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:
September 30, 2002
Commission File Number
333-64840
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
October 31, 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
September 30, December 31,
2002 2001
(Unaudited)
Current assets:
Cash ..................................................... $ 2,530 $ 6,986
Accounts receivable ....................................... 1,496 4,829
Merchandise inventory, at lower of cost or market ......... 11,217 11,591
--------- ---------
Total current assets ........................... 15,243 23,406
Other Assets:
Prepaid Offering Costs..................................... 30,091 15,000
--------- ---------
$ 45,334 $ 38,406
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Accounts payable ..................................... $ 14,109 $ 5,482
Accrued interest payable.............................. 14,958 7,427
Notes payable, shareholder 104,000 90,500
--------- ---------
Total current liabilities ...................... 133,067 103,409
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, 3,012,500
and 3,000,000 issued and outstanding ..................... 3,013 3,000
Additional paid-in capital ................................ 58,797 35,510
Accumulated deficit ....................................... (149,543) (103,513)
--------- ---------
Total shareholders' deficit................... (87,733) (65,003)
--------- ---------
$ 45,334 $ 38,406
========= =========
See accompanying notes to consolidated financial statements
3
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Quarter Ended
September 30,
-----------------------------
2002 2001
------------ ------------
Sales .................................. $ 3,276 $ 4,988
Cost of sales .......................... 2,686 4,218
------------ ------------
Gross profit ............... 590 770
------------ ------------
Operating Expenses ..................... 16,594 21,362
------------ ------------
Loss from operations ....... (16,004) (20,592)
Interest expense........................ (2,597) (2,936)
------------ ------------
Net loss ................... $ (18,601) $ (23,528)
============ ============
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 Nine Months Ended
September 30,
-----------------------------
2002 2001
------------ ------------
Sales .................................. $ 21,415 $ 27,792
Cost of sales .......................... 17,591 16,457
------------ ------------
Gross profit ............... 3,824 11,335
------------ ------------
Operating Expenses ..................... 42,324 58,029
------------ ------------
Loss from operations ....... (38,500) (46,694)
Interest expense ....................... (7,530) (5,182)
------------ ------------
Net loss ................... $ (46,030) $ (51,876)
============ ============
Net loss per basic common share ........ $ (0.02) $ (0.02)
============ ============
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 Nine Months Ended
September 30,
----------------------
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss ............................................. $ (46,030) $ (51,876)
Adjustments to reconcile net loss to
net cash used in operating activities:
Contribution of Services ........................ 10,800 10,800
--------- ---------
(35,230) (41,076)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ...................... 3,707 (12,908)
Accounts payable and accrued expenses ........... 16,158 4,897
--------- ---------
Net cash flow used in operating activities ... (15,365) (49,087)
--------- ---------
Cash flows from financing activities:
Offering costs incurred .............................. (15,091) (15,000)
Proceeds of Sales of Common Stock 12,500 --
Proceeds from Notes Payable - Shareholders............ 13,500 80,000
--------- ---------
Net cash flow provided by (used in)
financing activities 10,909 65,000
--------- ---------
Net change in cash ......................................... (4,456) 15,913
Cash at beginning of period ................................ 6,986 2,573
--------- ---------
Cash at end of period ........................ $ 2,530 $ 18,486
========= =========
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
SEPTEMBER 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 nine month period
ended September 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 September 30, 2002,
and has used significant amounts of working capital in its operations. Further,
at September 30, 2002, current liabilities exceed current assets by $117,824,
and total liabilities exceed total assets by $87,733.
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, additional sales of common stock 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.
2. Sale of Common Stock
During the quarter ending September 30, 2002, the Company sold 12,500 shares of
common stock for total proceeds of $12,500.
3. Notes Payable - Shareholders
During the quarter ending September 30, 2002, the Company borrowed $13,500 from
a shareholder under a demand note that bears interest at the rate of 10% per
annum.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
For the quarter ended September 30, 2002, the Company had sales of
$3,276 and cost of net product sales of $2,686 compared to sales of $ 4,988 and
cost of $4,218 for the quarter ended September 30, 2001. Operating expenses were
$16,594, resulting in a loss from operations of $16,004, compared to operating
expenses and a loss from operations of $21,362 and $20,592, respectively for the
same quarter of the prior year.
For the nine months ended September 30, 2002, the Company had sales of
$21,415 and cost of net product sales of $17,591 compared to sales of $27,792
and cost of $16,457 for the nine months ended September 30, 2001. Operating
expenses were $42,324, resulting in a loss from operations of $38,500 compared
to operating expenses and a loss from operations of $58,029 and $46,694,
respectively for the same nine months of the prior year. A higher level of
operations and promotion activities is expected when additional funding is
achieved.
7
Liquidity and Capital Resources.
On September 30, 2002, the Company had $15,243 in current assets,
including $2,530 in cash, and total current liabilities of $133,067, resulting
in a net working capital deficit of $117,824 compared to a net working capital
deficit of $80,003 at December 31, 2001. Net cash used in operating activities
for the nine months ended September 30, 2002 was $15,365, compared to $49,087
for the nine months ended September 30, 2001. Net cash provided by financing
activities for the nine months ended September 30, 2002 was $10,909, consisting
of the sale of common stock of $12,500, proceeds of notes payable from
shareholders of $13,500 and a $15,091 payment of offering costs. Net cash
provided by financing activities for the nine months ended September 30, 2001
was $65,000, consisting of proceeds of notes payable to shareholders of $80,000
and a $15,000 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. As of September 30, 2002, 12,500 shares of common
stock have been sold for total proceeds of $12,500. As of November 7, 2002, the
entire two hundred thousand shares of common stock had been sold for a total
proceeds of $200,000. 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.
Item 3. Controls and Procedures
Currently we have only one employee who is also our sole officer and
director and therefore we have not adopted any internal controls or any
disclosure controls and procedures.
8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
The Company sold 200,000 shares of common stock in a registered
offering which was approved in May 2002 and completed November 7, 2002.
Of the shares sold, 12,500 were outstanding at September 30, 2002.
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
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
9
Certifications
I, James R. Smith, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Cedar Mountain
Distributors, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 19, 2002
/s/ James R. Smith
- -------------------------------------
James R. Smith
Chief Executive and Financial 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
September 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
November 19, 2002
11