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, 2003
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
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 13,200,000 shares of common stock $.001 par value outstanding as of
November 4, 2003.
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,
2003 2002
--------- ---------
(Unaudited)
Current assets:
Cash ...................................................... $ 7,747 $ 9,840
Accounts receivable ....................................... -- 1,297
Merchandise inventory, at lower of cost or market ......... 7,011 7,989
--------- ---------
Total current assets ........................... 14,758 19,126
--------- ---------
$ 14,758 $ 19,126
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts and notes payable:
Accounts payable ..................................... $ 2,345 $ 8,017
Accrued interest payable.............................. 5,253 3,565
Notes payable, shareholders........................... 24,350 22,500
--------- ---------
Total current liabilities ...................... 31,948 34,082
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, 13,200,000
and 3,200,000 issued and outstanding ..................... 13,200 3,200
Additional paid-in capital ................................ 240,419 219,619
Retained deficit .......................................... (270,809) (237,775)
--------- ---------
Total shareholders' deficit................... (17,190) (14,956)
--------- ---------
$ 14,758 $ 19,126
========= =========
See accompanying notes to consolidated financial statements
3
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Quarter Ended
September 30,
-----------------------------
2003 2002
------------ ------------
Sales .................................. $ 320 $ 3,276
Cost of sales .......................... 256 2,686
------------ ------------
Gross profit ............... 64 590
------------ ------------
Operating Expenses ..................... 10,232 16,594
------------ ------------
Loss from operations ....... (10,168) (16,004)
Interest (expense) ..................... (563) (2,597)
------------ ------------
Net loss ................... $ (10,731) $ (18,601)
============ ============
Basic loss per common share ............ $ (0.00) $ (0.01)
============ ============
Basic weighted average shares outstanding... 7,656,522 3,005,000
============ ============
See accompanying notes to consolidated financial statements
4
CEDAR MOUNTAIN DISTRIBUTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Nine Months Ended
September 30,
-----------------------------
2003 2002
------------ ------------
Sales .................................. $ 1,264 $ 21,415
Cost of sales .......................... 978 17,591
------------ ------------
Gross profit ............... 286 3,824
------------ ------------
Operating Expenses ..................... 31,581 42,324
------------ ------------
Loss from operations ....... (31,295) (38,500)
Interest (expense) ..................... (1,739) (7,530)
------------ ------------
Net loss ................... $ (33,034) $ (46,030)
============ ============
Basic loss per common share ............ $ (0.01) $ (0.02)
============ ============
Basic weighted average shares outstanding... 4,701,832 3,002,000
============ ============
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,
-------------------------
2003 2002
---------- -----------
Cash flows from operating activities:
Net loss ............................................. $ (33,034) $ (46,030)
Adjustments to reconcile net loss to
net cash used in operating activities:
Contribution of Services ........................ 10,800 10,800
--------- ---------
(22,234) (35,230)
Changes in current assets and liabilities:
Accounts receivable, inventory
and other current assets ...................... 2,275 3,707
Accounts payable and accrued expenses ........... (3,984) 16,158
--------- ---------
Net cash flow (used in) operating activities . (23,943) (15,365)
--------- ---------
Cash flows from financing activities:
Offering costs incurred .............................. -- (15,091)
Proceeds from sale of common stock.................... 20,000 12,500
Proceeds from Notes Payable - Shareholders............ 1,850 13,500
--------- ---------
Net cash flow provided by financing activities 21,850 10,909
--------- ---------
Net change in cash ......................................... (2,093) (4,456)
Cash at beginning of period ................................ 9,840 6,986
--------- ---------
Cash at end of period ........................ $ 7,747 $ 2,530
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ........................................ $ 51 $ --
========= =========
Income taxes .................................... $ -- $ --
========= =========
See accompanying notes to consolidated financial statements
6
CEDAR MOUNTAIN DISTRIBUTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
SEPTEMBER 30, 2003 AND 2002
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 10-KSB dated December 31, 2002.
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, 2003, are not necessarily indicative of the results that may
be expected for the year ended December 31, 2003.
2. Equity - Change in Control
On August 20, 2003, the Company sold ten million shares of common stock to an
individual for a total price of $20,000. This represents 76% of the total
outstanding stock after the transaction and a change in control of the company.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our
condensed consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements included in our Form 10-KSB for the year ended December 31, 2002, and
notes thereto.
Results of Operations
For the quarter ended September 30, 2003, the Company had sales of $320
and cost of sales of $256 compared to sales of $3,276 and cost of sales of
$2,686 for the quarter ended September 30, 2002. Operating expenses were
$10,232, resulting in a loss from operations of $10,168, compared to operating
expenses and a loss from operations of $16,594 and $16,004, respectively, for
the same quarter of the prior year.
For the nine months ended September 30, 2003, the Company had sales of
$1,264 and cost of sales of $978 compared to sales of $21,415 and cost of sales
$17,591 for the nine months ended September 30, 2002. Operating expenses were
$31,581, resulting in a loss from operations of $31,295 compared to operating
expenses and a loss from operations of $42,324 and $38,500, respectively, for
the same nine month period of the prior year.
The reduction in sales and cost of sales during the three and nine
months ended September 30, 2003 are the result of the limited availability of
the Company's sole employee during these periods. Operating expenses are
substantially comprised of legal and accounting costs and services contributed
by a shareholder and officer. A higher level of operations and promotion
activities may occur if additional funding is achieved. There can be no
assurance that the Company will receive additional funding.
Liquidity and Capital Resources.
On September 30, 2003, the Company had $14,758 in current assets,
including $7,747 in cash, and total current liabilities of $31,948, resulting in
a net working capital deficit of $17,190 compared to a net working capital
deficit of $14,956 at December 31, 2002. Of the liabilities, $29,603 is owed to
shareholders and an officer. Net cash used in operating activities for the nine
months ended September 30, 2003 was $23,943, compared to $15,365 for the nine
months ended September 30, 2002. Net cash provided by financing activities for
the nine month periods ended September 30, 2003 and 2002 was $21,850 and
$10,909, respectively, which resulted from the proceeds of notes payable to
shareholders, and sales of additional shares of stock.
The Company does not have any commitments for capital or operating
expenditures and believes it has sufficient available funding resources to
maintain its operations at the current restricted level through December 31,
2003. Thereafter, the Company will need to obtain additional funding to continue
its business and expand its operations. There can be no assurance that
additional funding will be available.
Our auditors included an explanatory paragraph in their opinion on our
financial statements for the year ended December 31, 2002, to state that our
losses since inception and our net capital deficit at December 31, 2002 raise
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is dependent upon raising additional capital and
achieving profitable operations. We cannot assure you that our plan of operation
will be successful in addressing this issue.
Employees
The Company currently has no full time employees, but the president
devotes time to this business as resources allow.
8
Item 3. Controls and procedures
The Company has evaluated, with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
September 30, 2003 pursuant to Exchange Act Rule 15d-15. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic SEC filings. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation.
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.
9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
On August 20, 2003, the Company sold ten million shares of common stock
(the "Shares") in a private sale to Ms. Brenda Hall for a total price of
$20,000. The Shares represented approximately seventy-six percent (76%) of the
total issued and outstanding shares of common stock of the Company immediately
after the sale. The sale of the Shares was exempt from registration under
Section 4(2) of the Securities Act of 1933 and pursuant to Rule 506, as
promulgated under the Securities Act of 1933. The Company did not use an
underwriter in connection with the transaction.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
3(i).1 Restated Articles of Incorporation (Incorporated by
reference to Exhibit 3.2 of the Company's
Registration Statement on Form SB-2 filed July 10,
2001 (File No. 333-64840))
3(ii).2 Restated Bylaws(Incorporated by reference to Exhibit
3.3 of the Company's Registration Statement on Form
SB-2 filed July 10, 2001 (File No. 333-64840))
31.1 Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K:
A Current Report on Form 8-K was filed August 13, 2003 and amended
September 12, 2003 reporting under Item 4 a change in Registrant's Certifying
Accountant.
A Current Report on Form 8-K was filed on August 25, 2003 reporting
under Item 1 a change in control of the Company.
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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, Principal Executive Officer
and Principal Financial Officer
12