-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TWc1TGBH0xFrIroN121u1nAPi84PDbnZ38QvPqrpud7wmn/WkveA5QABTAZHwbDw IaAPYpzcPNaacOaf03NgDg== 0001014897-03-000100.txt : 20030814 0001014897-03-000100.hdr.sgml : 20030814 20030814140533 ACCESSION NUMBER: 0001014897-03-000100 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE BEAUTY SUPPLY INC CENTRAL INDEX KEY: 0001011662 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 223392051 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26361 FILM NUMBER: 03845963 BUSINESS ADDRESS: STREET 1: 380 TOTOWA RD CITY: TOWOWA STATE: NJ ZIP: 07512 BUSINESS PHONE: 2012920125 MAIL ADDRESS: STREET 1: 380 TOTOWA ROAD CITY: TOTOWA STATE: NJ ZIP: 07512 10QSB 1 creative10qsb1q03.txt FORM 10QSB FOR 6-30-03 U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2003 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from: to: Commission file number: 000-26361 Creative Beauty Supply, Inc. (Exact name of Small Business Issuer in its charter) NEW JERSEY 22-3392051 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 380 Totowa Road, Totowa, NJ 07512 (Address of principal executive offices) (Zip Code) Registrant's Telephone number, including area code: 973-904-0004 Check mark whether the Issuer (1) has filed all reports required by Section 13 or 15(d) of the Exchange Act 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 the filing requirements for at least the past 90 days. YES: X NO: APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PREVIOUS FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by the court. YES: X NO: APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date: 3,494,650 Transitional Small Business Disclosure Format. YES: NO: X 2 CREATIVE BEAUTY SUPPLY, INC. BALANCE SHEETS ASSETS JUNE 30, MARCH 31, 2003 2003 ---------- ---------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 320,384 $ 332,755 Marketable securities 200,000 160,000 Accounts receivable 1,519 1,554 Inventory 62,996 63,912 Prepaid expenses 3,205 2,858 ---------- ---------- TOTAL CURRENT ASSETS 588,104 561,079 PROPERTY AND EQUIPMENT, net of accumulated depreciation 7,437 7,906 ---------- ---------- TOTAL ASSETS $ 595,541 $ 568,985 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $ 37,900 $ 18,468 Payroll taxes withheld and accrued 1,249 1,202 Accrued expenses 9,752 16,095 ---------- ---------- TOTAL CURRENT LIABILITIES 48,901 35,765 ---------- ---------- STOCKHOLDERS' EQUITY Preferred stock, par value $.001, authorized 10,000,000 shares, issued and outstanding -0- shares - - Common stock, par value $.001, authorized 100,000,000 shares, issued and outstanding 3,494,650 shares 3,495 3,495 Additional paid-in-capital 1,288,781 1,288,781 Accumulated deficit (745,636) (719,056) Accumulated other comprehensive income (loss) - (40,000) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 546,640 533,220 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 595,541 $ 568,985 ========== ========== The accompanying notes are an integral part of these financial statements. 3 CREATIVE BEAUTY SUPPLY, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002 (UNAUDITED) 2003 2002 ---------- ---------- NET SALES $ 49,512 $ 53,729 COST OF GOODS SOLD 36,887 40,566 ---------- ---------- GROSS PROFIT 12,625 13,163 ---------- ---------- OPERATING EXPENSES: Salaries - officers 8,070 8,170 Payroll taxes 678 687 Auto and delivery 2,277 2,669 Employee welfare 2,644 2,214 Insurance 953 829 Office 365 851 Professional fees 20,029 27,635 Rent 3,900 3,855 Store supplies 67 271 Taxes 559 240 Telephone 646 965 Utilities 385 477 Miscellaneous 249 281 Depreciation 470 132 ---------- ---------- TOTAL OPERATING EXPENSES 41,292 49,276 ---------- ---------- LOSS FROM OPERATIONS BEFORE OTHER INCOME (28,667) (36,113) ---------- ---------- OTHER INCOME: Gain on sale of securities - 8,333 Interest income 2,087 4,127 ---------- ---------- TOTAL OTHER INCOME 2,087 12,460 ---------- ---------- NET LOSS (26,580) (23,653) ========== ========== LOSS PER COMMON SHARE, BASIC AND DILUTED $ (0.01) $ (0.01) ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 3,494,650 3,494,650 ========== ========== The accompanying notes are an integral part of these financial statements. 4 CREATIVE BEAUTY SUPPLY, INC. STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002 (UNAUDITED) 2003 2002 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (26,580) $ (23,653) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 469 132 Gain on sale of marketable securities - (8,333) Changes in operating assets and liabilities: Accounts receivable 35 (454) Inventory 916 (2,032) Prepaid expenses (347) (471) Accounts payable 19,432 34,372 Payroll taxes withheld and accrued 47 76 Accrued expenses (6,343) 491 ---------- ---------- Net cash provided by (used in) operating activities (12,371) 128 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment - (9,394) Proceeds from sale of marketable securities - 25,000 ---------- ---------- Net cash provided by investing activities - 15,606 ---------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,371) 15,734 CASH AND CASH EQUIVALENTS - beginning of period 332,755 383,108 ---------- ---------- CASH AND CASH EQUIVALENTS - end of period $ 320,384 $ 398,842 ========== ========== The accompanying notes are an integral part of these financial statements. 5 CREATIVE BEAUTY SUPPLY, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2003 NOTE 1 - BASIS OF PRESENTATION 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 and Article 10 of Regulation S-X. 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, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ended March 31, 2004. The unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended March 31, 2003. NOTE 2 - INVENTORY The Company's policy is to compute inventory for interim reporting on the gross profit method using the gross profit for the prior fiscal year. NOTE 3 - COMPREHENSIVE LOSS Other comprehensive gain for the three months ended June 30, 2003 consisted of an unrealized holding gain arising during the period (net of an income taxes of -0- after applying net operating loss carry forwards) in the amount of $40,000. Other comprehensive loss for the three months ended June 30, 2002 consisted of an unrealized holding loss arising during the period ( net of an income tax benefit of $59,269) in the amount of $78,564. NOTE 4 - MARKETABLE SECURITIES The cost and fair value of marketable equity securities that are available-for-sale are as follows: June 30, 2003 March 31, 2003 ------------- -------------- Cost $ 200,000 $ 200,000 Gross unrealized loss - (40,000) ------------- -------------- $ 200,000 $ 160,000 ============= ============== 6 The unrealized loss of marketable equity securities that are available for sale are as follows: June 30, 2003 March 31, 2003 ------------- -------------- Net unrealized loss $ - $ (40,000) Deferred income taxes - - ------------- -------------- $ - $ (40,000) ============= ============== These amounts are presented as accumulated other comprehensive income (loss). During the three months ended June 30, 2003 and 2002 sales proceeds and gross realized gains and losses on securities classified as available- for-sale were: 2003 2002 ---------- ---------- Sales proceeds - $ 25,000 ---------- ---------- Gross realized gains - $ 8,333 ---------- ---------- The method used to determine the costs of securities sold was actual cost per share. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Trends and Uncertainties. Demand for the Company's products will be dependent on, among other things, market acceptance of the Company's concept and general economic conditions, which are cyclical in nature. Inasmuch as a major portion of the Company's activities is the receipt of revenues from the sales of its products, the Company's business operations may be adversely affected by the Company's competitors and prolonged recessionary periods. Hairstyles in the industry change drastically from season to season. The recent trend away from straight hair will have a favorable impact on the sales of the Company's hair products such as perms, etc. although the extent of this impact is indeterminable. Results of Operations. The Company sells approximately 1,000 different products at varying mark ups ranging from 20 to 40 percent. The Company has two types of customers, beauty salons and the general public. The gross profit margin on sales of merchandises to the general public ranges from 30 to 40 percent depending on the product sold. The gross margin on sales of merchandise to beauty salons is somewhat less ranging from 20 to 28 percent depending on the product sold and the discount given. The Company's product margin increased for June 30, 2003 over June 30, 2002 due to a change in sales mix. Although sales decreased (wholesale decreased by 2% and retail decreased by 13%) products sold were sold at higher margins resulting in a higher gross margin for the three months ended June 30, 2003. Three Months Ended June 30, 2003 as compared to three months ended June 30, 2002 For the three months ended June 30, 2003, the Company had a net loss of $(26,580). The Company had net sales of $49,512 with a cost of goods sold of $36,887 resulting in gross profit of $12,625 for the three months ended June 30, 2003. The Company had operating expenses of $41,292 for the three months ended June 30, 2003. These expenses primarily consisted of officer's salaries of $8,070, auto and delivery of $2,277, employee welfare of $2,644, professional fees of $20,029, rent of $3,900, telephone of $646, utilities of $385, store supplies of $67, insurance of $953, office expenses of $365, payroll taxes and other taxes of $1,237, and other miscellaneous expenses of $249. Depreciation was $470 for the three months ended June 30, 2003. For the three months ended June 30, 2002, the Company had a net loss of $(23,653). The Company had net sales of $53,729 with a cost of goods sold of $40,566 resulting in gross profit of $13,163 for the three months ended June 30, 2002. 8 The Company had operating expenses of $49,276 for the three months ended June 30, 2002. These expenses primarily consisted of officer's salaries of $8,170, auto and delivery of $2,669, employee welfare of $2,214, professional fees of $27,635, rent of $3,855, telephone of $965, utilities of $477, store supplies of $271, insurance of $829, office expenses of $851, payroll and other taxes of $927 and other miscellaneous expenses of $281. Assets for the three months ended June 30, 2003 increased by approx. $26,556. This was a direct result from the increase in market value of securities held for sale. Liabilities for the three months ended June 30, 2003 increased by approx. $13,136. This was a direct result of an increase in net accounts payable and accrued expenses. Working capital at June 30, 2003 was approx. $539,203 and at March 31, 2003 it was $525,314, an increase of approx. $13,889. The increase was a direct result from the increase in current assets of $27,025 net of an increase of current liabilities of $13,136. Cash decreased by $12,371, market value of securities held for sale increased by $40,000 and inventory decreased by $916. Accounts payable increased by $19,432 while accrued expenses decreased by $6,343. Stockholders Equity decreased by the loss for the three months. There were no equity transactions during the period. Sales for the three months ended June 30, 2003 were $49,512 as compared to $53,729 for the three months ended June 30, 2002, a 8% decrease. Gross profit for the three months ended June 30, 2003 was 12,625 as compared to $13,163 for the three months ended June 30, 2002, a 4% decrease. Operating expenses for the three months ended June 30, 2003 were $41,292 as compared to $49,276 for the three months ended June 30, 2002, a decrease of 16%. Sales for the two periods were as follows: 2003 2002 ---------- ---------- Wholesale 22,995 46% 23,413 44% Retail 26,517 54% 30,316 56% ---------- ---------- 49,512 53,729 ========== ========== Sales are decreasing due to loss of customers causing a decrease in sales volume. Wholesale sales have decreased by approx. 2% and retail sales have decreased by approx. 13%. 9 Operating expenses decreased by approx. 16% as compared to 2002. All categories of expenses were consistent with 2002 with the exception of professional fees. Professional fees decreased by approx. $7,606 or 28%. The decrease was mostly due to lower audit fees. The unrealized gain from marketable securities held for sale was due directly from the increase in market value over the three month period. Liquidity. Capital and Source of Liquidity. For the three months ended June 30, 2003 and 2002, the Company did not pursue any financing activities. For the three months ended June 30, 2003, the Company did not pursue any investing activities. For the three months ended June 30, 2002, the Company acquired property and equipment of $9,394 and received proceeds from the sale of marketable securities of $25,000. Plan of Operation. During the next twelve months, the Company may obtain new product lines by negotiating with various manufacturers. The Company does not intend to hire any additional employees. The Company's liquidity will be decreased due to little or no increase in revenue and higher operating costs. The Company is not delinquent on any of its obligations even though the Company has had limited operating revenues. The Company intends to market its products utilizing cash made available from the sale of its products. The Company is of the opinion that revenues from the sales of its products and the proceeds from the sale of its securities will be sufficient to pay its expenses. The Company does not have nor does it intend to have pension and/or other post-retirement benefits in the future. The Company does not have any or intends to have any derivative instruments or hedging activities. Item 3. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, conducted an evaluation of our "disclosure controls and procedures" (as defined in Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-14(c)) within 90 days of the filing date of this quarterly report on Form 10QSB (the "Evaluation Date"). Based on their evaluation, our chief executive officer and chief financial officer have concluded that as of 10 the Evaluation Date, our disclosure controls and procedures are effective to ensure that all material information required to be filed in this quarterly report on Form 10-QSB has been made known to them in a timely fashion. Changes in Internal Controls There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date set forth above. 11 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 99 - Certifications pursuant to 18 U.S.C. Section 1350 (b) Not applicable. 12 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. Creative Beauty Supply, Inc. (Registrant) Dated: August14, 2003 By: /s/ Carmine Catizone ---------------------------- Carmine Catizone, President 13 CERTIFICATIONS I, Carmine Catizone, certify that: 1. I have reviewed this quarterly report on Form 10QSB of Creative Beauty Supply, Inc. 2. Based on my knowledge, the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 14 (6) The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /s/Carmine Catizone - -------------------------- Carmine Catizone Chief Executive Officer 15 CERTIFICATION I, Daniel Generelli, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Creative Beauty Supply, Inc. 2. Based on my knowledge, the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 16 (6) The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /s/ Daniel Generelli - -------------------------------- Danie Generelli, Chief Financial Officer EX-99 3 creative10q1q03ex99.txt SARBANES-OXLEY CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Creative Supply, Inc. (the "Company") on Form 10-QSB for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carmine Catizone, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/Carmine Catizone - ----------------------------- Carmine Catizone Chief Executive Officer August 14, 2003 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Creative Supply, Inc. (the "Company") on Form 10-QSB for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carmine Catizone, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/Daniel Generelli - ----------------------------- Daniel Generelli Chief Financial Officer August 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----