SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _________ to ________
Commission file number: 0-023532
SKINTEK LABS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 65-0636227
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
959 Shotgun Road
Sunrise, FL 33326
(Address of Principal Executive Offices)
(800) 555-8826
(Issuer's Telephone Number, Including Area Code)
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 report), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
---
Applicable only to Corporate Issuers:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.001 par value 9,127,187 shares outstanding as of November 13,
2000.
Transitional Small Business Disclosure Format: Yes ___ No X
---
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
Skintek Labs, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
Sept. 30, 2000 Dec. 31, 1999
CURRENT ASSETS
Cash $ (307,873) $ 143,992
Accounts Receivable 824,822 324,270
Inventory 1,917,063 1,230,189
Prepaid Expenses and Other 30,933 50,578
Due from Stockholders 81,689 107,311
TOTAL CURRENT ASSETS 2,546,634 1,856,340
PROPERTY AND EQUIPMENT, net 1,343,597 1,135,514
OTHER ASSETS 130,033 149,086
TOTAL ASSETS $ 4,020,264 $ 3,140,940
=================== ===================
=================== ===================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Sept. 30, 2000 Dec. 31, 1999
CURRENT LIABILITIES
Accounts Payable $ 535,453 $ 397,413
Payroll Taxes Payable 207,856 32,968
Line of Credit 500,000 100,000
Notes Payable 525,847 1,956,819
Current Portion of Long Term Debt 3,965
Other Accrued Expenses 103,755 26,930
Deferred Income Taxes 21,194 21,194
TOTAL CURRENT LIABILITIES 1,898,070 2,535,324
LONG TERM DEBT 141,181 135,219
TOTAL LIABILITIES 2,039,251 2,670,543
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $0.001 Par Value, 50,000,000 Shares
Authorized, 9,321,271 Shares Issued & Outstanding
in 2000 and in 1999 9,321 9,321
Preferred Stock, $0.001 Par Value, Non-Voting,
1,000,000 Shares Authorized,
0 Shares Issued & Outstanding - -
Additional Paid in Capital 2,756,164 1,295,510
Retained Earnings (Accumulated Deficit) (634,970) (487,153)
Stock Subscriptions Receivable (309,744) (374,287)
Interest of Nonconverting Company Stockholder 160,242 27,006
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 1,981,013 470,397
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY (DEFICIT) $ 4,020,264 $ 3,140,940
==================== =================
==================== =================
Skintek Labs, Inc.
and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
Sept. 30, 2000 Sept. 30, 1999 Sept. 30, 2000 Sept. 30, 1999
SALES $ 2,089,690 $ 1,489,318 $ 5,319,575 $ 3,964,742
COST OF SALES 1,277,205 1,042,479 3,442,302 2,707,677
GROSS PROFIT 812,485 446,839 1,877,273 1,257,065
OPERATING EXPENSES
Selling and Marketing 164,537 126,389 403,291 311,907
Research and Development - 1,500 2,835 4,111
General and Administrative 609,909 387,487 1,504,533 1,109,718
TOTAL OPERATING EXPENSES 774,446 515,376 1,910,659 1,425,736
INCOME (LOSS) FROM
OPERATIONS 38,039 (68,537) (33,386) (168,671)
OTHER INCOME AND EXPENSE
Miscellaneous Income - 86,941 160 57,597
Interest Income 1,126 1,061 3,447 2,738
Interest Expense (55,249) (140,307) (118,038) (104,867)
TOTAL OTHER INCOME (EXPENSE) (54,123) (52,305) (114,431) (44,532)
NET INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES (16,084) (120,842) (147,817) (213,203)
Provision for (Benefit from) Income Taxes - - - 58,103
NET INCOME (LOSS) $ (16,084) $ (120,842) $ (147,817) $ (155,100)
============ ============== ================ ==============
============ ============== ================ ==============
COMMON SHARE
Basic $ (.002) $ (.013) $ (.016) $ (.019)
============= ============== ================ =============
============= ============== ================ =============
Diluted $ (.002) $ (.013) $ (.015) $ (.019)
============= ============== ================ =============
============= ============== ================ =============
SHARES USED IN COMPUTING
NET INCOME (LOSS) PER
COMMON SHARE
Basic 9,321,271 9,253,775 9,321,271 8,251,248
============= ============== =============== ==============
============= ============== =============== ==============
Diluted 10,321,271 9,416,819 10,043,899 8,306,193
============= ============== =============== ==============
============= ============== =============== ==============
Skintek Labs, Inc.
and Subsidiaries
Condensd Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
Sept. 30, 2000 Sept. 30, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss) $ (147,817) $ (155,100)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
(Used in) Operating Activities
Depreciation and Amortization 204,710 94,428
Increase in Accounts Receivable (500,552) (263,514)
Increase in Inventory (686,874) (296,614)
Decrease in Prepaid Expenses and Other 19,645 71,450
Decrease (Increase) in Security Deposits 17,425 (36,898)
Increase (Decrease) in Accounts Payable 138,040 (74,933)
Increase (Decrease) in Payroll Taxes Payable 174,888 (1,648)
Increase in Other Accrued Expenses 76,825 83,159
Decrease in Deferred Income Taxes (58,414)
NET CASH USED IN
OPERATING ACTIVITIES (703,710) (638,084)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Loan Repayments from Stockholders (Net) 25,622 1,069
Purchases of Property and Equipment (410,745) (316,558)
Purchases of Intangible Assets (420) (1,717)
NET CASH USED IN
INVESTING ACTIVITIES (385,543) (317,206)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Stockholders' Contributions 1,593,890
Proceeds from Payments on Stock Subscriptions 64,543
Proceeds from (Principal Payments on) (1,030,972) 807,165
Notes Payable (Net) 9,927 9,436
Proceeds from Sale of Common Stock 125,180
NET CASH PROVIDED BY
FINANCING ACTIVITIES 637,388 941,781
NET INCREASE (DECREASE) IN CASH (451,865) (13,509)
CASH, BEGINNING OF PERIOD 143,992 65,522
CASH, END OF PERIOD $ (307,873) $ 52,013
=============== ================
=============== ================
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the period for:
Interest $ 118,038 $ 104,867
================ ===============
================ ===============
Income Taxes $ 0 $ 7,424
================ ===============
================ ===============
SKINTEK LABS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with Notes to Financial Statements contained in the Company's latest
Form 8-K. In the opinion of management, all adjustments considered necessary for
a fair presentation have been included. Operating results for the nine months
ended September 30, 2000 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2000.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying financial statements retroactively reflect the consolidation of
Ultimate Warlock, Inc., which was acquired by the Company on September 13, 2000,
as if the acquisition took place on January 1, 1999.
FORWARD LOOKING STATEMENTS
To the extent that financial information and management discussion and analysis
of financial conditions and results of operation contain forward looking
statements, such statements involve risks and uncertainties which could cause
the Company's actual result to differ materially from the anticipated results
discussed herein. Factors that might cause such a difference include, but are
not limited to, changes and demands of the Company's products and services,
changes in the level of operating expenses, competitive conditions, and product
supply, and the failure of the Company to successfully integrate the operations
of Ultimate Warlock, Inc. You are cautioned not to place undue reliance on the
forward-looking statements made herein.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with the
Financial Statements and notes thereto appearing elsewhere herein.
General.
On September 13, 2000, the Company acquired 91% of the outstanding common stock
of Ultimate Warlock, Inc. in exchange for 3,400,000 shares of its common stock.
Ultimate Warlock, Inc. manufactures and sells world-class high performance
powerboats.
Results of Operations.
For the period ended September 30, 2000 compared to the period ended September
30, 1999:
Net Sales. Net sales of $2,089,690 for the quarter ended September 30, 2000,
increased $600,372 or 39% over net sales of $1,489,318 for the quarter ended
September 30, 1999. Year to date net sales of $5,319,575 for the period ended
September 30, 2000, increased $1,354,833 or 34% over the same period in 1999.
This year-to-date increase is due to increased sales of powerboats due to an
improved and expanded dealer network.
Gross Profit. The gross profit for the quarter ended September 30, 2000, was
$812,485. This is an increase in profits of $365,646 over the third quarter of
1999 gross profit of $446,839. Gross profit for the first nine months of 2000
was $1,877,273 compared to gross profit of $1,251,065 for the first nine months
of 1999. The increase in both comparison periods can be attributed to the
increase in sales of powerboats.
Sales and Marketing Expenses. Sales and marketing expenses increased for the
quarter ending September 30, 2000. Sales and marketing expenses of $164,537 were
$38,148 or 30% higher than for the quarter ended September 30, 1999. For the 9
months ended September 30, 2000, sales and marketing expenses were $403,291, an
increase of $91,384 or 30% higher than for the 9 months ended September 30,
1999. Such increases are related to the Company's increased national television
advertising through the American Powerboat Association racing.
General and Administrative Expenses. General and administrative expenses for the
third quarter of 2000 were $609,909, an increase of $220,922 or 57% higher than
the quarter ended September 30, 1999. General and administrative expenses of
$1,507,368 for the 9 months ended September 30, 2000, increased $393,539, or 35%
over the 9 months ended September 30, 1999. The increases in both periods relate
to increase in legal and accounting fees related to the Company's status as a
public company and its acquisition of Ultimate Warlock, Inc.
Net Income (Loss). The Company's net loss of ($16,084) for the 3 months ended
September 30, 2000 is a favorable change of $104,758 over the net loss of
($120,842) for the 3 months ended September 30, 1999. For the 9 months ended
September 30, 2000, the Company's net loss of ($147,817) was a favorable change
of $7,283 over the net loss of ($155,100) for the 9 months ended September 30,
1999. The decrease in net loss for both periods are attributable to the
Company's increased sales of powerboats.
Liquidity and Capital Resources.
- -------------------------------
The Company's working capital as of September 30, 2000, was $648,564. This
compares to ($678,984) for the period ended September 30, 1999. Such change is
due to a decrease in current liabilities and an increase in inventory and
accounts receivable.
The Company's current liabilities as of September 30, 2000 were $1,898,070, a
decrease of $637,254 from December 31, 1999, and reflect the Company's payment
of certain of its debt.
The Company's accounts receivable as of September 30, 2000, was $824,822. This
represents an increase of $500,552 or 37% over accounts receivable as of
December 31, 1999. This increase is primarily attributed to the change in the
mix of dealer and retail sales of powerboats. Generally, Payment from dealers
is not due until 10 days after delivery.
The Company's inventory as of September 30, 2000, was $1,917,063. This
represents an increase of $686,874 or 56% over inventory as of December 31,
1999. The increased sales of powerboats have necessitated that the Company
increase its inventory of powerboats and parts.
As the Company's sales of its powerboat grows the Company anticipates that it
will experience cash flow problems related to such sales from time to time. The
Company is hopeful that it will be able to obtain banking financing to cover
such cash flow shortages.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule filed herewith
(b) Reports on Form 8-K: Form 8-K filed on September 22, 2000, covering
Items 1, 2, and 7.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 21, 2000 SKINTEK LABS, INC.
By: /s/ Carter Read
-------------------------------------
Carter Read, President
By: /s/ Richard S. Granville
-------------------------------------
Richard S. Granville,
Chief Financial Officer/Treasurer
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRATED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AS OF SEPTEMBER 30, 2000, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.