SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarter ended:
June 30, 2002
Commission File Number
--------
CEDAR MOUNTAIN DISTRIBUTORS, INC.
---------------------------------------------
(Name of small business issuer in its charter)
Nevada 91-2015441
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
1236 EAST FRONTIER LANE
OLATHE, KANSAS 66062
-------------------------------------- --------
(Address of Principal Executive offices) (Zip Code)
Issuer's telephone number: (913) 782-3068
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None:
Check whether the issuer (1) has 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 [ ]
There were 3,000,000 shares of common stock $.001 par value outstanding as of
July 30, 2002.
Documents incorporated by reference: None
Transitional Small Business Format (check one); Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required to be
filed with this 10-QSB Quarterly Report were prepared by management and commence
on the following page, together with related Notes. In the opinion of
management, the Consolidated Financial Statements fairly present the financial
condition of the Company.
2
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2002 2001
(Unaudited)
--------- ---------
Current assets:
Cash ..................................................... $ 2,204 $ 6,986
Accounts receivable ....................................... 5,783 4,829
Merchandise inventory, at lower of cost or market ......... 13,523 11,591
--------- ---------
Total current assets ........................... 21,510 23,406
Other assets:
Prepaid Offering Costs..................................... 30,091 15,000
--------- ---------
$ 51,601 $ 38,406
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Accounts payable ..................................... $ 21,473 $ 5,482
Accrued interest payable.............................. 12,360 7,427
Notes payable, shareholder 103,000 90,500
--------- ---------
Total current liabilities ...................... 136,833 103,409
Shareholders' deficit:
Preferred stock, $0.001 par value;
5,000,000 shares authorized, -0-
issued and outstanding ................................... -- --
Common stock, $0.001 par value,
50,000,000 shares authorized, 3,000,000
and 3,000,000 issued and outstanding ..................... 3,000 3,000
Additional paid-in capital ................................ 42,710 35,510
Accumulated deficit........................................ (130,942) (103,513)
--------- ---------
Total shareholders' deficit................... (85,232) (65,003)
--------- ---------
$ 51,601 $ 38,406
========= =========
See accompanying notes to consolidated financial statements
3
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended
June 30,
-----------------------------
2002 2001
------------ ------------
Sales .................................. $ 8,480 $ 9,186
Cost of sales .......................... 7,027 5,517
------------ ------------
Gross profit ............... 1,453 3,669
------------ ------------
Operating Expenses ..................... 16,713 20,984
------------ ------------
Loss from operations ....... (15,260) (17,315)
Interest expense ....................... (2,544) (1,582)
------------ ------------
Net loss ................... $ (17,804) $ (18,897)
============ ============
Net loss per basic common share ........ $ (0.01) $ (0.01)
============ ============
Number of shares outstanding for purposes
of computing net loss per
basic and diluted share .............. 3,000,000 3,000,000
============ ============
See accompanying notes to consolidated financial statements
4
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Six Months Ended
June 30,
-----------------------------
2002 2001
------------ ------------
Sales .................................. $ 18,139 $ 19,804
Cost of sales .......................... 14,905 12,239
------------ ------------
Gross profit ............... 3,234 7,565
------------ ------------
Operating Expenses ..................... 25,730 36,667
------------ ------------
Loss from operations ....... (22,496) (29,102)
Interest expense ....................... (4,933) (2,246)
------------ ------------
Net loss ................... $ (27,429) $ (31,348)
============ ============
Net loss per basic common share ........ $ (0.01) $ (0.01)
============ ============
Number of shares outstanding for purposes
of computing net loss per
basic and diluted share .............. 3,000,000 3,000,000
============ ============
See accompanying notes to consolidated financial statements
5
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
June 30,
----------------------
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss ............................................. $ (27,429) $ (31,348)
Adjustments to reconcile net loss to
net cash used in operating activities:
Contribution of Services ........................ 7,200 7,200
--------- ---------
(20,229) (24,148)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ...................... (2,886) (15,072)
Accounts payable and accrued expenses ........... 20,924 (2,642)
--------- ---------
Net cash flow used in operating activities ... (2,191) (41,862)
--------- ---------
Cash flows from financing activities:
Offering costs incurred .............................. (15,091) (7,500)
Proceeds from Notes Payable - Shareholders............ 12,500 67,500
--------- ---------
Net cash flow provided by (used in)
financing activities (2,591) 60,000
--------- ---------
Net change in cash ......................................... (4,782) 18,138
Cash at beginning of period ................................ 6,986 2,573
--------- ---------
Cash at end of period ........................ $ 2,204 $ 20,711
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ........................................ $ -- $ --
========= =========
Income taxes .................................... $ -- $ --
========= =========
See accompanying notes to consolidated financial statements
6
CEDAR MOUNTAIN DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
1. Interim Reporting - BASIS OF PRESENTATION
Summary of issuer's significant accounting policies are incorporated by
reference to the Company's annual report on Form 10KSB dated December 31, 2001.
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and with Form 10-QSB requirements. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the six month period
ended June 30, 2002, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has sustained substantial operating losses through June 30, 2002, and
has used significant amounts of working capital in its operations. Further, at
June 30, 2002, current liabilities exceed current assets by $115,323, and total
liabilities exceed total assets by $85,232.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its debt
obligations and the success of its future operations. Management believes that
actions presently being taken which include, among other things, additional
stockholder loans to the Company and a restructuring designed to improve
long-term profitability and generate steady growth, provide the opportunity for
the Company to continue as a going concern.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
For the quarter ended June 30, 2002, the Company had sales of $8,480
and cost of net product sales of $7,027 compared to sales of $ 9,186 and cost of
$5,517 for the quarter ended June 30, 2001. Operating expenses were $16,713,
resulting in a loss from operations of $15,260, compared to operating expenses
and a loss from operations of $20,984 and $17,315, respectively for the same
quarter of the prior year.
For the six months ended June 30, 2002, the Company had revenues of
$18,139 and cost of net product sales of $14,905 compared to revenues of $19,804
and cost of $12,239 for the six months ended June 30, 2001. Operating expenses
were $25,730, resulting in a loss from operations of $22,496 compared to
operating expenses and a loss from operations of $36,667 and $29,102,
respectively for the same six months of the prior year. A higher level of
operations and promotion activities is expected when additional funding is
achieved.
Liquidity and Capital Resources.
On June 30, 2002, the Company had $21,510 in current assets, including
$2,204 in cash, and total current liabilities of $136,833, resulting in a net
working capital deficit of $115,323 compared to a net working capital deficit of
$80,003 at December 31, 2001. Net cash used in operating activities for the six
months ended June 30, 2002 was $2,191, compared to $41,862 for the six months
ended June 30, 2001. Net cash used in financing activities for the six months
ended June 30, 2002 was $2,591. Net cash provided by financing activities for
the six months ended June 30, 2001 was $60,000, consisting of proceeds of notes
payable to shareholders of $67,500 and a $7,500 payment of offering costs.
In May of 2002, the Company received approval of a registration for an
offering of its common stock. Two hundred thousand shares are to be offered at a
price of $1.00 per share, resulting in gross proceeds of $200,000 and net
proceeds to the Company from the offering of approximately $150,000. The Company
intends to use the net cash proceeds to expand its operations and believes it
will have sufficient cash resources to execute its planned operations for the
year ending December 31, 2002. The Company does not have any commitments for
significant capital or operating expenditures above their current levels.
The Company's independent accountants have expressed substantial doubt
about the Company's ability to continue as a going concern. Management plans to
continue operating the Company and to raise capital, pursue various financing
activities, and restructure the Company to improve long-term profitability and
generate steady growth.
Forward Looking Statements
Certain statements contained in this Report on Form 10-QSB, including
statements of the Company's current expectations, intentions, plans and beliefs,
and statements containing the words "believes," "anticipates," "estimates,"
"expects," or "may," are forward-looking statements, as defined in Section 21D
of the Securities Exchange Act of 1934. Such forward-looking statements involve
known and unknown risk, uncertainties and other factors which may cause the
actual results, performance, timing or achievements of the Company to be
materially different from any results, performance, timing or achievements
expressed or implied by such forward-looking statements.
8
PART II - OTHER 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 and Reports on Form 8-K.
(a) Exhibits. None
(b) Reports on Form 8-K: None
9
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CEDAR MOUNTAIN DISTRIBUTORS, INC.
By: /s/ James R. Smith
--------------------------------
James R. Smith
President and Principal
Executive Officer
10
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, I, James R. Smith, Chief Executive Officer and Chief
Accounting Officer of CEDAR MOUNTAIN DISTRIBUTORS, INC. (the "Company"), hereby
certify that the Company's Quarterly Report on Form 10-QSB for the period ending
June 30, 2002, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), fully complies with the requirements of Section 13(a) or
15(d), as applicable, of the Securities Exchange Act of 1934 and that the
information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.
/s/ James R. Smith
- ----------------------------------------------------
James R. Smith
Chief Executive Officer and Chief Accounting Officer
August 14, 2002
11