UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended March 31, 2002 Commission file number 000-49634
FIRST IMPRESSIONS
(Exact name of registrant as specified in its charter)
NEVADA 88-0475756
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1601 E. Flamingo Rd., Suite 18B
Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
(702) 866-5834
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 No X
As of April 30, 2002 there were 20,000,000 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (check one)
Yes No X
FIRST IMPRESSIONS
MARCH 31, 2002
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of March 31, 2002 and 2001 3
Statement of Operations three months ended March 31,
2002 and 2001 4
Statement of Cash Flows three months ended March 31,
2002 and 2001 5
Notes to Unaudited Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matter to a Vote of
Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports of Form 8-K 13
SIGNATURES 14
FIRST IMPRESSIONS
BALANCE SHEET
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
March 31,
2002 2001
ASSETS
CURRENT ASSETS
Cash $ 26,872 $ 991
------------ ----------
TOTAL CURRENT ASSETS 26,872 991
------------ ----------
$ 26,872 $ 991
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 0 $ 1,500
------------ ----------
TOTAL CURRENT LIABILITIES 0 1,500
------------ ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value
authorized 5,000,000; no shares
issued and outstanding as of 3/31/02
and 3/31/01 respectively 0 0
Common stock, $.001 par value,
authorized 50,000,000 shares;
20,000,000 and 15,000,000 shares
issued and outstanding as of 3/31/02
and 3/31/01 respectively 20,000 150
Additional paid-in capital 30,731 14,850
(Deficit) accumulated during
development stage (23,859) (15,509)
------------ ----------
TOTAL STOCKHOLDER'S EQUITY 26,872 (509)
------------ ----------
$ 26,872 $ 991
=========== ==========
See notes to unaudited financial statements.
FIRST IMPRESSIONS
STATEMENT OF OPERATIONS
UNAUDITED
For the
Period
Three Three October 18,
Months Months 2000,
Ended Ended (Inception)
March 31, March 31, to March 31,
2002 2001 2002
Revenue $ 0 $ 0 $ 0
----------- ---------- -----------
EXPENSES
General and
Administrative 2,081 2,660 18,128
Officer services 1,500 0 5,731
----------- ---------- -----------
TOTAL EXPENSES 3,581 2,660 23,859
----------- ---------- -----------
NET (LOSS) $ (3,581) $ (2,660) $ (23,859)
=========== ========== ==========
Net (loss)
per weighted shares-basic
and fully diluted $ (.00) $ (.00)
=========== ==========
Weighted average
number of common
shares outstanding
basic and fully diluted 20,000,000 15,000,000
=========== ==========
See notes to unaudited financial statements.
FIRST IMPRESSIONS
STATEMENT OF CASH FLOWS
UNAUDITED
For the
Period
Three Three Months October 18,
Months Ended 2000,
Ended March 31, (Inception)
March 31, 2001 to March 31,
2002 2002
Cash Flows from
Operating Activities
Net loss $ (3,581) $ (2,660) $ (23,859)
Shares issued for services 0 0 5,000
Donated services 1,500 0 5,731
Adjustment to reconcile
net loss to net cash
used by operations
Note Payable (1,500) 1,500 0
Payroll Liabilities 0 (769) 0
---------- ----------- -----------
Net cash used in
operating activities (3,581) (1,929) (13,128)
Cash Flows from
Investing Activities 0 0 0
Cash Flows from
Financing Activities
Issuance of common stock 20,700 0 40,000
---------- ----------- -----------
Net increase in cash 17,119 (1,929) 26,872
Cash,
beginning of period 9,753 2,920 0
---------- ----------- -----------
Cash,
end of period $ 26,872 $ 991 $ 26,872
========== ========== ==========
See notes to unaudited financial statements.
FIRST IMPRESSIONS
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Summary of significant accounting policies
Organization
The Company was organized October 18, 2000 (Date of Inception) under the laws
of the State of Nevada, as First Impressions. The Company has not commenced
significant operations and, in accordance with SFAS #7, the Company is
considered a development stage company.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid
investments with original maturity of three months or less are considered to
be cash equivalents.
Revenue recognition
Sales and related cost of sales are generally recognized upon shipment of
products. Cost of goods sold generally represents the cost of items sold and
the related shipping and selling expenses.
Advertising Costs
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in general and administrative expenses as of March
31, 2002 and 2001.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of March 31,
2002 and 2001. The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. These financial
instruments include cash and accounts payable. Fair values were assumed to
approximate carrying values for cash and payables because they are short term
in nature and their carrying amounts approximate fair values or they are
payable on demand.
Impairment of long lived assets
Long lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of
an asset may not be recoverable or is impaired. No such impairments have
been identified by management at March 31, 2002 or 2001.
FIRST IMPRESSIONS
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Stock-Based Compensation:
The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations and has adopted the disclosure-only
alternative of FAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and other non-
employees are accounted for using the fair value method as prescribed by FAS
No. 123.
Earnings per share
The Company follows Statement of Financial Accounting Standards No. 128.
"Earnings Per Share" ("SFAS No. 128"). Basic earning per common share
("EPS") calculations are determined by dividing net income by the weighted
average number of shares of common stock outstanding during the year.
Diluted earning per common share calculations are determined by dividing net
income by the weighted average number of common shares and dilutive common
share equivalents outstanding. During periods when common stock equivalents,
if any, are anti- dilutive they are not considered in the computation.
Segment reporting
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information". The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
Income taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision
for income taxes. Deferred tax assets and liabilities are computed based
upon the difference between the financial statement and income tax basis of
assets and liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the
asset or liability each period. If available evidence suggests that it is
more likely than not that some portion or all of the deferred tax assets will
not be realized, a valuation allowance is required to reduce the deferred tax
assets to the amount that is more likely than not to be realized. Future
changes in such valuation allowance are included in the provision for
deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-
current, depending on the classification of assets and liabilities to which
they relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
FIRST IMPRESSIONS
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Recent pronouncements
The FASB recently issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133". The Statement defers for one year the effective date of
FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal
years beginning after June 15, 2000. In June 1998, the FASB issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement will require the company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income, if the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized
in earnings. The ineffective portion of a derivative's change in fair value
will be immediately recognized in earnings. The company has adopted a FAS
No. 133 and there is no material effect on the company's financials for the
years ended December 31, 2001 and 2000 and the period ended January 15, 2002.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
No. 101), which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101 did not impact
the company's revenue recognition policies.
Note 2 - Income taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax
assets and liabilities at the end of each period are determined using the
currently enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or
realized.
There is no provision for income taxes for the period ended March 31, 2002.
The Company's total deferred tax asset as of March 31, 2002 is as follows:
October 18,
Three Three 2000
Months Months (inception)
Ended Ended March to March 31,
March 31, 31, 2001 2002
2002
Net operation loss carry forward $ (3,581) $ (2,660) $ (23,859)
Valuation allowance 3,581 2,660 23,859
Net deferred tax asset $ 0 $ 0 $ 0
FIRST IMPRESSIONS
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 3 - Stockholder's equity
Common Stock
The authorized common stock of the corporation consists of 50,000,000 shares
with a par value $.001 per share.
On January 10, 2002, the Company approved a forward stock split on the basis
of 100 for 1. All references to the number of shares issued and outstanding
have been retroactively restated to reflect the forward split.
On October 18, 2000, the Company issued 5,000,000 shares of its $0.001 par
value common stock for services valued at $5,000.00. The shares were deemed
to have been issued pursuant to an exemption provided by Section 4(2) of the
Act, which exempts from registration "transactions by an issuer not involving
any public offering."
On October 19, 2000, the Company issued 10,000,000 shares of its $0.001 par
value common stock for $10,000.00 cash. The shares were deemed to have been
issued pursuant to an exemption provided by Section 4(2) of the Act, which
exempts from registration "transactions by an issuer not involving any public
offering."
On January 4, 2002, the Company completed a public offering that was offered
without registration under the Securities Act of 1933, as amended (The
"Act"), in reliance upon the exemption from registration afforded by sections
4(2) and 3(b) of the Securities Act and Regulation D promulgated thereunder.
The Company sold 5,000,000 shares of its $0.001 par value common stock at a
price of $0.60 per share for a total amount raised of $30,000.
Preferred Stock
The authorized preferred stock of the corporation consists of 5,000,000
shares with a par value of $.001 per share.
Note 4 - Going concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern which contemplates the
recoverability of assets and the satisfaction of liabilities in the normal
course of business. As noted above, the Company is in the development stage
and, accordingly, has not yet generated revenues from operations. Since its
inception, the Company has been engaged substantially in financing activities
and developing its product line, incurring substantial costs and expenses. As
a result, the Company incurred accumulated net losses from October 18, 2000
(inception) through the period ended March 31, 2002 of $(23,859). In
addition, the Company's development activities since inception have been
financially sustained by capital contributions.
FIRST IMPRESSIONS
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 4 - Going concern (continued)
The ability of the Company to continue as a going concern is dependent upon
its ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The
accompanying financial statements do not include any adjustments that might
be required should the Company be unable to recover the value of its assets
or satisfy its liabilities.
Note 5 - Warrants and options
There are no warrants or options outstanding to acquire any additional shares
of common stock.
Note 6 - Related party transactions
The Company neither owns nor leases any real or personal property. An officer
of the Company donated services at $50 an hour for 10 hours per month for a
total of $500 per month. The total services donated as of March 31, 2002
were $1,500 and the total as of October 31, 2000 (Inception) to March 31,
2002 were $5,731. Both amounts have been expensed accordingly.
The officers and directors of the Company are involved in other business
activities and may in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the Company's unaudited financial statements and the notes thereto contained
elsewhere in this filing.
Overview
First Impressions was organized October 18, 2000 as a Nevada
corporation, and has a limited operation history. We were organized to
develop a business as an online retailer and distributor of perfume
fragrances, bath products and related products specifically designed for
First Impressions.
BUSINESS OF THE COMPANY
First Impressions intends to be an online retailer and distributor of
perfume fragrances, bath products and related products specifically designed
for First Impressions. Our goal is to operate an online store that
specializes in the sale of fragrances, fragrance related products and bath
and body products on a retail and wholesale basis. The business-to-business
component of the online store is intended to offer products on a wholesale
basis to the market of smaller specialty retailers. Users will be able to
browse and locate products. The online store, domain name -
first2impress.com, will offer personalized customer service, secure ordering,
numerous shipping options and fast delivery. As of the date of this filing
our website is not yet operational.
To effectuate the business plan of the Company, we executed an agreement
on October 18, 2000 with Desert Health Products, Inc., which provides for the
licensing, manufacturing and distribution of First Impressions' products
until termination in December of 2010. The agreement provides for a price to
be paid to Desert Health Products, of the cost of production, including a
reasonable allowance for overhead, plus 30%, which also provides for a price
increase every six (6) months. There were no up front licensing fees. The
agreement further provides for termination prior to its expiration, by either
party for the following reasons:
* Upon the bankruptcy or liquidation of the other party, whether voluntary
or involuntary;
* Upon the other party taking the benefit of any insolvency law;
* Upon the other party having or applying for a receiver appointed for
either party;
* For cause, and/or
* For early termination in the event First Impressions fails or refuses to
cooperate with Desert Health Products, fails or refuses to make timely
payment of the compensation required by the agreement. In addition, upon
early termination, all invoicing shall become immediately due and payable
and/or deliverable.
Under the contract and relationship established between Desert Health
Products and First Impressions, we have the ability to choose the fragrance
desired by First Impressions, and utilize the fragrance in the various
products, which Desert Health Products already produces with different
fragrances, thus establishing an exclusive product for First Impressions.
Under the agreement, the fragrance formula is a one of a kind specially
formulated fragrance selected by First Impressions and to be utilized
exclusively by First Impressions in various forms of perfumes and related
products. Additionally, Desert Health Products has agreed to handle all
packaging and shipping for First Impressions.
Results of Operations for the three months ended March 31, 2002 as compared
to the three months ended March 31, 2001.
The Company's net loss was $3,581 for the three months ended March 31,
2002 as compared to a net loss of $2,660 for the three months ended March 31,
2001. This represents a 35% or $921 increase over the same period last year.
This net loss increase was primarily the result of expensing officer donated
services at $500 a month. The Company has not generated any revenues.
Liquidity and Capital Reserves
As of March 31, 2002 (Unaudited)
As of March 31, 2002, the Company's assets were $26,872 and its current
liabilities were $0.
Plan of Operation
The Company's current cash balance as of March 31, 2002 is $26,872.
Management believes the current cash balance is sufficient to fund the
current minimum level of operations through January, 2003, however, in order
to advance the Company's business plan the Company must raise additional
capital through the sale of equity securities. Management has continued to
avoid incurring substantial obligations to the Company pending the final
choice selection of product to place on the Internet. Once the product has
been selected and the Website complete, the Company's costs will increase as
a function of the advertising required to bring in business. The plan of
management is to increase advertising costs in direct proportion to sales,
advertising dollars coming into the Company, and equity capital raised by the
Company in the future. In the event any of the above do not happen in a
timely fashion, management is prepared to slow the expenditures of
advertising costs so that the Company can sustain itself until January 2003.
To date, the Company has sold $30,000 in equity securities and used
approximately $1,500 to repay a note. Sales of the Company's equity
securities have allowed the Company to maintain a positive cash flow balance.
We have prepared our financial statements assuming the Company will
continue as a going concern, which contemplates the recoverability of assets
and the satisfaction of liabilities in the normal course of business. As a
result of our development stage and our incurring start up costs and
expenses, the Company has incurred accumulated net loses from October 18,
2000 (inception) through the period ended March 31, 2002 of $23,859. As a
result of these losses our auditor has reflected our "Going Concern" in Note
4 of our audited financial statements.
Management has made initial progress in implementing its business plan
by commencing design of its website. First Impressions intends to use its
initial equity capital to fund First Impressions' initial business plan
during the next twelve months, as cash flow from sales is not estimated to
begin until year two of its business plan. Our initial business plan during
the next twelve months includes the expenditure of $27,000 from cash
currently available to:
* complete the selection and design of graphic packaging materials (cost
of approximately $3,500
* cover legal and accounting fees ($2000)
* selection of our final fragrance and initial products to be produced and
marketed (no costs associated),
* deposit money to be paid to Desert Health Products for our initial
inventory of products ($7,000),
* complete the design of our Website ($10,000), and
* pay the initial advertising costs associated with the Website ($5,000).
First Impressions will face considerable risk in each of its business
plan steps, such as difficulty of hiring competent personnel within its
budget, longer than anticipated website programming, and a shortfall of
funding due to First Impressions' inability to raise capital in the equity
securities market. If no funding is received during the next twelve months,
First Impressions will be forced to rely on its existing cash in the bank. In
such a restricted cash flow scenario, First Impressions would be unable to
complete all business plan steps, and would, instead, delay all cash
intensive activities. Primarily the cash intensive activities include full
time management and significant advertising dollars. First Impressions will
not be increasing management or incurring any equipment expenses until
additional dollars are available either through equity or revenues.
In the event equity or revenues are available to advance the business
plan to the next step, which amount would be approximately $100,000, then in
that event our current president would become operational on a full time
basis or we would bring in full time management. Additionally, approximately
$50,000 would be spent on advertising to assist in building up the revenues.
Phase three of the business plan would include hiring additional
personnel, spending additional dollars on advertising, updating the Website
software, where required, for increase sales volumes, and covering additional
accounting and legal fees.
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-QSB contains forward-looking
statements. These forward looking statements are based largely on the
Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control, including, but
not limited to, economic, competitive and other factors affecting the
Company's operations, markets, products and services, expansion strategies
and other factors discussed elsewhere in this report and the documents filed
by the Company with the Securities and Exchange Commission. Actual results
could differ materially from these forward-looking statements. In light of
these risks and uncertainties, there can be no assurance that the forward-
looking information contained in this report will in fact prove accurate.
The Company does not undertake any obligation to revise these forward-looking
statements to reflect future events or circumstances.
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 Matter to a Vote of Security Holders.
A special meeting of the stockholders of First Impressions was held on
January 9, 2002 and the following was approved by unanimous consent of
stockholders:
* The issuance of 50,000 shares of common stock sold under the Reg. D 504
in accordance with the subscription agreements;
* To amend the Articles of Incorporation to increase the capitalization to
50,000,000 common shares at $.001 par value; and,
* To authorize a 100 to 1 forward split.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST IMPRESSIONS
By:/s/ Tammy Kraft
Tammy Kraft, President
Date: May 15, 2002