UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2004
or
| | 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 333-102629
CCP Worldwide, Inc.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 45-0486747
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
6040-A Six Forks Road, Suite 179, Raleigh, North Carolina 27609
- --------------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number (919) 872-0401
------------------------------------------------
Securities registered under Section 12(b) of the Act: None
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 [ ]
As of May 31, 2004, there were 4,995,000 shares of the registrant's common
stock, par value $.001 issued and outstanding.
CCP WORLDWIDE, INC.
QUARTERLY REPORT ON FORM 10-QSB
MARCH 31, 2004
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet (Unaudited)
As of March 31, 2004 3
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2004 and 2003 4
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2004 and 2003 5
Notes to Consolidated Financial Statements 6-8
Item 2 - Management's Discussion and Analysis and Results of
Operation 9-10
Item 3 - Control and Procedures 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities and Use of Proceeds 11
Item 3 - Default Upon Senior Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 11
2
CCP WORLDWIDE, INC. AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 2004
(Unaudited)
ASSETS
Current assets:
Cash $ 681
Accounts receivable, net of allowance for doubtful accounts of $2,000 9,042
Inventory 641
---------
Total current assets 10,364
Furniture and equipment, net of accumulated depreciation of $1,525 --
---------
Total assets $ 10,364
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 25,011
Accrued expenses 83,128
Loan from Shareholder 400
---------
Total current liabilities 108,539
---------
Shareholders' deficit:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized;
no shares issued and outstanding --
Common stock, $0.001 par value, 100,000,000 shares authorized;
4,995,000 shares issued and outstanding 4,995
Additional paid-in capital 136,181
Accumulated deficit (239,351)
---------
---------
Total shareholders' deficit (98,175)
---------
Total liabilities and shareholders' deficit $ 10,364
=========
See accompanying notes to consolidated financial statements.
-3-
CCP WORLDWIDE, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months
Ended March 31,
--------------------------
2004 2003
----------- -----------
Net revenues $ 46,940 $ 47,819
Cost of sales 35,898 38,950
----------- -----------
Gross profit 11,042 8,869
----------- -----------
Operating expenses:
Shareholder compensation -- 32,814
Professional fees 17,100 --
General and administrative expenses 18,044 50,360
----------- -----------
35,144 83,174
----------- -----------
Loss from operations (24,102) (74,305)
Other income:
Interest income 15 --
----------- -----------
Net loss $ (24,087) $ (74,305)
=========== ===========
Loss per common share - basic and diluted $ (0.00) $ (0.01)
=========== ===========
Weighted average common shares
outstanding - basic and diluted 4,995,000 4,995,000
=========== ===========
See accompanying notes to consolidated financial statements.
-4-
CCP WORLDWIDE, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months
Ended March 31,
----------------------
2004 2003
--------- ---------
Cash flows from operating activities:
Net loss $ (24,087) $ (74,780)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities:
Accounts receivable (5,114) (2,059)
Inventory (641) --
Accounts payable 20,236 (14,141)
Accrued expenses (2,668) 5,324
--------- ---------
Net cash used in operating activities (12,274) (85,656)
--------- ---------
Cash flows from financing activities:
Loan from Shareholder 400 --
--------- ---------
Net cash provided by financing activities 400 --
--------- ---------
Net decrease in cash (11,874) (85,656)
Cash - beginning of year 12,555 133,927
--------- ---------
Cash - end of period $ 681 $ 48,271
========= =========
Cash paid during the year for:
Interest $ -- $ --
========= =========
Income taxes $ -- $ --
========= =========
See accompanying notes to consolidated financial statements.
-5-
CCP Worldwide, Inc.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS
CCP Worldwide, Inc. ("CCP") was incorporated under the laws of Delaware on
September 23, 2002. Our current operations are conducted through our wholly
owned subsidiary Custom Craft Packaging, Inc. ("Custom Craft"), which was
incorporated under the laws of North Carolina on July 28, 1993. On September 23,
2002, David Allison, the sole shareholder of Custom Craft Packaging, Inc., sold
all of his Custom Craft Packaging, Inc. shares to CCP in exchange for 3,000,000
shares of CCP.
Custom Craft has been in the packaging business since 1993. Custom Craft
primarily supplies corrugated boxes, folding cartons and foam packaging for the
manufacturers of industrial and consumer products, to assist these manufacturers
in the successful and safe distribution and shipping of their products. Custom
Craft also features point of sale merchandiser packaging for enhanced retail
sales of consumer products. The box materials include corrugated, folding
cartons, chipboard, solid fiber boxes and corrugated plastic. The foam packaging
includes polyethylene, polyurethane and expanded polystyrene foams. Custom Craft
evaluates its customers' needs with respect to many variables that include
product fragility, method of product distribution and point of sale
requirements.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited financial statements and related footnotes have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial statements and pursuant to the
rules and regulations of the Securities and Exchange Commission for Form 10-QSB.
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 (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information read the financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-KSB for the year ended December 31,
2003 as filed with the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 2004 are not necessarily
indicative of the operating results that may be expected for the year ending
December 31, 2004.
NOTE 3 - LIQUIDITY
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has an accumulated
deficit of $239,351 and has incurred a net loss of approximately $24,087 for the
three months ended March 31, 2004. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans include
obtaining capital both from themselves and the significant stockholder
sufficient to meet its minimal operating expenses.
However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans. The ability of the Company to
continue as a going concern is dependent upon its ability to successfully
accomplish the plans described in the preceding paragraph and eventually secure
other sources of financing and attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
6
CCP Worldwide, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
NOTE 4 - SUMMARY OF SIGNIFANT ACCOUNTING POLICIES
Cash and cash equivalents
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Allowance for doubtful accounts
The Company estimates uncollectibility of accounts receivable by analyzing
historical bad debts, customer concentrations, customer credit worthiness and
current economic trends when evaluating the adequacy of the allowance for
doubtful accounts.
Revenue Recognition
Revenue from sales of packaging materials is recognized when the customers have
received such materials.
Stock Based Compensation
Effective January 1, 2003 the Company adopted SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure." SFAS No. 148 amends SFAS
No. 123, and provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation.
In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
more prominent and more frequent disclosures in financial statements of the
effects of stock-based compensation. The interim disclosure requirements of SFAS
No. 148 are effective for interim periods beginning after December 15, 2002. The
Company's stock-based compensation related to employees and non-employee
directors is accounted for in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and thus there is no
compensation expense for options granted with exercise prices equal to the fair
value of the Company's common stock on the date of the grant. With respect to
stock based compensation granted to non-employees, the Company records an
expense equal to the fair value of the option on the measurement date, which is
either the earlier of the date at which a commitment for performance is reached
or the date at which the service is complete.
Loss Per Share
The Company presents basic loss per share and, if appropriate, diluted loss per
share in accordance with the provisions of SFAS No. 128 "Earnings per Share"
("SFAS 128").
Under SFAS 128 basic net loss per share is computed by dividing the net loss for
the reporting period by the weighted average number of common shares outstanding
during the year.
Use of 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.
Financial Instruments
The carrying amounts of financial instruments, including cash, accounts
receivable, accounts payable and accrued expenses approximate fair value at
March 31, 2004 because of the relatively short maturity of the instruments.
7
CCP Worldwide, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
NOTE 4 - SUMMARY OF SIGNIFANT ACCOUNTING POLICIES (Continued)
Recent accounting pronouncements
In December 2003, the FASB revised SFAS No. 132, "Employers' Disclosures about
Pensions and other Postretirement Benefits," ("SFAS No. 132") establishing
additional annual disclosures about plan assets, investment strategy,
measurement date, plan obligations and cash flows.
In addition, the revised standard established interim disclosure requirements
related to the net periodic benefit cost recognized and contributions paid or
expected to be paid during the current fiscal year. The new annual disclosures
are effective for financial statements with fiscal years ending after December
15, 2003 and the interim period disclosures are effective for interim periods
beginning after December 15, 2003. The Company adopted the annual disclosures
for its fiscal year ending December 31, 2004 and the interim disclosures for its
fiscal quarter ending March 31, 2004. The adoption of the revised SFAS No. 132
had no impact on the Company's results of operation or financial condition.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying consolidated financial statements.
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Special Note Regarding Forward-Looking Statements
To the extent that the information presented in this Quarterly Report
on Form 10-QSB for the quarter ended March 31, 2004 discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Management's
Discussion and Analysis or Plan of Operation."
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
Overview
CCP plans to manufacture cross-linked polyethylene foam. CCP has no experience
in manufacturing cross-linked polyethylene foam, or experience in any type of
manufacturing, and needs to raise $4,500,000 in order to begin manufacturing.
Therefore, CCP believes that the operating history of its operating subsidiary
Custom Craft Packaging, Inc. is not in any way indicative of the results that
may be expected from the planned manufacture of cross-linked polyethylene foam.
Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003
Net sales fell to $46,940 for the three months ended March 31, 2004 from $47,819
for the three months ended March 31, 2003, a difference of $879 or 1.84%.
Cost of sales decreased to $35,898 for the three months ended March 31, 2004
from $38,950 for the three months ended March 31, 2003, a difference of $3,052
or 7.84%. This decrease reflected CCP`s decrease in sales volume. CCP`s gross
profit margin for three months ended March 31, 2004 was 23.5% of net sales,
compared to 18.5% for the three months ended March 31, 2003. CCP believes this
is due to slow sales activity from the continuing customer base representing
generally higher margin business.
Shareholder compensation was $0 for the three months ended March 31, 2004
compared to $32,814 for the three months ended March 31, 2003. Shareholder
compensation during the three months ended March 31, 2003 is a non-cash amount
recorded by CCP to properly reflect the services provided by the sole
shareholder of Custom Craft Packaging, Inc., ("Custom Craft") (CCP's sole
operating subsidiary) prior to its acquisition by CCP on September 23, 2002.
Prior to the acquisition, Custom Craft was subject to the provisions of
Subchapter "S" of the Internal Revenue Code, whereby income (loss) of Custom
Craft was passed through to it sole shareholder. Because Custom Craft's
shareholder was compensated for his services primarily through the distribution
of the corporation's net income, the expenses of the corporation did not include
expenses representing the fair value of those services. This compensation was
recorded to properly reflect the fair value of the sole shareholders' services
rendered to Custom Craft, in the accompanying consolidated financial statements.
Professional fees increased to $17,100 for the three months ended March 31,
2004, from $0 for the three months ended March 31, 2003. These professional
fees, primarily legal and accounting fees, were incurred by CCP as a result of
the costs of the registration statement filed by us in 2004.
General and administrative expenses decreased to $18,044 for the three months
ended March 31, 2004 from $50,360 for the three months ended March 31, 2003.
Net loss for the three months ended March 31, 2004 was $24,087, compared to a
net loss of $74,305 for the three months ended March 31, 2003. This decrease in
net loss is due primarily to decreased operating expenses. Such decreases in
losses are due in part to the shareholder compensation expenses during the three
months ended March 31, 2003.
9
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations with cash flow from operations
and since the year ended December 31, 2002 through the private sale of its
common stock.
Net cash used in operating activities was $12,274 for the three months ended
March 31, 2004 compared to net cash used in operating activities of $85,656 for
the three months ended March 31, 2003. This decrease is attributed to the
decrease in net loss for the period.
Net cash provided by financing activities were $400 for the three months ended
March 31, 2004 compared to $0 for the three months ended March 31, 2003.
We require external financing to fund our operations in the next twelve months.
Such financing is expected to be through the sale of common stock and or debt
issuances. However, we do not have any commitment from any sources to raise this
capital. If management is unable to generate external financing, we will not be
able to proceed with our business plan, and accordingly operations would have to
be curtailed. For current operations, the box brokerage process for the cost of
goods sold is known. Prices are quoted to Custom Craft prior to a purchase order
being issued for all items sold. Custom Craft also benefits from terms of sale
of 30 days from its suppliers.
CRITICAL ACCOUNTING POLICIES
A summary of significant accounting policies is included in Note 1 to the
audited financial statements included in our Annual Report on Form 10-KSB for
the year ended December 31, 2003 as filed with the Securities and Exchange
Commission. We believe that the application of these policies on a consistent
basis enables us to provide useful and reliable financial information about our
operating results and financial condition.
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 revenues and expenses during the reporting period.
Actual results may differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2003, the FASB revised SFAS No. 132, "Employers' Disclosures about
Pensions and other Postretirement Benefits," ("SFAS No. 132") establishing
additional annual disclosures about plan assets, investment strategy,
measurement date, plan obligations and cash flows.
In addition, the revised standard established interim disclosure requirements
related to the net periodic benefit cost recognized and contributions paid or
expected to be paid during the current fiscal year. The new annual disclosures
are effective for financial statements with fiscal years ending after December
15, 2003 and the interim period disclosures are effective for interim periods
beginning after December 15, 2003. The Company adopted the annual disclosures
for its fiscal year ending December 31, 2004 and the interim disclosures for its
fiscal quarter ending March 31, 2004. The adoption of the revised SFAS No. 132
had no impact on the Company's results of operation or financial condition.
Management does not believe that any recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying consolidated financial statements.
10
Item 3. Controls and Procedures
Our principal executive officer and principal financial officer evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this report. Based on this
evaluation, the Company's principal executive officer and principal financial
officer have concluded that the Company's controls and procedures are effective
in providing reasonable assurance that the information required to be disclosed
in this report has been recorded, processed, summarized and reported as of the
end of the period covered by this report. During the period covered by this
report, there have not been any significant changes in our internal controls or,
to our knowledge, in other factors that could significantly affect our internal
controls.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults in Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
Executive Officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal
Financial Officer
32.1 Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
On February 12, 2004, we filed an 8-K disclosing a change in
our independent certifying accountants.
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.
CCP WORLDWIDE, INC.
Dated: June 3, 2004 By: /s/David R. Allison
----------------------------------
David R. Allison
Chief Executive Officer
11