-----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, WBKZ4YuJIVcHXGxH3zmGORa6vEH5GsP+XdvZFtr0zkxbDOLVVUo5781YdNEt7xSW 76dUk0gB85s80vO6unYu/Q== 0001014897-05-000034.txt : 20050413 0001014897-05-000034.hdr.sgml : 20050413 20050413121657 ACCESSION NUMBER: 0001014897-05-000034 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Creative Beauty Supply of New Jersey CORP CENTRAL INDEX KEY: 0001290658 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 000000000 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-50773 FILM NUMBER: 05747821 BUSINESS ADDRESS: STREET 1: 380 TOTOWA ROAD CITY: TOTOWA STATE: NJ ZIP: 07512 BUSINESS PHONE: 973-904-0004 MAIL ADDRESS: STREET 1: 380 TOTOWA ROAD CITY: TOTOWA STATE: NJ ZIP: 07512 10KSB 1 creativenj10k123104.txt FORM 10KSB FOR 12-31-2004 FORM 10-KSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ ] 15,ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: OR [x]15,TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from April 1, 2004 to December 31, 2004 Commission File Number 0-50773 Creative Beauty Supply of New Jersey Corporation (Exact name of Small Business Issuer in its charter) New Jersey 56-2415252 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification number) 380 Totowa Road Totowa, NJ 07512 (Address of principal executive offices) (Zip Code) Registrant's Telephone number, including area code: (973) 904-0004 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value Check whether the Corporation (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or such shorter period that the Corporation was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes __x__ No _____ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Corporation's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ x ] 2 The Corporation's revenues for its most recent fiscal year were $110,837. As of March 31, 2005, the market value of the Corporation's voting $.00l par value common stock held by non-affiliates of the Corporation was $0.00. The number of shares outstanding of Corporation's only class of common stock, as of December 31, 2004 was 3,494,650 shares of its $.001 par value common stock. Check whether the Issuer has 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 a court. Yes __ __ No _____ No documents are incorporated into the text by reference. Transitional Small Business Disclosure Format (check one) Yes No x -------- -------- 3 PART I ITEM 1. BUSINESS Creative Beauty Supply of New Jersey Corporation was incorporated in the State of New Jersey on October 1, 2003. It was formed pursuant to a resolution of the board of directors of Creative Beauty Supply Inc. ("CBS"), as a wholly owned subsidiary of that company, a publicly traded New Jersey corporation. On January 1, 2004, the assets and liabilities of CBS were contributed at book value to Creative NJ, and CBS approved a spin- off of this subsidiary to its shareholders. The spin-off was approved in contemplation of a merger which occurred on March 19, 2004 between CBS and Global Digital Solutions, Inc., a Delaware corporation, upon approval by vote of the stockholders of CBS and Global Digital whereby the former shareholders of CBS will become the owners of 100 percent of the common stock of Creative NJ. The common shares to be transferred upon completion of the Form 10SB to the former shareholders of CBS prior to the merger are being held in escrow with Jody M. Walker, Attorney At Law. CBS is the predecessor of Creative NJ. Pursuant to the requirements of Staff Legal Bulletin #4, the spin-off will be completed upon the satisfactory resolution of all SEC comments to the Form 10SB. Pursuant to the terms of the spin-off arrangement, upon completion of the Form 10SB, Global Digital will provide its shareholders as of January 1, 2004, one share of Creative NJ for every share of Global Digital owned as of the record date. There is not expected to be any material changes in Creative NJ's operations as a result of the spin-off. Creative NJ filed its Form 10SB voluntarily. Creative NJ will voluntarily file periodic reports in the event its obligation to file such reports is suspended under the Exchange Act. Corporate Operations. Creative NJ operates as a cosmetic and beauty supply distributor at both the retail and wholesale levels. Creative NJ's various beauty and cosmetic products are purchased by it from a number of unaffiliated suppliers and manufacturers and thereafter sold on its premises to retail "walk-in" customers or directly to beauty salons. Products. Creative NJ's beauty and cosmetic products primarily consist of the following items: Shampoos, conditioners, mousse, setting/styling and spray gels, lotions, lipstick and nail products and hair sprays as well as such beauty and cosmetic related appliances as blow dryers, curling irons, mirrors, air diffusers and hair trimmers. Many of the aforesaid products (at least 80%) may be considered to be "national" brands bearing consumer recognition with respect to the their respective names. Such consumer recognition of such "brand" names is considered by Creative NJ to be of assistance to it with respect to sale of such products since 4 consumer recognition is advanced by national brand media advertising (at no cost to Creative NJ but to Creative NJ's benefit) when potential customers are already familiar with the product as a result of media advertising. Suppliers. The above indicated products are purchased by Creative NJ from a number of unaffiliated suppliers and management of Creative NJ does not contemplate or anticipate any significant difficulties with its ability to purchase such products from its current suppliers and/or from replacement and/or additional suppliers if and when necessary or advisable. Creative NJ does not have any written or oral agreements with any of its suppliers. Creative NJ purchases approximately 45% of its products from New York City Beauty Supply. Management believes that other suppliers could provide similar products on comparable terms. A change in suppliers, however, could cause a delay in obtaining merchandise and possible loss of sales that could affect operating results. Distribution. Creative NJ is currently distributing its products to approximately 200 nail and beauty salons. Its territory is principally and almost exclusively located within the northern and central portion of the State of New Jersey, in the counties of Essex, Hudson, Bergen, Passaic, Morris and Union. Creative NJ sells cosmetic and beauty supplies, both on the retail and wholesale levels to beauty salons and to the general public. No customer contributes more than 10% of revenues. Creative NJ operates in a single segment. Wholesale sales consist of sales to beauty salons of merchandise for resale. Sales of merchandise to these customers for consumption in the course of providing hair care services, and not for the resale are considered retail sales. All sales to the general public are also considered retail sales. Net sales are summarized as follows for the nine months ended December 31, 2004: Retail $ 62,169 Wholesale 48,668 ---------- $ 110,837 ========== Competition. Competition is based on price. Creative NJ's price ranges of its various products are within the manufacturer-suggested prices, services and product lines. Creative NJ is competing with established companies and other entities (many of which may possess substantially greater resources than Creative NJ). Almost all of the companies with which Creative NJ competes are substantially larger, have more substantial histories, backgrounds, experience and records of successful operations, greater financial, technical, marketing and other resources, more employees and more extensive facilities than Creative NJ now has, or will have in the foreseeable 5 future. It is also likely that other competitors will emerge in the near future. There is no assurance that Creative NJ's products will compete successfully with other established and/or well-regarded products. Inability to compete successfully might result in increased costs, reduced yields and additional risks to the investors herein. Marketing. Creative NJ has no formal marketing plan and no sales representatives. Creative NJ's products are marketed through catalog advertising to the salon industry and special promotions. The salons order and receive their products weekly. No customer accounts for more than 10% of sales and there are no existing sales contracts. Backlog. Creative NJ services its wholesale accounts on two days notice. There is no backlog. If Creative NJ does not have a specific item, it is back ordered until the next delivery. Employees. Creative NJ currently has one full-time employee and one part-time employee. Creative NJ does not plan to hire additional employees in the next twelve months. Creative NJ's operations do not depend nor are they expected to depend upon patents, copyrights, trade secrets, know-how or other proprietary information. No amounts have been expended by Creative NJ for research and development of any products nor does Creative NJ expect to expend any amounts this year or in the near future. Creative NJ's business, products and properties are not subject to material regulation (including environmental regulation) by federal, state, or local governmental agencies. Seasonal Nature of Business Activities. Creative NJ's business activities are not seasonal. ITEM 2. PROPERTIES. Creative NJ's executive offices and showroom are located at 380 Totowa Road, Totowa, New Jersey 07512. Telephone No. (973) 904- 0004. These offices consist of 1,400 square feet on a lease term. Creative NJ is obligated under a lease agreement with an unrelated party for the space occupied by its executive offices, store, and warehouse facilities in Totowa, New Jersey. The lease expires on May 31, 2007, and has a monthly rent of $1,350. This lease was a renewal of a prior lease that expired on April 30, 2004 and had a monthly rent of $1,300. The prior lease, which was the obligation of Creative NJ's parent company, Creative Beauty Supply Inc., was assigned to Creative NJ on January 1, 2004. 6 The future lease payments at December 31, 2004 are as follows: Year ended December 31, ----------------------- 2005 $ 16,200 2006 16,200 2007 6,750 ---------- Total $ 39,150 ========== Creative NJ owns its delivery vehicle and the computers used in the operation of the business. ITEM 3. LEGAL PROCEEDINGS. The Corporation is not involved in any legal proceedings at this date. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the last quarter of the fiscal year ended December 31, 2004, no matters were submitted to a vote of Creative Beauty Supply of New Jersey Corporation security holders, through the solicitation of proxies. 7 PART II ITEM 5. MARKET FOR CORPORATION'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information. Creative NJ's common stock is not included in the pink sheets or in the OTC Bulletin Board maintained by the NASD. Creative NJ plans to apply to the OTC Bulletin Board. There is no public trading market for Creative NJ common stock and there is no guarantee any trading market will develop. Holders. The sole shareholder of record of Creative NJ's common stock, as of March 31, 2005 was Creative Beauty Supply, Inc. As a result of the spin-off, the approximate number of record holders of Creative NJ will be 113. Dividends. Holders of Creative NJ's common stock are entitled to receive such dividends as may be declared by its board of directors after the spin-off has been completed. Creative NJ does not anticipate that it will declare any dividends. All profit will be used for continuing operations. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Trends and Uncertainties. Demand for Creative NJ's products will be dependent on, among other things, market acceptance of Creative NJ's concept and general economic conditions, which are cyclical in nature. Inasmuch as all of Creative NJ's activities is the receipt of revenues from the sales of its products, Creative NJ's business operations may be adversely affected by Creative NJ's competitors. Capital and Source of Liquidity. Creative NJ had cash and cash equivalents of $213,341, a decrease of $49,663 from the cash and cash equivalents balances of $263,004 at March 31, 2004. Cash used in operating activities totaled $44,663. The primary reasons for the decrease was the loss for the period and increase in inventory levels, somewhat offset by the increase in accounts payable and accrued expenses. Investments in Available For Sale Securities consist of an investment in 200,000 common shares of Ram Venture Holdings Corp., a publicly trading company listed on NASD Bulletin Board and subscriptions for 100,000 shares of common stock of Proguard Acquisitions, Corp., a non-public company with a cost of $5,000. An unrealized loss on Ram of $138,000 at December 31, 2004 represents the difference between the fair market value of the common stock owned as determined by the closing market price per share on December 31, 2004 and the cost of the investment. For the nine months ended December 31, 2004, Creative NJ acquired available for sale security of $5,000 resulting in net cash used in investing activities of $5,000. 8 Results of Operations. Creative NJ sells approximately 1,000 different products at varying mark ups ranging from 20 to 40 percent. For the nine months ended December 31, 2004, Creative NJ had net sales of $110,837 and cost of sales of $87,474 resulting in gross profit of $23,363. For the nine months ended December 31, 2004 Creative NJ had operating expenses of $91,316. A majority of these expenses consisted of those necessary to conduct our business. We paid $30,798 for professional fees necessary to become a reporting company. Plan of Operation. During the next twelve months, Creative NJ may obtain new product lines by negotiating with various manufacturers. Creative NJ does not intend to hire any additional employees. To date, no product lines have been identified and no timeframes established or cash needs defined. Creative NJ is not delinquent on any of its obligations even though Creative NJ has had limited operating revenues. Creative NJ intends to market its products utilizing cash made available from the sale of its products. Creative NJ is of the opinion that revenues from the sales of its products will be sufficient to pay its expenses. Creative NJ does not have nor does it intend to have pension and/or other post-retirement benefits in the future. Creative NJ does not have any or intends to have any derivative instruments or hedging activities. Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in Creative NJ's financial statements and the accompanying notes. The amounts of assets and liabilities reported in our balance sheets and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, fair market values of marketable securities, asset impairments, inventory and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements. 9 Revenue is recognized when earned in accordance with applicable accounting standards. Net sales are recognized at the time products are shipped to customers. Over-the-counter sales are recorded at point of sale. The allowance for doubtful accounts is based on Creative NJ's assessment of the collectability of specific customer accounts, credit worthiness and economic as well as the aging of the accounts receivable balances. If there is a deterioration of a major customer's credit worthiness or actual defaults are higher than Creative NJ's historical experience, Creative NJ's estimates of recoverability of amounts due Creative NJ could be adversely affected. Creative NJ has elected to classify all of its investments in equity securities as available-for-sale and report them at fair value. Realized gains and losses are recorded in earnings (loss) and changes in the unrealized gain or loss is excluded from earnings (loss) and reported as a component of other comprehensive income (loss). Creative NJ's inventory consists of finished goods and is valued at lower of cost or market with cost being determined on the first-in, first-out (FIFO) method. Creative NJ also considers obsolescense, excessive levels, deterioration and other factors in evaluating net realizable value. Creative NJ periodically evaluates the net realizable value of long- lived assets, including property and equipment, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. An impairment in the carrying value of an asset is recognized whenever future cash flows (undiscounted) from an asset are estimated to be less than its carrying value. The amount of the impairment recognized is the difference between the carrying value of the asset and its fair value. New Accounting Standards: In December 2003, the Financial Accounting Standards Board ("FASB") issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51," which provides guidance on the identification of and reporting for variable interest entities for consideration in determining whether a variable interest entity should be consolidated. Interpretation No. 46, as revised, is effective for the Company in the third quarter of fiscal 2004. The adoption of Interpretation No. 46 had no impact on the Company's results of operations for the nine months ended December 31, 2004, or its financial condition at that date, nor is it expected to have a significant impact in the future. In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which replaces SFAS 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), and supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 10 No. 25"). SFAS 123(R) requires companies to recognize in their income statement the grant-date fair value of stock options and other equity- based compensation issued to employees. This SFAS is effective for most public companies for interim and annual reporting periods beginning after June 15, 2005. Grant-date fair value will be determined using one of two acceptable valuation models. This Standard requires that compensation expense for most equity-based awards be recognized over the requisite service period, usually the vesting period; while compensation expense for liability-based awards (those usually settled in cash rather than stock) be re-measured to fair-value at each balance sheet date until the award is settled. The Standard also provides guidance as to the accounting treatment for income taxes related to such compensation costs, as well as transition issues related to adopting the new Standard. The adoption of SFAS No. 123(R) had no impact on the Company's results of operations for the nine months ended December 31, 2004, or its financial condition at that date, nor is it expected to have a significant impact in the future. In December 2004, the FASB issued SFAS No. 153, "Exchange of Non- monetary Assets an amendment of APB Opinion No. 29." This Statement precludes companies from using the "similar productive assets" criteria to account for non-monetary exchanges at book value with no gain or loss being recognized. Effective for fiscal periods beginning after June 15, 2005, all companies will be required to use fair value for most non-monetary exchanges, recognizing gain or loss, if the transaction meets commercial, substance criteria. The Company does not expect this Standard to have a significant impact on its current financial statements. In November 2004, the FASB issued Statement No. 151, "Inventory Costs, an amendment of ARB 43, Chapter 4" ("SFAS 151"), to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage). ARB 43 allowed some of these "abnormal costs" to be carried as inventory, whereas the new Standard requires that these costs be expensed as incurred. This Statement is effective for fiscal years beginning after June 15, 2005. The Company does not expect this Standard to have a significant impact on its current financial statements. In December 2004, the FASB issued FSP FAS 109-1, "Application of FASB Statement No. 109, "Accounting for Income Taxes," to the "Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004" to provide accounting guidance on the appropriate treatment of tax benefits generated by the enactment of the Act. The FSP requires that the manufacturer's deduction be treated as a special deduction in accordance with SFAS 109 and not as a tax rate reduction. The Company is awaiting final tax regulations from the IRS before completing its assessment of the impact of adopting FSP FAS 109-1 on its current financial statements. 11 Forward-Looking Statements This Form 10-KSB contains forward-looking statements within the meaning of the federal securities laws. These statements include those concerning the following: Our intentions, beliefs and expectations regarding the fair value of all assets and liabilities recorded; our strategies; growth opportunities; product development and introduction relating to new and existing products; the enterprise market and related opportunities; competition and competitive advantages and disadvantages; industry standards and compatibility of our products; relationships with our employees; our facilities, operating lease and our ability to secure additional space; cash dividends; excess inventory, our expenses; interest and other income; our beliefs and expectations about our future success and results; our operating results; our belief that our cash and cash equivalents will be sufficient to satisfy our anticipated cash requirements; our expectations regarding our revenues and customers; investments and interest rates. These statements are subject to risk and uncertainties that could cause actual results and events to differ materially. Creative NJ undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-KSB. ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements The response to this item is being submitted as a separate section of this report beginning on page 20. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE (a) On March 19, 2004, the board of directors of Creative NJ engaged the accounting firm of Samuel Klein and Company as principal accountants of Creative NJ for the period from inception through January 31, 2004. Creative NJ has not consulted Samuel Klein and Company during predecessor CBS's two most recent fiscal years and the interim period for the quarter ended December 31, 2003. On January 19, 2005, Samuel Klein and Company resigned as auditors of Creative NJ. The decision to resign was due to Samuel Klein and Company no longer pursuing any SEC auditing work. Samuel Klein and Company, on the financial statements of Creative NJ for the period from inception through January 31, 2004 neither contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. 12 For the period from inception through January 31, 2004 and the interim period through the date of resignation, there were no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure and there were no "reportable events" with Samuel Klein and Company as described in Items 304 (a) of Regulation S-K, respectively. (b) On March 19, 2005, the board of directors of Creative NJ engaged the accounting firm of Rotenberg, Meril, Solomon, Bertiger & Guttilla, P.C. as principal accountants of Creative NJ for the nine months ended December 31, 2004. ITEM 8A CONTROLS AND PROCEDURES Controls and Procedures. Carmine Catizone, the chief executive officer and Daniel Generelli, the chief financial officer of Creative NJ have made an evaluation of the disclosure controls and procedures relating to the financial statements of Creative NJ for the nine months ended December 31, 2004 and have judged such controls and procedures to be effective as of December 31, 2004 (the evaluation date). There have not been any significant changes in the internal controls of Creative NJ or other factors that could significantly affect internal controls relating to Creative NJ since the evaluation date. 13 PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION Name Position Held Term of Office Carmine Catizone, age 54 President, Director October 1, 2003 to present Daniel Generelli, age 36 Secretary/Treasurer October 1, 2003 Vice-President/Director to present
Resumes: Carmine Catizone. Mr. Catizone has been President and a director of Creative NJ since its incorporation on October 1, 2003. From June 1988 to July 1994, Mr. Catizone was President and a Director of J&E Beauty Supply, Inc., a retail and wholesale beauty supply distributor. Mr. Catizone served as President and a director of C&C Investments, Inc., a blank check company (now known as T.O.P.S. Medical Corp., which provided chemicals for transportation of organs) from July 1977 to December 1984. From August 1995 to March 19, 2004, Mr. Catizone was President and a director of Creative Beauty Supply, Inc., now Global Digital Solutions, Inc., a SEC reporting company. Mr. Catizone is not currently involved with T.O.P.S. Medical Corp. From June 1980 to December 1985, Mr. Catizone had been district sales manager (engaged in sales of cosmetics) for Chattem Labs. Mr. Catizone received his Bachelor of Science degree from Fairleigh Dickerson University in 1972. Daniel Generelli. Mr. Generelli has been Secretary-Treasurer and a director of Creative NJ since its incorporation on October 1, 2003. From August 1995 to March 19, 2004, Mr. Generelli was Secretary- Treasurer and a director of Creative Beauty Supply, Inc., now Global Digital Solutions, Inc., a SEC reporting company. From December 1989 to July 1995, Mr. Generelli was Secretary/Treasurer and a director of J&E Beauty Supply, Inc., a retail and wholesale beauty supply distributor. From December 1984 to December 1989, Mr. Generelli was employed as a distribution supervisor with Tags Beauty Supply, a retail and wholesale beauty supply distributor in Fairfield, NJ. Mr. Generelli graduated from Ramapo College of New Jersey with a Bachelor of Science degree in June of 1984. Carmine Catizone, Daniel Generelli and Pasquale Catizone would be deemed to be promoters of Creative NJ. 14 ITEM 10. EXECUTIVE COMPENSATION To date, Creative NJ has not entered into employment agreements nor are any contemplated.
Annual Compensation Awards Payouts --------------------------- ---------------------- ---------- Other Restricted Securities Annual Stock Underlying LTIP All Other Name and Position Year Salary($) Bonus($) Compensation($) Awards(#) Options/SARs(#) Payouts($) Compensation($) Carmine Catizone 2004 --- --- --- --- --- --- --- President 2003 --- --- --- --- --- --- --- Daniel Generelli 2004 --- --- --- --- --- --- --- Secretary/Treasuer/ 2003 --- --- --- --- --- --- --- Director
Board of Directors Compensation. Members of the Board of Directors may receive an amount yet to be determined annually for their participation and will be required to attend a minimum of four meetings per fiscal year. To date, Creative NJ has paid $0.00 in directors' expenses. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The common shares to be distributed to Global Digital shareholders as of January 1, 2004 are being held in escrow with Jody M. Walker, Attorney At Law until the Form 10SB is completed. The following tabulates holdings of shares of Creative NJ by each person who, adjusted for completion of the spin-off, will holders of record or is known by Management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of Creative NJ individually and as a group. Each named beneficial owner has sole voting and investment power with respect to the shares set forth opposite his name. Shareholdings at March 31, 2005 Adjusted for completion of the spin-off Percentage of Number & Class(1) Outstanding Name and Address of Shares Common Shares Carmine Catizone(4) Common 1,308,000 (direct) 31.26% 10 1/2 Walker Avenue 80,600(2) (indirect) 1.93% Morristown, NJ 07960 Daniel T. Generelli Common 80,000 1.91% 24 Kansas Street Hackensack, NJ 07601 All Directors & Officers 1,468,600 35.10% as a group (2 persons) 15 Pasquale Catizone(4) Common 500,000 (direct) 11.95% 266 Cedar Street Common 10,000(3)(indirect) .24% Cedar Grove, NJ 07009 Ram Venture Holdings Corp.(5) Common 630,000 15.06% 3040 E. Commercial Blvd. Fort Lauderdale, FL 33308 Cede & Co. Common 487,500 11.65% P.O. Box 20 Bowling Green Station New York, NY 10274
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the voting) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to a security whether through a contract, arrangement, understanding, relationship or otherwise. Unless otherwise indicated, each person indicated above has sole power to vote, or dispose or direct the disposition of all shares beneficially owned, subject to applicable unity property laws. (2)Carmine Catizone and Phyllis Catizone are husband and wife and are deemed to be the beneficial owners of each other's shares and custodial shares. (3)Pasquale Catizone and Barbara Catizone are husband and wife and are deemed to be the beneficial owners of each other's shares. (4) Carmine Catizone and Pasquale Catizone are brothers. (5) Ron Martini is the beneficial owner of the shares held by Ram Venture. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Spin-off from Predecessor. On January 1, 2004, the assets and liabilities of CBS were contributed at book value which represented fair value at January 1, 2004, to Creative NJ, and CBS approved a spin-off of this subsidiary to its shareholders. The spin-off was approved in contemplation of a merger which occurred on March 19, 2004 between CBS and Global Digital Solutions, Inc., a Delaware corporation, upon approval by vote of the stockholders of CBS and Global Digital whereby the former shareholders of CBS will become the owners of 100 percent of the common stock of Creative NJ. The common shares to be transferred upon completion of the Form 10SB to the former shareholders of CBS prior to the merger are being held in escrow with Jody M. Walker, Attorney At Law. CBS is the predecessor of Creative NJ. Pursuant to the requirements of Staff Legal Bulletin #4, the spin-off will be completed upon the satisfactory resolution of all SEC comments to the Form 10SB. 16 Pursuant to the Memorandum of Understanding between CBS and Global Digital, Creative NJ and Carmine Catizone, Pasquale Catizone and their families have agreed to indemnify Global from any claims arising from existing liabilities of CBS prior to the closing that occurred on March 19, 2004. Carmine Catizone was President and Chief Executive Officer of CBS through the closing date of the merger, and is currently President of Creative NJ and Pasquale Catizone was a stockholder of CBS through the closing date of the merger. There are no other agreements between Global Digital Solutions, Inc. and Creative NJ post spin-off. The spin-off includes all the operations, assets and liabilities of the Creative NJ subsidiary. Global Digital does not retain any liability once the spin-off is completed and Global Digital and Creative NJ will mutually release each other from any claims after the spin-off. ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) FINANCIAL STATEMENTS AND SCHEDULES The following financial statements and schedules are filed as part of this report: Report of Independent Registered Accounting Firm Balance Sheet as of December 31, 2004 Statement of Operations and Comprehensive Loss for the nine months Ended December 31, 2004 Statement of Stockholders' Equity for the nine months ended December 31, 2004 Statement of Cash Flows for the nine months ended December 31, 2004 Notes to Financial Statements 17 REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM To the Board of Directors and Stockholders of Creative Beauty Supply of New Jersey Corporation We have audited the accompanying balance sheet of Creative Beauty Supply of New Jersey Corporation as of December 31, 2004 and the related statements of operations and comprehensive loss, stockholders' equity and cash flows for the nine months then ended. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004 and the results of operations and cash flows for the nine months then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Rotenberg Meril Solomon Bertiger & Guttilla, P.C. ROTENBERG MERIL SOLOMON BERTIGER & GUTTILLA, P.C. Saddle Brook, New Jersey March 16, 2005 18 CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION BALANCE SHEET DECEMBER 31, 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 213,341 Marketable securities 67,000 Accounts receivable 1,367 Inventory 58,059 Prepaid expenses 739 ---------- TOTAL CURRENT ASSETS 340,506 PROPERTY AND EQUIPMENT - net 5,198 ---------- TOTAL ASSETS $ 345,704 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable - trade $ 28,660 Accrued salaries 25,000 Payroll taxes payable 3,246 Accrued expenses 3,389 ---------- TOTAL CURRENT LIABILITIES 60,295 ---------- 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 Additional paid-in-capital 501,646 Accumulated deficit (81,732) Accumulated other comprehensive loss (138,000) ---------- TOTAL STOCKHOLDERS' EQUITY 285,409 ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 345,704 ========== The accompanying notes are an integral part of these financial statements. 19 CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE NINE MONTHS ENDED DECEMBER 31,2004 Net sales $ 110,837 Cost of sales 87,474 ---------- Gross profit 23,363 ---------- Operating expenses Salaries - officers 24,040 Employee benefits 8,471 Professional fees 30,785 Rent 12,050 Other general and administrative 15,970 ---------- Total operating expenses 91,316 ---------- Loss from operations (67,953) Other income Interest income 3,355 ---------- Net loss (64,598) Other comprehensive loss - net of taxes: Unrealized holding loss arising during the period, net of income tax benefits of $119,820 (138,000) ---------- Total comprehensive loss $ (202,598) ========== Earning (loss) per share: Basic and diluted net loss per common share $ (0.02) ========== Basic and diluted weighted average common shares outstanding 3,494,650 ========== The accompanying notes are an integral part of these financial statements. 20 CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 2004
Common Stock Accumulated $.001 Par Value Additional Other Number Paid In Accumulated Comprehensive of Shares Amount Capital Deficit Income(Loss) Total ---------- ---------- ---------- ---------- ---------- ---------- Balance - April 1, 2004 3,494,650 $ 3,495 $ 501,646 $ (17,134) $ 180,180) $ 668,187 Unrealized loss on available for sale securities - net of $119,820 income tax benefits - - - - (318,180) (318,180) Net loss - - - (64,598) - (64,598) ---------- ---------- ---------- ---------- ---------- ---------- Balance - December 31, 2004 3,494,650 $ 3,495 $ 501,646 $ (81,732) $ (138,000) $ 285,409 ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 21 CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2004 Cash Flows from Operating Activities: Cash received from customers $ 110,968 Cash paid to suppliers and employees (158,986) Interest received 3,355 ---------- Net cash used by operating activities (44,663) ---------- Cash Flows from Investing Activities: Investment in marketable securities (5,000) ---------- NET DECREASE IN CASH AND CASH EQUIVALENTS (49,663) CASH AND CASH EQUIVALENTS - beginning of period 263,004 ---------- CASH AND CASH EQUIVALENTS - end of period $ 213,341 ========== RECONCILIATION OF NET LOSS TO NET CASH USED BY OPERATIONS: Net loss $ (64,598) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 974 Decrease in accounts receivable 131 Increase in inventory (11,371) Increase in prepaid expenses (89) Increase in accounts payable and accrued expenses 30,290 ---------- Net cash provided by operating activities $ (44,663) ========== The accompanying notes are an integral part of these financial statements. 22 CREATIVE BEAUTY SUPPLY OF NEW JERSEY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Creative Beauty Supply of New Jersey Corporation (the "Company") was incorporated in the State of New Jersey on October 1, 2003. It was formed pursuant to a resolution of the board of directors of Creative Beauty Supply, Inc., ("CBS") as a wholly-owned subsidiary of that company, a publicly traded New Jersey corporation. On January 1, 2004, the assets and liabilities of CBS were contributed at book value to the Company, and this subsidiary was then spun-off by CBS to its stockholders, subject to the Company's current registration statement on Form 10-SB being declared effective. This spin-off was consummated in contemplation of a merger between CBS and Global Digital Solutions, Inc. (Global), a Delaware corporation. The merger occurred on March 19, 2004 whereby the former shareholders of CBS became the owners of 100 percent of the common stock of the Company. In addition, on January 1, 2004, the Company commenced operations in the beauty supply industry at both the wholesale and retail levels. The Company is located in Totowa, New Jersey and sells cosmetic and beauty supplies to the general public and beauty salons in northern and central New Jersey. Financial Statement Presentation The Company has adopted a calendar reporting year ending on December 31. The Company and CBS previously reported on a fiscal year ending on March 31, therefore the 2004 calendar reporting period of the Company is nine months. The statement of operations includes the operations of the Company from April 1, 2004 through December 31, 2004. The operations of CBS from April 1, 2003 through December 31, 2003 are summarized below (see Note 11). Accounting Estimates The preparation of financial statements in conformity with accounting principals generally accepted in the Unites States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 could differ from those estimated. Revenue Recognition Wholesale sales are recognized at the time products are shipped to customers. Over the counter sales are recognized at point of sale. 23 Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be a cash equivalent. Cash equivalents consist of a money market account. Investment in Available-For-Sale Securities The Company considers its investments in equity securities as available-for-sale and has therefore reflected the investments at fair value in the accompanying financial statements. Realized gains and losses are recorded in income. Changes in unrealized gains or losses are excluded from income and reported as a component of other comprehensive loss in the stockholders' equity section of the balance sheet. Accounts Receivable Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within thirty days from the invoice date or as specified by the invoice and are stated at the amount billed to the customer. Customer account balances with invoices dated over ninety days or ninety days past the due date are considered delinquent. Payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice, or if unspecified, are applied to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amount that will not be collected. Management individually reviews all accounts receivable balances that are considered delinquent and based on an assessment of current credit worthiness, estimates the portion, if any, of the balance that will not be collected. In addition, management periodically evaluates the adequacy of the allowance based on the Company's past experience. Management considered accounts receivable at December 31, 2004 to be fully collectible; accordingly, no allowance for doubtful accounts was provided for at December 31, 2004. Inventory Inventory, consisting of finished goods, is valued at lower of cost or market with cost being determined on the first-in. first-out (FIFO) method. The Company also considers obsolescence, excessive levels, deterioration and other factors in evaluating net realizable value. Long-lived Assets The Company periodically evaluates the net realizable value of long- lived assets, including property and equipment, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. Impairment in the carrying value of an asset is recognized whenever undiscounted future 24 cash flows from an asset are estimated to be less than its carrying value. The amount of the impairment recognized is the difference between the carrying value of the asset and its fair value. Property and Equipment Property and equipment are recorded at cost. Depreciation of property and equipment is provided for over the estimated useful lives of the respective assets. Depreciation is recorded on the straight-line method. The major classes of assets and ranges of estimated useful lives are as follows: Years ----- Delivery equipment 5 Furniture and office equipment 7 Maintenance, repairs and minor renewals are charged to earnings when they are incurred. When assets are retired or otherwise disposed of, the assets and related allowance for depreciation is eliminated from the account and any resulting gain or loss is reflected in income. Income Taxes Deferred income taxes are provided on the liability method whereby deferred income tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred income tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment. Earnings (Loss) Per Share The Company computes earnings (loss) per share in accordance with Statement of Financial Standards No. 128 ("SFAS 128"), which requires the presentation on the face of the income statement "basic" earnings per share and "diluted" earnings per share. Basic earnings per share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of outstanding common shares. The calculation of dilutive earnings per share is similar to basic earnings per share except the denominator includes dilutive common stock equivalents such as stock options and convertible debentures. There were no dilutive common stock equivalents for all periods presented. 25 Comprehensive Loss The Company reports components of comprehensive income (loss) under the requirements of SFAS 130, "Reporting Comprehensive Income". SFAS 130 establishes rules for the reporting of comprehensive income or loss and its components which require that certain items be presented as separate components of stockholders' equity. For the period presented, the Company's other comprehensive loss consisted solely of unrealized losses from available-for-sale marketable securities. Recent Accounting Pronouncements In December 2003, the Financial Accounting Standards Board ("FASB") issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51," which provides guidance on the identification of and reporting for variable interest entities for consideration in determining whether a variable interest entity should be consolidated. Interpretation No. 46, as revised, is effective for the Company in the third quarter of fiscal 2004. The adoption of Interpretation No. 46 had no impact on the Company's results of operations for the nine months ended December 31, 2004, or its financial condition at that date, nor is it expected to have a significant impact in the future. In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which replaces SFAS 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), and supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). SFAS 123(R) requires companies to recognize in their income statement the grant-date fair value of stock options and other equity- based compensation issued to employees. This SFAS is effective for most public companies for interim and annual reporting periods beginning after June 15, 2005. Grant-date fair value will be determined using one of two acceptable valuation models. This Standard requires that compensation expense for most equity-based awards be recognized over the requisite service period, usually the vesting period; while compensation expense for liability-based awards (those usually settled in cash rather than stock) be re-measured to fair-value at each balance sheet date until the award is settled. The Standard also provides guidance as to the accounting treatment for income taxes related to such compensation costs, as well as transition issues related to adopting the new Standard. The adoption of SFAS No. 123(R) had no impact on the Company's results of operations for the nine months ended December 31, 2004, or its financial condition at that date, nor is it expected to have a significant impact in the future. In December 2004, the FASB issued SFAS No. 153, "Exchange of Non- monetary Assets an amendment of APB Opinion No. 29." This Statement precludes companies from using the "similar productive assets" criteria to account for non-monetary exchanges at book value with no gain or loss being recognized. Effective for fiscal periods beginning after June 15, 2005, all companies will be required to use fair value for most non-monetary exchanges, recognizing gain or loss, if the 26 transaction meets commercial, substance criteria. The Company does not expect this Standard to have a significant impact on its current financial statements. In November 2004, the FASB issued Statement No. 151, "Inventory Costs, an amendment of ARB 43, Chapter 4" ("SFAS 151"), to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage). ARB 43 allowed some of these "abnormal costs" to be carried as inventory, whereas the new Standard requires that these costs be expensed as incurred. This Statement is effective for fiscal years beginning after June 15, 2005. The Company does not expect this Standard to have a significant impact on its current financial statements. In December 2004, the FASB issued FSP FAS 109-1, "Application of FASB Statement No. 109, "Accounting for Income Taxes," to the "Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004" to provide accounting guidance on the appropriate treatment of tax benefits generated by the enactment of the Act. The FSP requires that the manufacturer's deduction be treated as a special deduction in accordance with SFAS 109 and not as a tax rate reduction. The Company is awaiting final tax regulations from the IRS before completing its assessment of the impact of adopting FSP FAS 109-1 on its current financial statements. 2. CONCENTRATION OF CREDIT RISK The Company maintains its cash balances with a major bank. The balances are insured by the Federal Deposit insurance Corporation up to $100,000 per depositor. At December 31, 2004, the Company's uninsured cash balances approximated $112,000. 3. SUPPLIER CONCENTRATION For the nine months ended December 31, 2004, the Company purchased approximately 45 percent of its products from one supplier. Management believes that other suppliers could provide similar products on comparable terms. A change in suppliers, however, could cause a delay in merchandise and possible loss of sales which could affect operating results. 4. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of the Company's financial instruments, including cash and cash equivalents, trade receivables, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short-term maturities. The investment in marketable equity securities is recorded at fair value based on quoted market prices. 27 5. MARKETABLE SECURITIES The cost and fair value of marketable equity securities that are available-for-sale are as follows at December 31, 2004: Cost $ 205,000 Gross unrealized loss (138,000) ---------- Fair value $ 67,000 ========== The marketable securities have been in a loss position for less than twelve months. Management believes the unrealized loss is of a temporary nature as the market value of the securities has been volatile over time. Management will periodically evaluate the value of such securities and record an impairment loss if the value does not recover. 6. PROPERTY AND EQUIPMENT The components of property and equipment are as follows at December 31, 2004: Delivery equipment $ 6,497 Less: Accumulated depreciation 1,299 ---------- Net book value $ 5,198 ========== Depreciation expense for the nine months ended December 31, 2004 was $974. 7. INCOME TAXES The deferred income tax assets and liabilities at December 31, 2004 relate to temporary differences between the financial statement carrying amounts and their tax basis. Assets and liabilities that give rise to significant portions of the net deferred tax assets and liabilities relate to the following at December 31, 2004: Net operating loss carry forwards $ 28,002 Unrealized holding losses 42,263 ---------- 70,265 Valuation allowance (70,265) ---------- Net deferred income tax assets $ - ========== A valuation allowance has been established equal to the full amount of the deferred tax assets as the Company is not assured at December 31, 2004 that it is more likely than not that these benefits will be realized. 28 The change in valuation allowance for the nine months ended December 31, 2004 was an increase of $62,494 due to increases in federal and state net operating loss carry forwards and unrealized holding losses. Federal net operating loss carry forwards of $81,732 will expire through the year 2024 and state net operating loss carry forwards of $80,732 will expire through the year 2012. However, state net operating loss carry forwards are restricted and limited in 2005. 8. SALES Wholesale sales consist of sales to beauty salons of merchandise for resale. Sales of merchandise to beauty salons for their own consumption and not for resale are considered retail sales. All sales to the general public are also considered retail sales. Net sales for the nine months ended December 31, 2004 are summarized as follows: Retail $ 62,169 Wholesale 48,668 ---------- $ 110,837 ========== 9. COMMITMENTS The Company was obligated as assignee under an operating lease agreement with an unrelated party for the space occupied by its executive offices, store and warehouse facilities in Totowa, New Jersey. The lease, which was the obligation of CBS, was assigned to the Company on January 1, 2004. Monthly rent under the lease was $1,300 expiring on April 30, 2004. The lease was renewed with an effective date of June 1, 2004 for a three-year term expiring on May 31, 2007. Monthly rent under the renewed lease is $1,350. Rent expense for the nine months ended December 31, 2004 was $12,050. The future lease payments at December 31, 2004 are as follows: Year ended December 31, ----------------------- 2005 $ 16,200 2006 16,200 2007 6,750 ---------- Total $ 39,150 ========== 29 10. OTHER MATTER On May 21, 2004, the Company filed a registration statement with the Securities and Exchange Commission ("SEC") on Form 10-SB12G, to spin off the Company to the shareholders of CBS and to register for sale 3,494,650 shares of $.001 par value common stock, which comprises all of the issued and outstanding common stock of the Company. The Company received a letter from the SEC that contained comments on the filing as well as requests for additional information. The Company filed an amended Form 10-SB12G/A on October 7, 2004 which included answers to those comments and all additional information requested in the SEC letter. The Company received a second comment letter from the SEC which the Company is currently responding to. As of the date of the financial statements, the registration statement has not been declared effective by the SEC. 11. PREDECESSOR UNAUDITED FINANCIAL INFORMATION The summarized statement of operations of CBS for the nine months ended December 31, 2003 is as follows: Net sales $ 132,162 Cost of goods sold 112,202 ---------- Gross profit 19,960 Operating expenses (114,996) Other income 5,107 ---------- Net loss $ (89,929) ========== Loss per common share - basic and diluted $ (0.03) ========== Weighted average number of common shares outstanding 3,494,650 ========== 30 (b) List of Exhibits The following exhibits are filed with this report: Exhibit 31 - 302 certification Exhibit 32 - 906 certification (B) REPORTS ON FORM 8-K None ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees. We incurred aggregate fees and expenses of $10,230 and $0 from Samuel Klein and Company and Rotenberg Meril Solomon Bertiger & Guttilla, P.C., respectfully for the 2004 fiscal year. Such fees included work completed for our annual audit and for the review of our financial statements included in our Forms 10SB and 10-QSB. Tax Fees. We did not incur any aggregate tax fees and expenses from Samuel Klein and Company or Rotenberg Meril Solomon Bertiger & Guttilla, P.C. for the 2004 fiscal year for professional services rendered for tax compliance, tax advice, and tax planning. All Other Fees. We incurred audit related fees of $6,375 from Samuel Klein and Company. This includes reviewing financial information, assistance with the SEC comment letter, etc. We did not incur any other fees from Rotenberg Meril Solomon Bertiger & Guttilla, P.C. during fiscal 2004. The Board of Directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence. All of the services described above for fiscal year 2004 were approved by the Board of Directors pursuant to its policies and procedures. We intend to continue using Rotenberg Meril Solomon Bertiger & Guttilla, P.C. solely for audit and audit- related services, tax consultation and tax compliance services, and, as needed, for due diligence in acquisitions. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Corporation has duly caused this Report to be signed on its behalf by the undersigned duly authorized person. Date: April 11, 2005 Creative Beauty Supply of New Jersey Corporation /s/ Carmine Catizone - ------------------------------ By: Carmine Catizone, President 31 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Corporation and in the capacities and on the dates indicated. Creative Beauty Supply of New Jersey Corporation Date: April 11, 2005 /s/ Carmine Catizone --------------------- By: Carmine Catizone President, Chief Executive Officer April 11, 2005 /s/Daniel Generelli ---------------------- By: Daniel Generelli Chief Financial Officer and Controller
EX-31 2 creativenj10k123104ex31.txt 302 CERTIFICATIONS 302 CERTIFICATION I, Carmine Catizone, certify that: 1. I have reviewed the amendment to the annual report on Form 10-KSB of Creative Beauty Supply of New Jersey Corporation; 2. Based on my knowledge, this annual 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 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 12a-14) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; 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 over financial reporting. Date: April 11, 2005 /s/Carmine Catizone ---------------------------- Carmine Catizone President & Chief Executive Officer 302 CERTIFICATION I, Daniel Generelli, certify that: 1. I have reviewed the amendment to the annual report on Form 10-KSB of Creative Beauty Supply of New Jersey Corporation; 2. Based on my knowledge, this annual 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 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 12a-14) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; 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 over financial reporting. Date: April 11, 2005 /s/Daniel Generelli ---------------------------- Daniel Generelli, CFO EX-32 3 creativenj10ksb123104ex32.txt 906 CERTIFICATIONS 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 Annual Report of Creative Supply of New Jersey Corporation (the "Company") on Form 10-KSB for the nine months ending December 31, 2004 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 April 11, 2005 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 Annual Report of Creative Supply of New Jersey Corporation (the "Company") on Form 10-QSB for the nine months ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel Generelli, 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 April 11, 2005 -----END PRIVACY-ENHANCED MESSAGE-----