requirements of Staff Legal Bulletin #4, the spin-off
was completed in September 2005 with the satisfactory resolution of all
SEC comments to the Form 10SB.
Pursuant to the terms of the spin-off arrangement, Global Digital
provided its shareholders as of January 1, 2004, the record date, one
share of Creative NJ for every share of Global Digital owned as of that
date.
Creative NJ filed its Form 10SB voluntarily. Creative NJ will
voluntarily file periodic reports in the event its obligation to file
such reports is suspended under the Exchange Act.
Corporate Operations
On January 1, 2004, Creative NJ commenced operations in the beauty
supply industry at both the wholesale and retail levels. On November
30, 2007, Creative NJ's Board of Directors approved a plan to dispose
of its wholesale and retail beauty supply business. As of January 1,
2009, Creative NJ has had no operations and is a shell company.
Creative NJ's business plan is to attempt to identify and negotiate
with a business target for the merger of that entity with and into
Creative NJ. In certain instances, a target company may wish to become
a subsidiary of Creative NJ or may wish to contribute or sell assets to
Creative NJ rather than to merge. No assurances can be given that
Creative NJ will be successful in identifying or negotiating with any
target company. Creative NJ seeks to provide a method for a foreign or
domestic private company to become a reporting or public company whose
securities are qualified for trading in the United States secondary
markets.
A business combination with a target company normally will involve the
transfer to the target company of the majority of the issued and
outstanding common stock of Creative NJ, and the substitution by the
target company of its own management and board of directors. No
assurances can be given that Creative NJ will be able to enter into a
5
business combination, or, if Creative NJ does enter into such a
business combination, no assurances can be given as to the terms of a
business combination, or as to the nature of the target company.
The current and proposed business activities described herein classify
Creative NJ as a blank check company. The Securities and Exchange
Commission and many states have enacted statutes, rules and regulations
limiting the sale of securities of blank check companies. Management
does not intend to undertake any efforts to cause a market to develop
in Creative NJ's securities until such time as Creative NJ has
successfully implemented its business plan described herein.
ITEM 1A. RISK FACTORS
Not applicable to a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Creative NJ has no properties and, at this time, has no arrangements to
acquire any properties. Creative NJ currently uses for its principal
place of business the home office of Pasquale Catizone, a principal
shareholder of Creative NJ, at no cost to Creative NJ, an arrangement
which management expects will continue until Creative NJ completes an
acquisition or merger.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against Creative NJ.
ITEM 4. (REMOVED AND RESERVED)
6
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information. There has been no trading market for Creative
NJ's common stock for at least the last three years. There can be no
assurance that a trading market will ever develop or, if such a market
does develop, that it will continue.
Holders. There were approximately 101 record holders of Creative
NJ's common stock as of March 23, 2011. The issued and outstanding
shares of Creative NJ's common stock were issued in accordance with the
exemptions from registration afforded by Sections 3(b) and 4(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder.
Dividends. Holders of the registrant's common stock are entitled
to receive such dividends as may be declared by its board of directors.
No dividends on the registrant's common stock have ever been paid, and
the registrant does not anticipate that dividends will be paid on its
common stock in the foreseeable future.
Securities authorized for issuance under equity compensation
plans. No securities are authorized for issuance by the registrant
under equity compensation plans.
Performance graph. Not applicable.
Sale of unregistered securities. None.
(b) Use of Proceeds. Not applicable.
(c) Purchases of Equity Securities by the issuers and affiliated
purchasers. None.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
--------------------------
Statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, as well as in certain other parts
of this Annual Report on Form 10-K (as well as information included in
oral statements or other written statements made or to be made by
Creative NJ) that look forward in time, are forward- looking statements
made pursuant to the safe harbor provisions of the Private Litigation
Reform Act of 1995. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or
performance, expectations, predictions, and assumptions and other
statements which are other than statements of historical facts.
7
Although Creative NJ believes such forward-looking statements are
reasonable, it can give no assurance that any forward-looking
statements will prove to be correct. Such forward-looking statements
are subject to, and are qualified by, known and unknown risks,
uncertainties and other factors that could cause actual results,
performances or achievements to differ materially from those expressed
or implied by those statements. These risk, uncertainties and other
factors include, but are not limited to Creative NJ's ability to
estimate the impact of competition and of industry consolidation and
risks, uncertainties and other factors set forth in Creative NJ's
filing with the Securities and Exchange Commission, including without
limitation this Annual Report on Form 10-K.
Creative NJ undertakes no obligation to update forward-looking
statements to reflect events or circumstances occurring after the date
of this Form 10-K.
Critical Accounting Policies
----------------------------
The preparation of our financial statements and notes thereto requires
management to make estimates and assumptions that affect the amounts
and disclosures reported within those financial statements. On an
ongoing basis, management evaluates its estimates, including those
related to revenue recognition, contingencies, litigation and income
taxes. Management bases its estimates and judgments on historical
experiences and on various other factors believed to be reasonable
under the circumstances. Actual results under circumstances and
conditions different than those assumed could result in differences
from the estimated amounts in the financial statements. There have
been no material changes to these policies during fiscal 2009. As of
December 31, 2010 and 2009, Creative NJ has not identified any critical
estimates that are used in the preparation of the financial statements.
Trends and Uncertainties
------------------------
There are no material commitments for capital expenditure at this time.
There are no trends, events or uncertainties that have had or are
reasonably expected to have a material impact on our limited
operations. There are no known causes for any material changes from
period to period in one or more line items of Creative NJ's financial
statements.
Liquidity and Capital Resources
-------------------------------
At December 31, 2010, Creative Beauty Supply of New Jersey Corporation
had a cash balance of $152,241, which represents a $25,012 decrease
from the $177,253 balance at December 31, 2009. This decrease was
primarily the result of cash used to satisfy the requirements of a
reporting company. Creative NJ's working capital balance at December
31, 2010 was $136,191, as compared to a December 31, 2009 balance of
$157,175.
8
The focus of Creative NJ's efforts is to acquire or develop an
operating business. Despite no active operations at this time,
management intends to continue in business and has no intention to
liquidate Creative NJ. Creative NJ does not contemplate limiting the
scope of its search to any particular industry. Management has
considered the risk of possible opportunities as well as their
potential rewards. Management has invested time evaluating several
proposals for possible acquisition or combination; however, none of
these opportunities were pursued. Creative NJ's sole expected expenses
are comprised of professional fees primarily incident to its reporting
requirements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a
material effect on the accompanying financial statements.
Results of Operations for the Year Ended December 31, 2010 compared to
the Year Ended December 31, 2009.
----------------------------------------------------------------------
Creative NJ incurred a net loss of $20,984 in 2010 versus a net loss of
$26,601 in 2009. Operating expenses were incurred primarily to enable
Creative NJ to satisfy the requirements of a reporting company. For
the year ended December 31, 2010 and 2009, professional fees necessary
to remain a reporting company were $21,475 and $29,045, respectively.
During the current and prior period, Creative NJ did not record an
income tax benefit due to the uncertainty associated with Creative NJ's
ability to merge with an operating company, which might permit Creative
NJ to avail itself of those advantages.
Off Balance Sheet Arrangements
None.
Disclosure of Contractual Obligations
None.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Creative NJ's financial statements and associated notes are set forth
beginning on page 19.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
9
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
We conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31,
2010. The evaluation was conducted under the supervision and with the
participation of management, including our chief executive officer and
chief financial officer. Disclosure controls and procedures mean our
controls and other procedures that are designed to ensure that
information required to be disclosed in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
SEC rules and forms. Disclosure controls and procedures are also
designed to provide reasonable assurance that such information is
accumulated and communicated to our management, including the chief
executive officer, as appropriate to allow timely decisions regarding
required disclosure. Our evaluation of disclosure controls and
procedures includes an evaluation of some components of our internal
control over financial reporting, and internal control over financial
reporting is also separately evaluated on an annual basis for purposes
of providing the management report that is set forth below.
The evaluation of our disclosure controls and procedures included a
review of their objectives and design, our implementation of the
controls, and the effect of the controls on the information generated
for use in this Form 10-K. In the course of the controls evaluation, we
sought to identify any past instances of data errors, control problems
or acts of fraud and sought to confirm that appropriate corrective
actions, including process improvements, were being undertaken. This
evaluation is performed on a quarterly basis so that the conclusions of
management, including the chief executive officer and chief financial
officer, concerning the effectiveness of our disclosure controls and
procedures can be reported in our periodic reports.
Our chief executive officer and chief financial officer have concluded,
based on the evaluation of the effectiveness of the disclosure controls
and procedures by our management, that as of December 31, 2010, our
disclosure controls and procedures were not effective due to the
material weaknesses described in Management's Report on Internal
Control over Financial Reporting below.
Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, a company's principal
executive and principal financial officers and effected by a company's
board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes
those policies and procedures that:
10
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and disposition of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States, and
that receipts and expenditures of the registrant are being made only in
accordance with authorizations of management and directors of the
registrant; and
- Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
company's assets that could have a material effect on the financial
statements.
As required by Rule 13a-15(c) promulgated under the Exchange Act, our
management, (chief executive officer and chief financial officer),
evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2010. Management's assessment was based
on criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control - Integrated Framework.
Based upon management's assessment using the criteria contained in
COSO, and for the reasons discussed below, our management has concluded
that, as of December 31, 2010, our internal control over financial
reporting were ineffective due to the material weaknesses described
below.
1) The registrant did not sufficiently segregate duties over
incompatible functions. The registrant's inability to sufficiently
segregate duties is due to a small number of personnel.
2) In conjunction with the lack of segregation of duties, the
registrant did not institute specific anti-fraud controls. While
management found no evidence of fraudulent activity, certain
individuals have access to both accounting records and corporate
assets, principally the operating bank account.
Under the rules promulgated by the US Securities and Exchange
Commission, the term "material weakness" means a deficiency, or a
combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of the registrant's annual or interim financial statements
will not be prevented or detected on a timely basis. A material
weakness in internal control over financial reporting does not imply
that a material misstatement of the financial statements has occurred,
but rather, that there is a reasonable possibility that a material
misstatement could occur.
Inherent Limitations over Internal Controls
-------------------------------------------
Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal
control over financial reporting includes those policies and procedures
that: (i) pertain to the maintenance of records that, in reasonable
11
detail, accurately and fairly reflect the transactions and disposition
of our assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures are being made only in accordance with
authorizations of management and directors; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of assets that could have
a material effect on the financial statements.
Management, including our chief executive officer and chief accounting
officer, does not expect that our internal controls will prevent or
detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of internal controls can provide
absolute assurance that all control issues and instances of fraud, if
any, have been detected. Also, any evaluation of the effectiveness of
controls in future periods are subject to the risk that those internal
controls may become inadequate because of changes in business
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There have not been any changes in the registrant's internal control
over financial reporting, as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act, during its fourth fiscal quarter
that have materially affected, or are reasonably likely to materially
affect its internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
AND CORPORATE GOVERANCE
(a) Identity of Officers and Directors
Set forth below are the names of the directors and officers of Creative
NJ, all positions and offices with Creative NJ held, the period during
which he has served as such, and his business experience during at
least the last five (5) years:
Name Position Held Term of Office
Carmine Catizone, age 66 President, Director October 1, 2003
to present
Daniel Generelli, age 48 Secretary/Treasurer October 1, 2003
Vice-President/Director to present
Carmine Catizone. Mr. Catizone has been President and a director of
Creative NJ since its incorporation on October 1, 2003. From June 1988
to July 1994, Mr. Catizone was president and a director of J&E Beauty
Supply, Inc., a retail and wholesale beauty supply distributor. Mr.
Catizone served as president and a director of C&C Investments, Inc., a
blank check company (now known as T.O.P.S. Medical Corp., which
provided chemicals for transportation of organs) from July 1977 to
December 1984. From August 1995 to March 19, 2004, Mr. Catizone was
president and a director of Creative Beauty Supply, Inc., now Global
Digital Solutions, Inc., a SEC reporting company. Mr. Catizone is not
currently involved with T.O.P.S. Medical Corp. From June 1980 to
December 1985, Mr. Catizone had been district sales manager (engaged in
sales of cosmetics) for Chattem Labs. Mr. Catizone received his
Bachelor of Science degree from Fairleigh Dickerson University in 1972.
Daniel Generelli. Mr. Generelli has been secretary-treasurer and a
director of Creative NJ since its incorporation on October 1, 2003.
From August 1995 to March 19, 2004, Mr. Generelli was Secretary-
Treasurer and a director of Creative Beauty Supply, Inc., now Global
Digital Solutions, Inc., a SEC reporting company. From December 1989
to July 1995, Mr. Generelli was secretary/treasurer and a director of
J&E Beauty Supply, Inc., a retail and wholesale beauty supply
distributor. From December 1984 to December 1989, Mr. Generelli was
employed as a distribution supervisor with Tags Beauty Supply, a retail
and wholesale beauty supply distributor in Fairfield, NJ. Mr. Generelli
graduated from Ramapo College of New Jersey with a Bachelor of Science
degree in June of 1984.
Other than Mr. Catizone and Mr. Generelli, Creative NJ did not have any
significant employees as of the date of this Report. There were no
family relationships between any of the officers or directors of
Creative NJ. During the fiscal year covered by this Report, there were
no changes to the procedures by which security holders could recommend
nominees to Creative NJ's board of directors.
13
At this time, Creative NJ does not have an audit committee because
Creative NJ has not engaged in any business operations for at least the
last two years. Creative NJ's board of directors acts as its audit
committee. Similarly, Creative NJ's board of directors has determined
that it does not have an audit committee financial expert as defined
under Securities and Exchange Commission rules.
Current Blank Check Companies
-----------------------------
Daniel Generelli, an officer and director of Creative NJ, is an officer
and director of Baynon International Corp., a blank check company.
Other than disclosed above, no directors or officers of Creative NJ are
presently officers, directors or shareholders in any blank check
companies except for Creative NJ. However, one or both of the
officers/directors may, in the future, become involved with additional
blank check companies.
(b) Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires Creative NJ's
officers and directors, and persons who beneficially own more than ten
(10%) percent of a class of equity securities registered pursuant to
Section 12 of the Exchange Act, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and
the principal exchange upon which such securities are traded or quoted.
Reporting Persons are also required to furnish copies of such reports
filed pursuant to Section 16(a) of the Exchange Act with Creative NJ.
Based solely on review of the copies of such forms furnished to
Creative NJ, Creative NJ's two (2) directors did not file their reports
on a timely basis.
Code of Ethics
--------------
Creative NJ has not yet adopted a code of ethics. The board of
directors anticipates that it will adopt a code of ethics upon
identifying and negotiating with a business target for the merger of
that entity with and into Creative NJ, although there is no guarantee
that Creative NJ will be able to enter into such a transaction.
14
Corporate Governance
--------------------
We have no change in any state law or other procedures by which
security holders may recommend nominees to our board of directors. In
addition to having no nominating committee for this purpose, we
currently have no specific audit committee and no audit committee
financial expert. Based on the fact that our current business affairs
are simple, any such committees are excessive and beyond the scope of
our business and needs.
ITEM 11. EXECUTIVE COMPENSATION
To date, Creative NJ has not entered into employment agreements nor are
any contemplated.
Annual Compensation Awards Payouts
------------------- ---------------------- --------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Other
Annual Restricted Secruties All Other
Name and Compen- Stock Underlying LTIP Compen-
Position Year Salary($) Bonus($) sation($) Awards(#) Options/SARs(#) Payouts($) sation($)
Carmine Catizone 2010 --- --- --- --- --- --- ---
President 2009 --- --- --- --- --- --- ---
Daniel Generelli 2010 --- --- --- --- --- --- ---
Sec/Treas 2009 --- --- --- --- --- --- ---
Compensation Discussion and Analysis
As of the date of this report, while seeking a business combination,
Creative NJ's management anticipates devoting up to five (5) hours per
month to the business of Creative NJ. Creative NJ's current officers
and directors do not receive any compensation for their services
rendered to Creative NJ, have not received such compensation in the
past, and are not accruing any compensation pursuant to any agreement
with Creative NJ.
The officers and directors of Creative NJ will not receive any finder's
fees, either directly or indirectly, as a result of their efforts to
implement Creative NJ's business plan outlined herein. However, the
officers and directors of Creative NJ anticipate receiving benefits as
shareholders of Creative NJ.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by Creative NJ for
the benefit of its employees.
Creative NJ has not entered into any employment agreements with any of
its officers, directors, or other persons, and no such agreements are
anticipated in the immediate future.
15
Creative NJ has no other executive compensation elements that would
require the inclusion of tabular disclosure or narrative discussion.
Board of Directors Compensation
-------------------------------
Members of the board of directors may receive an amount yet to be
determined annually for their participation and will be required to
attend a minimum of four meetings per fiscal year. To date, Creative NJ
has not paid any directors' fees or expenses.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 23, 2011, certain
information regarding the ownership of the common stock by (i) each
person known by Creative NJ to be the beneficial owner of more than
five (5%) percent of Common Stock, (ii) each of Creative NJ's Directors
and Named Executive Officers, as such term is defined under Item
402(a)(3) of Regulation S-K under the Securities Act, and (iii) all of
Creative NJ's Executive Officers and Directors as a group. Beneficial
ownership has been determined in accordance with Rule 13d-3 under the
Exchange Act. Under Rule 13d-3 certain shares may be deemed to be
beneficially owned by more than one person (such as where persons share
voting power or investment power). In addition, shares are deemed to
be beneficially owned by a person if the person has the right to
acquire the shares (for example, upon the exercise of an option) within
sixty (60) days of the date as of which the information is provided.
In computing the ownership percentage of any person, the amount of
shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of
these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not
necessarily reflect the person's actual ownership or voting power at
any particular date.
Percentage of
Number & Class Outstanding
Name and Address of Shares Common Shares
Carmine Catizone(2) Common 3,458,000(direct) 32.83%
10 1/2 Walker Avenue 80,600(1)(indirect) .77%
Morristown, NJ 07960
Daniel T. Generelli Common 40,000 .38%
24 Kansas Street
Hackensack, NJ 07601
All Directors & Officers Common 3,498,000(direct) 33.21%
as a group (2 persons) 80,600(indirect) .77%
Pasquale Catizone(2) Common 5,397,500(direct) 51.24%
266 Cedar Street
Cedar Grove, NJ 07009
16
Ram Venture Holdings Corp. Common 595,054 5.65%
3040 E. Commercial Blvd.
Fort Lauderdale, FL 33308
(1)Carmine Catizone and Phyllis Catizone are husband and wife and are
deemed to be the beneficial owners of each other's shares and custodial
shares.
(2)Carmine Catizone and Pasquale Catizone are brothers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Certain Relationships and Related Transactions
----------------------------------------------
None.
Director Independence
---------------------
Creative NJ's board of directors consists of Carmine Catizone and
Daniel Generelli. Neither of them is independent as such term is
defined by a national securities exchange or an inter-dealer quotation
system.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
----------
The aggregate fees billed and estimated to be billed for the fiscal
years ended December 31, 2010 and 2009 for professional services
rendered by Rotenberg, Meril, Solomon, Bertiger & Guttilla, P.C. for
the audit of the registrant's annual financial statements and review of
the financial statements included in the registrant's Form 10-Q or
services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for the fiscal
years ended December 31, 2010 and 2009, were $15,600 and $15,600
respectively.
Audit related fees
------------------
The aggregate fees billed for the fiscal years ended December 31, 2010
and 2009 for assurance and related services by RMSB&G that are
reasonably related to the performance of the audit or review of the
registrant's financial statements for that fiscal year were $0 and $0.
Tax Fees
--------
We did not incur any aggregate tax fees and expenses from RMSB&G for
the 2010 and 2009 fiscal years for professional services rendered for
tax compliance, tax advice, and tax planning.
17
All Other Fees
--------------
We did not incur any other fees from RMSB&G for the 2010 and 2009
fiscal years.
The board of directors, acting as the Audit Committee considered
whether, and determined that, the auditor's provision of non-audit
services was compatible with maintaining the auditor's independence.
All of the services described above for fiscal year 2010 were approved
by the board of directors pursuant to its policies and procedures. We
intend to continue using RMSB&G solely for audit and audit-related
services, tax consultation and tax compliance services, and, as needed,
for due diligence in acquisitions.
18
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) List of financial statements included in Part II hereof:
Report of Independent Registered Public Accounting Firm
Balance Sheet at December 31, 2010 and 2009
Statements of Operations for the years ended December 31, 2010 and 2009
Statement of Changes in Stockholders' Equity for the years ended
December 31, 2010 and 2009
Statements of Cash Flows for the years ended December 31, 2010 and 2009
Notes to Financial Statements
(a)(2) List of financial statement schedules included in Part IV
hereof:
None.
(a)(3) Exhibits
(3.1) Articles of Incorporation(1)
(3.2) Bylaws(1)
(3.3) Form of Common Stock Certificate(1)
(10.1) Renewed Lease Agreement(2)
(10.2) Agreement and Plan of Reorganization between Global Digital
Solutions and Creative Beauty Supply, Inc.(3)
(1) Incorporated by reference to Form 10SB, file number 0-50773 filed on
May 21, 2004.
(2) Incorporated by reference to amendment 3 to Form 10SB, file number
0-50773 filed on June 15, 2005
(3) Incorporated by reference to Form 8-K filed March 8, 2004 by
Creative Beauty Supply, Inc.
The following exhibits are filed with this report:
Exhibit 31 - 302 certification
Exhibit 32 - 906 certification
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this
Report to be signed on its behalf by the undersigned duly authorized
person.
Date: March 23, 2011
Creative Beauty Supply of New Jersey Corporation
/s/ Carmine Catizone
-------------------------------
By: Carmine Catizone, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated.
Creative Beauty Supply of New Jersey Corporation
Date: March 23, 2011 /s/ Carmine Catizone
---------------------
By: Carmine Catizone
President, Chief Executive Officer
March 23, 2011 /s/Daniel Generelli
----------------------
By: Daniel Generelli
Chief Financial Officer and
Controller
20
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM 21
FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 2010 and 2009 22
Statements of Operations and Comprehensive Loss
for the years ended December 31, 2010 and 2009 23
Statements of Stockholders' Equity for the years
ended December 31, 2010 and 2009 24
Statements of Cash Flows for the years ended
December 31, 2010 and 2009 25
Notes to Financial Statements 26
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Creative Beauty Supply of
New Jersey Corporation
We have audited the accompanying balance sheets of Creative Beauty
Supply of New Jersey Corporation as of December 31, 2010 and 2009 and
the related statements of operations and comprehensive loss,
stockholders' equity and cash flows for the years then ended. The
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company
as of December 31, 2010 and 2009 and the results of its operations and
cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
Saddle Brook, New Jersey
March 23, 2011
22
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
2010 2009
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 152,241 $ 177,253
---------- ----------
TOTAL CURRENT ASSETS 152,241 177,253
---------- ----------
TOTAL ASSETS $ 152,241 $ 177,253
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,050 $ 7,278
Accrued expenses 12,000 12,800
---------- ----------
TOTAL CURRENT LIABILITIES 16,050 20,078
---------- ----------
TOTAL LIABILITIES 16,050 20,078
---------- ----------
STOCKHOLDERS' DEFICIENCY:
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 10,532,150 shares 10,532 10,532
Additional paid-in capital 776,109 776,109
Accumulated deficit (650,450) (629,466)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 136,191 157,175
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 152,241 $ 177,253
========== ==========
The accompanying notes are an integral
part of these financial statements
23
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
2010 2009
------------ ------------
Revenues $ - $ -
------------ ------------
Operating Expenses:
Professional fees 21,475 29,045
Miscellaneous 585 710
------------ ------------
Total Operating Expenses 22,060 29,755
------------ ------------
Loss From Operations (22,060) (29,755)
------------ ------------
Other Income:
Interest income 1,076 3,154
------------ ------------
Total Other Income 1,076 3,154
------------ ------------
Net Loss $ (20,984) $ (26,601)
============ ============
Earnings (loss) per share:
Basic and diluted net loss
per common share $ 0.00 $ 0.00
============ ============
Basic and diluted weighted average common shares
outstanding 10,532,150 10,532,150
============ ============
The accompanying notes are an integral
part of these financial statements
24
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
Common Stock
$.001 Par Value
--------------- Additional
Number Paid In Accumulated
of Shares Amount Capital Deficit Total
---------- -------- --------- ---------- ---------
<s> <c> <c> <c> <c> <c>
(a) (b) (c) (d) (e) (f)
Balance, December 31, 2008 10,532,150 $ 10,532 $ 776,109 $ (602,865) $ 183,776
Net loss for the year - - - (26,601) (26,601)
---------- -------- --------- ---------- ---------
Balance, December 31, 2009 10,532,150 10,532 776,109 (629,466) 157,175
Net loss for the year - - - (20,984) (20,984)
---------- --------- --------- ---------- ---------
Balance, December 31, 2010 10,532,150 $ 10,532 $ 776,109 $ (650,450) $ 136,191
========== ========= ========= ========== =========
The accompanying notes are an integral
part of these financial statements
25
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
2010 2009
------------ ------------
Net loss from continuing operations $ (20,984) $ (26,601)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Increase (decrease) in
accounts payable (3,228) 5,980
Increase (decrease) in accrued
expenses (800) 900
---------- ----------
Cash used in continuing operations (25,012) (19,722)
Cash used in discontinued operations - (3,200)
---------- ----------
Net cash used in operating activities (25,012) (22,922)
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (25,012) (22,922)
CASH AND CASH EQUIVALENTS - Beginning of year 177,253 200,175
---------- ----------
CASH AND CASH EQUIVALENTS - End of year $ 152,241 $ 177,253
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Income taxes $ 500 $ 520
========== ==========
Interest $ - $ -
========== ==========
The accompanying notes are an integral
part of these financial statements
26
CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 AND 2009
1. THE COMPANY
Creative Beauty Supply of New Jersey Corporation (the "Company") was
incorporated in the State of New Jersey on October 1, 2003. It was
formed pursuant to a resolution of the board of directors of Creative
Beauty Supply, Inc., ("CBS") as a wholly-owned subsidiary of that
company, a publicly traded New Jersey corporation. On January 1, 2004,
the assets and liabilities of CBS were contributed at book value to the
Company, and this subsidiary was then spun-off by CBS to its
stockholders. This spin-off was consummated in contemplation of a
merger, which occurred on March 19, 2004 between CBS and Global Digital
Solutions, Inc. ("Global"), a Delaware corporation, whereby the former
stockholders of CBS became the owners of 100 percent of the common
stock of the Company.
On January 1, 2004, the Company commenced operations in the beauty
supply industry at both the wholesale and retail levels. On November
30, 2007, the Company's Board of Directors approved a plan to dispose
of its wholesale and retail beauty supply business. As of January 1,
2009, the Company has had no operations and is a shell company.
The Company's current business plan is to attempt to identify and
negotiate with a business target for the merger of that entity with and
into the Company. In certain instances, a target company may wish to
become a subsidiary of the Company or wish to contribute assets to the
Company rather than merge.
No assurance can be given that the Company will be successful in
identifying or negotiating with any target company. The Company
provides a means for a foreign or domestic private company to become a
reporting (public) company whose securities would be qualified for
trading in the United Sates secondary market.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statement Presentation
The Company's financial statements are prepared in conformity with US
generally accepted accounting principles ("GAAP").
Use of Estimates
The preparation of these financial statements require management to
make estimates, judgments and assumptions that affect the reporting
amounts of assets, liabilities, revenue and expenses. The Company
continually evaluates the accounting policies and estimates used to
prepare the financial statements. The Company bases its estimates on
historical experiences and assumptions believed to be reasonable under
current facts and circumstances. Actual amounts and results could
differ from these estimates made by management.
27
Cash and Cash Equivalents
For financial statement purposes, short-term investments with an
original maturity of ninety days or less and highly liquid investments
are considered cash and cash equivalents. Cash and cash equivalents
consist of a money market account.
Income Taxes
The Company utilizes Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC 740"). ASC 740 requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequence of events that have been include in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the differences between
the financial statement carrying amounts and the tax bases of assets
and liabilities using enacting tax rates in effect in the years in
which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
Earnings (Loss) Per Share
The Company computes earnings or loss per share in accordance with ASC
260, "Earnings Per Share". Basic earnings per share is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
agreements to issue common stock were exercised or converted into
common stock. Diluted earnings per share is computed based upon the
weighted average number of common shares and dilutive common equivalent
shares outstanding, which includes convertible debentures, stock
options and warrants. There were no dilutive common stock equivalents
for all periods presented.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts payable and accrued expenses approximate fair
value based on the short-term maturity of these instruments.
Recently Issued Accounting Standards
Management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a
material effect on the accompanying financial statements.
3. CONCENTRATION OF CREDIT RISK
The Company maintains its cash balance with a major bank. The balances
are insured by the Federal Deposit Insurance Corporation up to $250,000
per depositor. At December 31, 2010 and 2009, all cash balances were
fully insured.
4. INCOME TAXES
The Company adopted the provisions of ASC Topic 740-10-05, "Accounting
for Uncertainty of Income Taxes" ("ASC 740") related to the accounting
28
for the uncertainty of income taxes. The ASC clarifies the accounting
for uncertainty in income taxes recognized in an enterprise's financial
statements. The ASC prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. The ASC
provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition.
At December 31, 2010 and 2009, the Company had no material unrecognized
tax benefits.
The deferred income tax assets and liabilities at December 31, 2010 and
2009 relate to temporary differences between the financial statement
carrying amounts and their tax basis. Assets and liabilities that give
rise to significant portions of the net deferred tax assets and
liabilities relate to the following:
2010 2009
----------- -----------
Net operating loss carry forwards $ 172,700 $ 168,760
Capital loss carry forwards - 64,440
----------- -----------
172,700 233,200
Less: Valuation allowance (172,700) (233,200)
----------- -----------
Total $ - $ -
=========== ===========
A 100% valuation allowance was provided at December 31, 2010 and 2009
as it is uncertain if the deferred tax assets would be utilized. The
decrease in the valuation allowance was a result from the expiration of
the capital loss carry forward.
At December 31, 2010, the Company has unused federal net operating loss
carry forwards of approximately $474,300 expiring between 2023 and 2030
and unused New Jersey net operating loss carry forwards of
approximately $469,800 expiring between 2012 and 2017.
The Company files federal and New Jersey income tax returns subject to
statutes of limitations. The 2007 through 2009 tax years generally
remain subject to examination by federal and New Jersey tax
authorities.
5. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of this
filing.