SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
/ X / ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 2001
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 33-96882-LA
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CARING PRODUCTS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
____________________
DELAWARE 98-0134875
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization) ____________________
7025 E First Avenue Suite 5, Scottsdale AZ 85251
(principal mailing address)
480-945-2232
(Issuer's telephone number, including area code)
____________________
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
Warrants to purchase common stock.
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-QSB. / X /
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of June 30, 2001 was 120,563 shares of common stock, $.01 par
value (the "Common Stock").
Transitional Small Business Disclosure Format (check one):
Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
Part III - Certain exhibits Included in prior filings made
Listed in response to Item 13(a) under the Securities Act of 1933.
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CARING PRODUCTS INTERNATIONAL, INC
FORM 10-QSB
FOR THE PERIOD ENDED JUNE 30, 2001
INDEX PAGE NUMBER
PART I: FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2001
and June 30, 2001 (unaudited) 3
Condensed Consolidated Statements of Operations for each of the three-month
periods ended June 30, 2000 and June 30, 2001
(unaudited) 4
Condensed Consolidated Statements of Cash Flows for the three-month
periods ended June 30, 2000 and June 30, 2001
(unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Managements Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION 9
2
CARING PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
MARCH 31, JUNE 30,
2001 2001
(UNAUDITED)
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Current Assets
Cash $ 74,873 $ 21,100
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Total assets $ 74,873 $ 21,100
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,545 $ 6,134
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Total liabilities 2,545 6,134
Stockholders Equity
Preferred stock, par value $0.01 per share; authorized,
1,000,000 shares; none outstanding - -
Common stock, par value $0.01 per share; authorized,
100,000,000 shares; issued and outstanding,
120,563 shares 121 121
Additional paid-in capital 19,512,512 19,512,512
Accumulated deficit (19,440,305) (19,497,667)
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Total stockholder's equity 72,328 14,966
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$ 74,873 $ 21,100
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See accompanying notes to financial statements
3
CARING PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED JUNE 30, 2000 AND 2001
(UNAUDITED)
JUNE 30 JUNE 30
2000 2001
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Revenues $ - $ -
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Gross profit - -
Operating expenses
General and administrative - 57,598
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Total operating expenses - 57,598
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Operating Loss - (57,598)
Other income
Other income - 237
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Total other income - 237
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Loss from continuing operations before discontinued $ - $ (57,362)
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operations
Discontinued operations
Loss from operations of discontinued company ($140,226) $ 0
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Net Loss $(140,226) $ (57,362)
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Weighted average common shares outstanding 30,563 120,563
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Net operating loss per common share $ - $ (0.48)
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Loss from discontinued operations per common share $ (4.59) $ -
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See accompanying notes to financial statements
4
CARING PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED JUNE 30, 2000 AND 2001
(UNAUDITED)
JUNE 30 JUNE 30
Increase (Decrease) in Cash 2000 2001
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Cash flows from operating activities
Net loss from operations $ - $(57,362)
Net loss from discontinued operations (140,226) -
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization and depreciation 4,854 -
Changes in operating assets and liabilities
Customer sales account deposit 32,339 -
Accounts receivable 35,754 -
Inventories 4,614 -
Prepaid expenses 16,923 -
Accounts payable (21,711) 3,589
Accrued liabilities (9,465) -
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Net cash used in operating activities (76,918) (53,773)
Decrease in cash (76,918) (53,773)
Cash at beginning of period 181,763 74,873
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Cash at end of period $ 104,845 $ 21,100
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Supplemental cash flow information:
Cash paid for interest $ - $ 550
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See accompanying notes to financial statements
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CARING PRODUCTS INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED JUNE 30, 2000 AND JUNE 30, 2001
NOTE 1 - FINANCIAL STATEMENTS
The unaudited consolidated financial statements and related notes are
presented as permitted by Form 10-QSB and do not contain certain
information included in the Company's audited consolidated financial
statements and notes for the fiscal year ended March 31, 2001. The
information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of the interim periods presented. The results
of operation for the interim periods are not necessarily indicative of the
results to be expected for the entire fiscal year ending March 31, 2002.
The accompanying unaudited consolidated financial statements and related
notes should be read in conjunction with the audited consolidated financial
statements and the Form 10-KSB of Caring Products International, Inc. and
its subsidiaries (the "Company") and notes thereto, for its fiscal year
ended March 31, 2001.
NOTE 2 - LOSS PER COMMON SHARE
The Company accounts for loss per common share under Statement of Financial
Accounting Standards No 128, "Earnings Per Share" which established
standards for computing and presenting earnings per share. Basic loss per
share is based on the weighted average number of shares outstanding during
each quarter available to common shareholders. The weighted average shares
for computing the Company's basic loss per share were 120,563 and 30,563
for the three months ended June 30, 2001 and 2000, respectively. Because
the net loss for the three months ended June 30, 2001 and 2000, potentially
dilutive common stock issuances were not included in the calculation of
diluted earnings per share as their inclusion would be anti-dilutive. As of
June 30, 2001 and 2000, there were 26,242 and 26,242 shares of potentially
issueable common stock post reverse split, respectively.
NOTE 3 - MANAGEMENT PLANS
On March 30, 2001, the Company consummated a private placement of 90,000
shares of its common stock, $0.01 par value (the "Common Stock"), to
Raymond A. Bills (the "Transaction"), a previously unaffiliated accredited
investor. Mr. Bills paid the Company $250,000.00 in consideration for the
issuance. After giving effect to the Transaction and the 30,563 previously
issued and outstanding shares of Common Stock, Mr. Bills is the beneficial
owner of approximately 74.6% of the Company's Common Stock and now has the
ability to exercise control over the Company's affairs.
The operations related to the marketing of various incontinence products
ceased during the quarter ended March 31, 2001. The Company has no source
of operating revenues or prospects for the initial development of an
operating business. The Company continues to maintain part-time
administrative support while it reviews is strategic options. Certain
reclassifications have been made to the June 30, 2000 financial statements
to reflect the change in operations.
The Company's ability to continue as a going concern is contingent upon its
ability to raise funds through debt or equity resources. No assurances can
be given that the Company will be successful attracting new capital to the
Company or completing an acquisition, which can support the Company's
working capital requirements.
NOTE 4 - STOCKHOLDERS' EQUITY
On May 29, 2001, the Company authorized an increase in the authorized
number of shares of common stock of the Company to 100,000,000.
Additionally, the Company authorized a 100:1 reverse stock split. The
increase in authorized shares is considered to be post reverse split. The
Company filed amended articles of incorporation with the state of Delaware,
which was approved on July 12, 2001, reflecting both of these actions. All
references to number of shares and per share price have been adjusted
retroactively to reflect the effect of this split.
On May 29, 2001, the Company adopted the 2001 Employee Stock Compensation
Plan, which authorized the issuance of up to 5,000,000 shares of common
stock of the Company for stock options. As of June 30, 2001, there were no
stock options issued under this plan.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, OF THE COMPANY CONTAINED ELSEWHERE IN
THIS FORM 10-QSB.
OVERVIEW
The Company discontinued all operations related to the production, marketing and
sale of various adult incontinence products in early 2001. On March 30, 2001 the
Company consummated a private placement of 90,000 shares of its common stock
to a previously unaffiliated accredited investor for $250,000. In connection
with the transaction, Mr. Bills joined the Company's board of directors.
Concurrently, four of the five members of the Company's board of directors
resigned. Mr. Ian Rice also joined the board of directors, serving as its
Chairman. The Company has minimal assets and no active business related to
operations, or research and development. The Company intends to seek out and
investigate possible business opportunities with the intent to acquire or merge
with one or more business ventures into the Company. As of the date hereof, the
Company has not made any arrangements nor entered into any definitive agreements
to acquire or merge a business venture into the Company, employ and consultants
or advisors to identify business venture opportunities or made any formal
arrangements to raise additional funds to support the Company's business
operations.
On April 1, 2000, the Company's principal executive offices moved to 7025 East
1st Ave., Suite 5, Scottsdale, Arizona 85251.
RESULTS OF OPERATIONS AND OPERATING EXPENSES
The Company recorded no operating revenues during the three-month period ended
June 30, 2001. The Company discontinued all operations related to the adult
incontinence market in early 2001. In the comparable period the Company
generated revenues related to discontinued operations of $36,250 and cost of
goods sold of $4,614.
General and administrative costs were $57,598 in the June 30 2001 period, of
which $46,667 were legal and accounting fees attributable to the completion of a
private placement in March, 2001 and preparation of various filings and notices
associated with the private placement, change of control of the Board of
Directors and 100:1 reverse stock split of the Company's outstanding common
stock. In the prior comparable period ended June 30, 2000, the Company incurred
general and administrative costs of $156,982 of which $34,069 were legal and
accounting fees. This 64% decrease in total general and administrative is due
to discontinuation of the Company's operations.
The Company generated interest income of $236 in the Fiscal 2001 Period and no
interest in the Fiscal 2000 Period. As a result, the Company generated a loss
of $57,362 for the 2001 Period. The comparable 2000 period was a discontinued
operation and had a net loss of $140,226 for the 2001 Period. The net loss per
share for the Period ended 2001 was $0.48 and$4.59 for 2000,adjusted for reverse
stock split, a decrease of 90%.
PLAN OF OPERATION
During the next 12 months, the Company will actively seek out and investigate
possible business opportunities with the intent to acquire or merge with one or
more business ventures. Because the Company lacks funds, it may be necessary for
the Company's directors and officers to either advance funds to the Company or
to accrue expenses until such time as a successful business consolidation can be
effected. Management intends to hold expenses to a minimum and to obtain
services on a contingency basis when possible. If the Company engages outside
advisors or consultants in its search for business opportunities, it may be
necessary for the Company to attempt to raise additional funds. As of the date
hereof, the Company has not made any arrangements or definitive agreements to
use outside advisors or consultants or to raise any capital. If the Company does
need to raise capital, most likely the only method available to the Company
would be the private sale of its securities. Because of the nature of the
Company it is unlikely that it could make a public sale of its securities or be
able to borrow any significant sum from either a commercial or private lender.
There can be no assurance that the company will be able to obtain additional
funding when and if needed, or that such funding, if available, can be obtained
on terms acceptable to the Company.
The Company does not intend to hire any employees, with the possible exception
of part-time clerical assistance on an as-needed basis. Outside advisors or
consultants will be used only if they can be obtained for minimal cost or on a
deferred payment basis or are willing to accept options, warrants or shares of
the Company's common stock as payment. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next 12 months.
7
LIQUIDITY AND CAPITAL RESOURCES
On March 30, 2001 the Company consummated a private placement of 90,000
shares of its common stock to a previously unaffiliated accredited investor for
$250,000. As of June 30, 2001, the Company's principal source of liquidity
included cash of $21,100. The Company has no commitments for any significant
capital expenditures. However, the Company will incur routine fees and expenses
incident to its reporting duties as a public company, and it will incur fees and
expenses if it makes or attempts to make an acquisition. The Company expects no
significant operating costs other than professional fees payable to attorneys
and accountants.
The Company does not anticipate that funding will be necessary in order to
complete a proposed business combination, except possibly for fees and costs of
the Company's professional advisers. Accordingly, there are no plans to raise
capital to finance any business combination, nor does management believe that
any combination candidate will expect cash from the Company. The Company hopes
to require the candidate companies to deposit with the Company an advance that
the Company can use to defray professional fees and costs and travel, lodging
and other due diligence costs of management. Otherwise, management would have to
advance such costs out of their own pockets, and there is no assurance that they
will advance such costs.
Other routine expenses, such as making required filings with the SEC and related
expenses will inevitably be incurred. In order to pay these, the Company will be
forced to borrow money or prevail upon existing shareholders to provide
additional capital, whether as a loan or investment, to the Company. It is by no
means certain that existing shareholders will want or be financially able to do
so. There are no plans to sell additional securities of the Company to raise
capital. The Company's failure for any reason to timely file reports required
under the Securities Exchange Act of 1934, as amended, could subject it to fines
and penalties and make it less desirable to a potential combination candidate.
None of these sources of funds is assured and, if no funds can be raised, the
Company may be effectively unable to pursue its business plan.
The Company's shareholders and management members who advance money to the
Company to cover operating expenses will expect to be reimbursed by the company
acquired, prior to or simultaneously with the completion of a combination. The
Company has no intention of borrowing money to pay any officer, director or
shareholder of the Company or their affiliates.
FORWARD LOOKING STATEMENTS
This Form 10-QSB and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively the "Filings")
contain or may contain forward-looking statements and information that are based
upon beliefs of, and information currently available to, the Company's
management, as well as estimates and assumptions made by the Company's
management.
When used in the Filings, the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions, as they relate to
the Company or the Company's management, identify forward-looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations, competitive factors and pricing
pressures, shifts in market demand, the performance and needs of the industries
which constitute the customers of the Company, the costs of product development
and other risks and uncertainties, including, in addition to any uncertainties
with respect to management of growth, increases in sales, the competitive
environment, hiring and retention of employees, pricing, new product
introductions, product productivity, distribution channels, enforcement of
intellectual property rights, possible volatility of stock price and general
industry growth and economic conditions. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.
8
PART I: FINANCIAL 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 a Vote of Security Holders
None.
Item 5 Other Information.
None.
Item 6 Exhibits
27.1 -- Financial Data Schedule
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Seattle,
Washington, on August 20, 2001.
CARING PRODUCTS INTERNATIONAL, INC.
By: /s/ Ian W Rice
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Ian W Rice
Chairman and President
In accordance with the requirements of the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ian W Rice August 20, 2001
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Ian Rice
9