SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2000
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[ ] 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: 0-30629
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FIRST AID DIRECT, INC.
(Name of small business issuer in its charter)
Florida 59-1796257
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(State of incorporation) (IRS employer Ident. No.)
10211 N.W. 53rd St., Sunrise, FL 33351
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(address of principal office) (Zip Code)
Registrant's telephone number: (954) 749-9926
Indicate by check mark whether the Registrant: (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
The number of shares outstanding of each of the issuer's classes of
equity as of September 30, 2000: 3,905,000 shares of Common Stock, $.001 par
value.
FIRST AID DIRECT, INC.
TABLE OF CONTENTS
Form 10-QSB
For the Quarter Ended September 30, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheet (Unaudited) as of September 30, 2000 Page 3
Condensed Statements of Income (Unaudited) for the nine months
ended September 30, 2000 and 1999 and the three months ended
September 30, 2000 and 1999 Page 4
Condensed Statements of Cash Flows (Unaudited) for the nine months
ended September 30, 2000 and 1999 Page 5
Notes to Financial Statements. Page 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K.
FIRST AID DIRECT, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2000
(Unaudited)
ASSETS
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Current assets:
Cash $ 18,861
Accounts receivable 433,540
Inventories 469,206
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Total current assets 921,607
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Property and equipment, net 72,838
Intangible asset, net 126,418
Other assets 74,096
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$ 1,194,959
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities:
Accounts payable and accrued expenses $ 244,771
Due to stockholder 93,387
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Total current liabilities 338,158
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Stockholders' equity:
Common stock 3,905
Additional paid-in capital 1,671,207
Deficit (818,311)
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856,801
$ 1,194,959
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The accompanying notes are an integral part of these condensed
financial statements.
Page 3
FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
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2000 1999 2000 1999
----------- ----------- ----------- -----------
Net sales $ 2,092,582 $ 1,421,781 $ 763,678 $ 570,323
Cost of sales 1,484,923 985,218 546,969 372,509
----------- ----------- ----------- -----------
Gross margin 607,659 436,563 216,709 197,814
General and administrative expenses 554,083 362,638 231,548 153,091
----------- ----------- ----------- -----------
Income (loss) from continuing operations before income
taxes
provision for income taxes 53,576 73,925 (14,839) 44,723
Provision for income taxes -- 39,440 -- 17,440
----------- ----------- ----------- -----------
Income (loss) from continuing operations 53,576 34,485 (14,839) 27,283
Income from discontinued operations, net
of income taxes -- 29,913 -- 31,041
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Net income (loss) $ 53,576 $ 64,398 $ (14,839) $ 58,324
=========== =========== =========== ===========
Net income (loss) per share information:
Basic:
Net income (loss) per share $ .01 $ .02 $ .00 $ .02
=========== =========== =========== ===========
Weighted average number of common shares 3,905,000 3,880,795 3,905,000 3,905,000
=========== =========== =========== ===========
Diluted:
Net income (loss) per share $ .01 $ .02 $ .00 $ .02
=========== =========== =========== ===========
Weighted average number of common shares 3,979,667 4,054,795 3,979,667 4,079,000
=========== =========== =========== ===========
The accompanying notes are an integral part of these condensed
financial statements.
Page 4
FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
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2000 1999
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Cash flows from operating activities:
Net income $ 53,576 $ 64,398
Depreciation and amortization 23,728 21,000
Changes in assets and liabilities (176,228) (163,082)
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Net cash provided by (used in) operating activities (98,924) (77,684)
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Cash flows from investing activities:
Purchase of equipment (3,054) (22,534)
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Net cash used in investing activities (3,054) (22,534)
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Cash flows from financing activities:
Repayment of stockholder loan (150,000)
Proceeds from sale of stock -- 112,000
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Net cash (used in) provided by financing activities (150,000) 112,000
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Net increase (decrease) in cash (251,978) 11,782
Cash, beginning of period 270,839 20,548
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Cash, end of period $ 18,861 $ 32,330
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Supplemental Disclosure of Cash Paid:
Interest $ -- $ --
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Non-cash Investing and Financing Activities:
Assets acquired in exchange for debt $ 200,000
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The accompanying notes are an integral part of these condensed
financial statements.
Page 5
FIRST AID DIRECT, INC.
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed financial statements of First Aid Direct,
Inc. (the "Company") 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. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three and
nine month periods ended September 30, 2000 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2000. For
further information, refer to the financial statements and footnotes for the
year ended December 31, 1999 found in the Company's Form 10-SB.
The fiscal years ended December 31, 2000 and December 31, 1999 are herein
referred to as "fiscal 2000" and "fiscal 1999", respectively.
2. Inventories
Inventories are comprised primarily of first aid products held for sale, and are
stated at the lower of cost or market, determined on the FIFO method.
3. Acquisition of assets
Purchase
On March 17, 2000, the Company entered into an asset purchase
agreement to buy certain assets from Van Dyne Crotty, Inc., a
stockholder. The Company purchased accounts receivable, inventory
and customer lists for $200,000, as noted below, to be paid in
cash. The $200,000 represents cost as reflected in the accounting
books and records of the stockholder. As of September 30, 2000,
$150,000 has been paid; the remaining $50,000 is due on demand.
Accounts receivable $ 25,264
Inventories 41,374
Customer listings 133,362
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$200,000
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Commitments
The Company entered into a non-competition agreement and a
consulting agreement with the original owner of the assets
purchased above. The covenant not to compete is being amortized
over the five-year term of the agreement and provides for $25,000
each year, for a term of three years, to be paid in thirty-six
equal installments totaling $75,000. The consulting agreement is
for a three-year term and provides for thirty-six equal
installments totaling $75,000.
4. Sales to Stockholder
During the nine months ended September 30, 2000, 23% of revenue was
derived from sales to a stockholder.
Page 6
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS AND EVENTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THE RISKS AND
UNCERTAINTIES SET FORTH UNDER THE CAPTION "CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS", IN OUR FORM 10-SB FOR THE YEAR ENDED DECEMBER 31,
1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULT OF OPERATIONS
Three months ended September 30, 2000 compared to the three months ended
September 30, 1999.
Sales Total revenues increased 34% in the third quarter of fiscal 2000 over the
same period in fiscal 1999. The revenue increased $193,355 from $570,323 to
$763,678 in the three months ended September 30, 2000 over the same period in
the prior fiscal year. Revenue increased 40% due to the supplier agreement
signed with Van Dyne Crotty, Inc., to be the primary supplier for its retail
first aid distribution business. An additional revenue increase of 12% was
attributable to the Company acquiring a customer list and other assets from Van
Dyne Crotty, Inc. as disclosed in Note 3 to the financial statements. Revenue
from other customers decreased primarily due to the loss of sales to
distributors that were purchased by other competitors.
Costs and Expenses The cost of sales for the third quarter increased $174,460
from $372,509 in the third quarter of fiscal 1999 to $546,969 in the third
quarter of fiscal 2000. This resulted in an increase in the gross margin of
$18,895, from $197,814 in the third quarter of fiscal 1999 to $216,709 in the
third quarter of fiscal 2000. As a percentage, the gross margin decreased from
35% in fiscal 1999 to 28% in fiscal 2000, principally as a result of growth in
distributor sales over our more profitable direct sales and increases in freight
due to our expanding geographic distribution.
General and administrative expenses increased $78,457 from $153,091 in the third
quarter of fiscal 1999 to $231,548 in the third quarter of fiscal 2000. Also,
general and administrative expenses increased as a percent of revenue from 27%
in 1999 to 30% in 2000. The increase primarily resulted from the salary payout
to the officer who left the Company during the quarter along with other
administrative costs associated with filing the Form 10-SB to become a fully
reporting publicly held company.
Income from continuing operations before income taxes The Company's income from
continuing operations decreased $59,562 during the third quarter of fiscal 2000
to loss of $14,839, from an income of $44,723 during the third quarter of fiscal
1999. The decrease was primarily a result of the salary payout to the officer
who left the Company during the quarter along with other administrative costs
associated with filing the Form 10-SB to become a fully reporting publicly held
company.
Other No income tax expense or benefit is recorded in the three-month period
ended September 30, 2000, as the Company will utilize net operating loss
carryforwards to offset the current tax expense. The Company had income from
discontinued operations, net of income taxes, during the third quarter of fiscal
1999 of $31,041. The overall net income decreased $73,163 during the third
quarter of fiscal 2000 to a loss of $14,839 from an income of $58,324 during the
third quarter of fiscal 1999.
Page 7
Nine months ended September 30, 2000 compared to the nine months ended September
30, 1999.
Sales Total revenues increased 47% for the nine months ended September 30, 2000
over the same periods in fiscal 1999. Net sales increased $670,801 from
$1,421,781 in the nine months of fiscal 1999 to $2,092,582 in the nine months of
fiscal 2000. Revenue increased 34% due to the supplier agreement signed with Van
Dyne Crotty, Inc., to be the primary supplier for its retail first aid
distribution business. An additional revenue increase of 9% was attributable to
the Company acquiring a customer list and other assets from Van Dyne Crotty,
Inc. as disclosed in Note 3 to the financial statements.
Costs and Expenses The cost of sales for the nine months increased $499,705 from
$985,218 in the same period of fiscal 1999 to $1,484,923 for fiscal 2000. This
resulted in an increase in the gross margin of $171,096, from $436,563 during
the nine months of fiscal 1999 to $607,659 for the same period of fiscal 2000.
As a percentage, the gross margin decreased from 31% in fiscal 1999 to 29% in
fiscal 2000. The decrease results principally as a result of growth in
distributor sales over our more profitable direct sales and an increase in
freight costs due to our expanding geographic distribution.
General and administrative expenses increased $191,445 from $362,638 in the nine
months of fiscal 1999 to $554,083 during the nine months of fiscal 2000. General
and administrative expenses increased as a percent of revenue from 26% in 1999
to 27% in 2000. The increase resulted primarily from the salary payout to the
officer who left the Company during the quarter along with other administrative
costs associated with filing the Form 10-SB to become a fully reporting publicly
held company.
Income from continuing operations The Company's income from continuing
operations decreased $20,349 during the nine months of fiscal 2000 to $53,576,
from $73,925 during the nine months of fiscal 1999. The decrease primarily
resulted from the salary payout to the officer who left the Company during the
quarter along with other administrative costs associated with filing the Form
10-SB to become a fully reporting publicly held company.
Other No income tax expense or benefit is recorded in the nine-month period
ended September 30, 2000, as the Company will utilize net operating loss
carryforwards to offset the current tax expense. The Company had income from
discontinued operations, net of income taxes, during the nine months of fiscal
1999 of $29,913. The overall net income decreased $10,822 during the nine months
of fiscal 2000 to $53,576 from $64,398 during the nine months of fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of the Company's cash are net cash flows from operating
activities and short-term vendor financing. Currently, the Company does not have
available any established lines of credit with banking facilities.
The Company believes its current available cash position, coupled with its cash
forecast for the year and periods beyond, is sufficient to meet its cash needs
on both a short-term and long-term basis. The balance sheet has a strong working
capital ratio (2.73 to 1) and management is not aware of any known trends or
demands, commitments, events, or uncertainties, as they relate to liquidity
which could negatively affect the Company's ability to operate and grow as
planned.
Page 8
Part II. OTHER INFORMATION
Item 5. Other information.
On March 17, 2000, the Company entered into an asset purchase agreement to buy
certain assets from a company stockholder (See Note 3 of the financial
statements).
Item 6. Exhibits:
(a) (27.1) Financial Data Schedule
(b) Reports on Form 8-K
None
Page 9
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.
First Aid Direct, Inc., a Florida corporation
Date: November 14, 2000 By /s/ Scott Siegel
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Scott Siegel, President and CEO
(Principal Executive Officer)