U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________to________________
Commission File Number: 0-27833
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INTERNATIONAL COSMETICS MARKETING CO.
(Exact name of small business issuer as specified in its charter)
Florida 65-0598868
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(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
6501 N.W. Park of Commerce Boulevard, Suite 205, Boca Raton, Florida 33487
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(Address of Principal executive offices)
Issuer's telephone number, including area code: (561) 999-8878
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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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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,759,400 shares as of March
17, 2000.
1
INTERNATIONAL COSMETICS MARKETING CO.
Form 10-QSB for the quarter ended September 30, 1999
TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
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Part 1. Financial Information
Item 1. Financial Statements
International Cosmetics Marketing Co.
Unaudited Balance Sheets
September 30, June 30,
1999 1999
ASSETS
Current Assets:
Cash $ 101,218 $ 450
Deposits for inventory purchases 100,234 --
Prepaid expenses 14,318 --
Deferred offering costs -- 9,340
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Total current assets 215,770 9,790
Office furniture and equipment, net 11,369 --
License agreement, net 221,341 --
Other, primarily deposits 17,651 --
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Total assets $ 466,131 $ 9,790
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Curremt Liabilities:
Accounts payable and accrued liabilities $ 29,493 $ 9,340
Payable to licensor 137,501 --
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Total current liabilities 166,994 9,340
0% convertible debentures 425,000 --
Commitments and contingencies
Stockholders' Equity (Deficiency):
Common stock, par value $.001 per share, 25,000,000 shares authorized;
4,778,200 and 7,450,000 shares issued and
and outstanding 4,778 7,450
Additional paid-in capital 46,288 1,116
Deficit accumulated during the devleopment stage (176,929) (8,116)
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Total stockholders' equity (deficiency) (125,863) 450
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Total liabilities and stockholders' equity (deficiency) $ 466,131 $ 9,790
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The accompanying notes are an integral part of these financial statements.
International Cosmetics Marketing Co.
Unaudited Statements of Operations
Three Months Three Months Inception
Ended Ended (July 14, 1995)
September September To September
30, 1999 30, 1998 30, 1999
Revenues $ -- $ -- $ --
Operating expenses:
Legal 40,660 -- 40,660
Compensation 36,182 -- 36,182
Royalty 25,000 -- 25,000
Computer services 18,750 -- 18,750
Other general and administrative 48,221 170 56,337
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Total operating expenses 168,813 170 176,929
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Operating loss (168,813) (170) (176,929)
Provision for income taxes -- -- --
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Net loss $ (168,813) $ (170) $ (176,929)
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Net loss per share:
Basic $ (0.03) $ (0.00)
Diluted $ -- $ --
Weighted average common shares outstanding:
Basic 6,093,785 7,431,200
Diluted 8,332,246 7,431,200
The accompanying notes are an integral part of these financial statements.
International Cosmetics Marketing Co.
Unaudited Statements of Operations
Three Months Three Months Inception
Ended Ended (July 14, 1995)
September September To September
30, 1999 30, 1998 30, 1999
Cash Flows From Operating Activities
Net loss $(168,813) $ (170) $(176,929)
Adjustments to reconcile net loss to net cash used
in operations:
Depreciation expense 325 -- 325
License amortization expense 1,158 -- 1,158
Legal expense 10,000 -- 10,000
Changes in operating assets and liabilities:
Deposits for inventory purchases (100,234) -- (100,234)
Prepaid expenses (5,984) -- (5,984)
Deferred offering costs 9,340 -- 9,340
Accounts payable and accrued liabilities 20,153 -- 20,153
Payable to licensor 137,501 -- 137,501
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Net cash used in operating activities (96,554) (170) (104,670)
Cash Flows From Investing Activities
Purchase of office furniture and equipment (11,694) -- (11,694)
Deposits for services (15,984) -- (15,984)
License agreement (200,000) -- (200,000)
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Net cash used in investing activities (227,678) -- (227,678)
Cash Flows from Financing Activities
Contribution of capital -- -- 665
Proceeds from common stock issuance -- -- 7,901
Issuance of convertible debentures 425,000 -- 425,000
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Net cash provided by financing activities 425,000 -- 433,566
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Net increase (decrease) in cash 100,768 (170) 101,218
Cash, beginning of period 450 260 --
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Cash, end of period $ 101,218 $ 90 $ 101,218
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Supplemental Disclosure of Noncash Investing and Financing Activities:
900,000 shares of stock issuged in August 1999 in acquisition of license agreement valued at $22,500.
28,200 shares of stock issued in August 1999 for legal services valued at $10,000.
400,000 shares of stock issued conditionally in September 1999 for consulting services valued at $10,000.
The accompanying notes are an integral part of these financial statements.
International Cosmetics Marketing Co.
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Nature of Operations
International Cosmetics Marketing Co. (the "Company"), d/b/a Beverly Sassoon &
Co., is a network marketing company involved in the distribution and sale of
products in the areas of skin care and cosmetics, nutrition and human wellness
products, various apparel and other goods. The company commenced operations in
the fourth quarter of 1999. The subsistence of the Company is dependent upon
sufficient proceeds being raised through financing or capital contributions and
sales and profitable operations. The Company's operations are currently expected
to be limited to the United States.
Basis of Presentation
The Company prepares its financial statements on the accrual basis of
accounting, recognizing income when earned and expenses when incurred. The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the
accompanying unaudited financial statements contain all adjustments, consisting
of normal recurring adjustments, considered necessary for a fair statement of
the Company's financial information as of September 30, 1999 and for the
three-month periods ended September 30, 1999 and 1998 and for the period from
July 14, 1995 (date of inception) to September 30, 1999. The results of
operations of any interim period are not necessarily indicative of the results
of operations to be expected for the fiscal year.
Financial Statement Estimates
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Office Furniture and Equipment
Office furniture and equipment are stated at cost. Depreciation is calculated
based on estimated useful lives of the assets ranging from three to five years.
License Amortization
The exclusive license agreement is being amortized over sixteen years.
Income Taxes
Deferred tax assets and liabilities are determined based upon differences
between financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse. The Company has not recognized any benefit for its net operating loss
through September 30, 1999 in the accompanying financial statements as the
realization of this deferred tax benefit is not more likely than not. A 100%
valuation allowance has been recognized to offset the entire effect of the
Company' net deferred tax assets.
Loss Per Share
Basic net income (loss) per common share is computed by dividing net income
(loss) available to common stockholders for the period. Diluted income per
common share reflects the maximum dilution that would have resulted from the
assumed exercise related to dilutive securities and is computed by dividing net
income by the weighted average number of common shares and all dilutive
securities outstanding. Options for 337,500 shares at September 30, 1999 were
not dilutive.
2. Subsequent events
In November 1999 the board of directors of the Company authorized changing the
Company's fiscal year from December 31 to June 30, effective June 30, 1999. In
January, 2000, the Company canceled 18,800 shares of common stock previously
issued prior to June 30, 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
1999 compared to 1998
Royalty expense increased $25,000 for the three-month period ended
September 30, 1999 compared with the same period in 1998. The increase in
royalty expense resulted from the Company entering into an exclusive license
agreement in August, 1999.
Legal, compensation, computer services and other general and administrative
expenses increased $97,983 for the three-month period ended September 30, 1999
compared to the same period in 1998. The increase in these operating expenses
resulted primarily from the Company organizing to commence operations in the
fourth quarter of 1999.
Net loss increased by $168,643 for the three-month period ended September
30, 1999 compared to the same period in 1998 due to the Company organizing to
commence operations in the fourth quarter of 1999.
Liquidity and Capital Resources
The Company's principal needs for funds have been for working capital
(deposits for future inventory purchases), royalty expense, operating expenses,
capital expenditures, and the development of operations for the U.S. market. The
Company has generally relied on cash flow from the issuance of convertible
debentures to fund operating activities. The Company expects to need additional
funding from the issuance of convertible debentures or other sources to
implement its business plan. The Board of Directors had previously approved the
issuance of convertible debentures in the principal amount not to exceed
$2,000,000 that may be sold from time to time by the Company to raise start-up
capital. As of March 17, 2000, the Company has issued convertible debentures and
received funding of $1,950,000. While no commitments have been received to
provide the balance of the funding or other working capital needs for the
remainder of the fiscal year, the Company believes that there are persons or
entities that will provide any needed financing.
The Company is currently generating negative cash flow from operations
since it had not commenced operations as of September 30, 1999. The Company will
not generally extend credit to distributors but requires payment by credit card
or bank draft prior to shipping of products. This process is expected to
eliminate the need for significant accounts receivable from distributors. During
the three-month period ending September 30, 1999, the Company had negative cash
flow from operating activities of $96,554. This negative cash flow from
operating activities primarily related to the Company's net loss, deposits for
inventory purchases, and prepaid rent.
As of September 30, 1999, working capital was $48,776 compared to $450 at
June 30, 1999. This increase is primarily due to funds from the issuance of
convertible debentures. Cash at September 30, 1999 and June 30, 1999 was
$101,218 and $450, respectively.
Capital expenditures, primarily for office furniture and equipment were
$11,694 for the three-month period ended September 30, 1999. In addition, the
Company anticipates additional similar capital expenditures of $90,000 for the
remainder of the fiscal year to implement its business plan.
Expenditures for deposits for services, principally lease for office space
were $15,984 for the three-month period ended September 30, 1999. Except for
deposits for inventory purchases, an additional rental deposit of $40,000, and a
deposit as collateral for a merchant account for making credit card sales, no
significant additional deposits are anticipated for these items for the
remainder of the fiscal year.
The Company leases office space under a non-cancelable operating lease
expiring October 31, 2004. Minimum future operating lease obligations at
September 30, 1999 were $311,572, including $42,504 for the remainder of the
fiscal year.
Seasonality and Cyclicality
In addition to general economic factors, the direct selling industry is
impacted by seasonal factors and trends such as major cultural events and
vacation patterns.
Note Regarding Forward-Looking Statements
Certain statements made above, including those in the Liquidity and Capital
Resources section, herein are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements consist of
any statement other than a recitation of historical fact and be identified by
the use of forward-looking terminology such as "may," "expect," "anticipate," "
estimate,", or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward looking statements. The Company does not
have a policy of updating or revising forward-looking statements and thus it
should not be assumed that silence by its management over time means that actual
events are bearing out as estimated in such forward looking statements.
Part II Other Information
Page
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES
2
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities and Use of Proceeds
Information in response to the requirements of this Item is disclosed above, in
PART I, Item 2., under the Liquidity and Capital Resources section.
Item 3 Defaults upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
In August, 1999, the majority of shareholders approved an amendment to the
articles of incorporation to change the name of the corporation from Cindyco,
Inc. to International Cosmetics Marketing Co. and to increase the capitalization
of the Company to 25,000,000 shares of common stock and 5,000,000 shares of
preferred stock.
Item 5 Other Information
In January, 2000, the Company canceled 18,800 shares of common stock previously
issued prior to June 30, 1999.
Item 6 Exhibits and Reports on Form 8-K
None
Page #
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned as duly authorized.
International Cosmetics Marketing Co.
(Registrant)
/s/ Stephanie McAnly /s/ Sonny Spoden
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Stephanie McAnly Sonny Spoden
President Chief Financial Officer
Dated: March 17, 2000
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