<PAGE>2
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] 15,ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: 3/31/00
OR
[ ]15,TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number -
Creative Beauty Supply, Inc.
Exact name of Registrant as specified in its charter)
NEW JERSEY 22-3392051
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Identification number)
of incorporation
or organization
380 Totowa Road, Totawa, NJ 07512
(Address of principal executive offices) (Zip Code)
Telephone: 973-904-0004
(Registrant's telephone number, including area code)
Securities registered pursuant to
Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act: Common Stock, $.001 par value
Check whether the Company (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 Company 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 Company'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]
The Company's revenues for its most recent fiscal year were $245,309. As
of March 31, 2000, the market value of the Company's voting $.00l par
value common stock held by non-affiliates of the Company was $ .
The number of shares outstanding of Company's class of common
stock, as of March 31, 2000 was 1,864,650 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
-------- --------
<PAGE>3
PART I
ITEM 1. BUSINESS - General
A. The Company was incorporated in New Jersey on August 28, 1995.
On March 15, 1996, the Company effectuated a 45,392 for 1 stock split.
There have been no other material events in the development of the
Company (including any material mergers or acquisitions) since
inception. There are no pending or anticipated mergers, acquisitions,
spin-offs or recapitalizations. On February 26, 1997, the Company's
officers surrendered 7,543,000 Common Shares. The issued and
outstanding shares were reduced from 11,348,000 to 3,805,000. On July
1, 1997, the Company effectuated a 1 for 2.5 reverse stock split
reducing the issued and outstanding shares from 4,600,000 to 1,840,000.
Corporate Operations. The Company operates as a cosmetic and beauty
supply distributor at both the retail and wholesale levels. The
Company'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. The Company'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 the Company to be of assistance to it with
respect to sale of such products since consumer recognition is advanced
by national brand media advertising (at no cost to the Company but to
the Company'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 the Company
from a number of unaffiliated suppliers and management of the Company
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. The Company does not have any written agreements with any
of its suppliers nor does any one supplier or small group of suppliers
(i.e. three suppliers) account for any significant portion of the
Company's purchases. Currently, the Company utilizes approximately 50
unaffiliated suppliers, none of whom account for 5% or more of the
Company's purchases (and no group of three of who account for an
aggregate of 10% or more of such purchases). Additionally, the
Company intends to acquire new product lines. Accordingly, the Company
is not dependent, whatsoever, upon any individual supplier or small
group of suppliers.
Distribution. The Company is currently distributing its products to
approximately 200 nail and beauty salons. Its territory is
principally and almost exclusively located within the northern portion
of the State of New Jersey, in the counties of Essex, Hudson, Bergen,
Passaic, Morris and Union.
The Company sells cosmetic and beauty supplies, both on the retail and
wholesale levels to beauty salons and to the general public.
Wholesale sales consist of sales to beauty salons of merchandise for
resale. Sales of merchandise to beauty salons for their own
consumption, not for resale, are considered retail sales. All sales
to the general public are also considered retail sales.
Sales are summarized as follows:
2000 1999
--------- --------
Wholesale $103,470 $118,935
Retail 141,839 143,205
-------- --------
$245,309 $262,140
======== ========
<PAGE>4
Competition. Competition is based on price. The Company's price
ranges of its various products are within the manufacturer-suggested
prices, services and product lines. The Company is competing with
established companies and other entities (many of which may possess
substantially greater resources than the Company). Almost all of the
companies with which the Company 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 the
Company now has, or will have in the foreseeable future. It is also
likely that other competitors will emerge in the near future. There is
no assurance that the Company'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. The Company intends to purchase its products in larger
quantities, resulting in larger discounts on purchases, resulting in
more profit and better competition. The Company's products will be
marketed through a combination of personal contact by sales
representatives, catalog advertising to the salon industry and special
promotion. The salons order and receive their products weekly.
No customer accounts for more than 20% of sales and there are no
existing sales contracts.
Backlog. The Company services its accounts on two days notice. There
is no backlog. If the Company does not have a specific item, it is
back ordered until the next delivery.
Employees. The Company currently has four full-time employees and one
part-time employees.
The Company'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 the Company for
research and development of any products nor does the Company expect to
expend any amounts this year.
The Company'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. The Company's business
activities are not seasonal.
ITEM 2. PROPERTIES.
The Company'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. The Company has
a lease for a term of three (3) years commencing May 1, 1999 at a monthly
rental of $1,200 per month for the first twelve (12) months and $1,300
a month for each of the remaining twenty four (24) months. The
Company needs additional warehouse space and will attempt to locate
adequate warehouse space on a lease basis in the near future. The
Company owns its delivery vehicle and the computers used in the
operation of the business.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not involved in any legal proceedings at this date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year ended March 31, 2000, no
matters were submitted to a vote of the Company's security holders,
through the solicitation of proxies.
<PAGE>5
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company intends to apply to have its common stock traded in the
over-the-counter market and listed on the NASDAQ Bulletin Board
The Company has never paid any cash dividends nor does it intend, at
this time, to make any cash distributions to its shareholders as
dividends in the near future.
As of March 31, 2000, the number of holders of Company's common
stock is 61.
ITEM 6. 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.
Hair styles 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.
Capital and Source of Liquidity. In April, 1999, the Company renewed
its lease for a term of three (3) years commencing May 1, 1999 at a
monthly rental of $1,200 per month for the first twelve (12) months and
$1,300 a month for each of the remaining twenty four (24) months.
Additionally, management intends to lease additional warehouse space.
The increased lease amounts will have a negative effect on the cash
flow of the Company.
For the year ended March 31, 2000, the Company pursued no financing
activities.
For the year ended March 31, 1999, the Company issued common stock
valued at $47,750. As a result, the Company had net cash flow
provided by financing activities of $47,750.
For the year ended March 31, 2000 and 1999, the Company pursued no
investing activities.
Results of Operations.
The Company sells approximately over 1,000 different products at
varying mark ups ranging from 20 to 35 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 20 to 35 percent depending on the product sold. The gross margin
on sales of merchandise to beauty salons is somewhat less ranging from
15 to 25 percent depending on the product sold and the discount given.
Our profit margins were increased due to the across the board price
increase for our products.
March 31, 2000 compared to March 31, 1999
For the year ended March 31, 2000, the Company had a net loss of
$(47,283). The Company had net sales of $245,309 with a cost of goods
sold of $174,722 resulting in gross profit of $70,587 for the year
ended March 31, 2000
The Company had operating expenses of $134,792 for the year ended March
31, 2000. These expenses primarily consisted of officer's salaries of
$61,189, auto and delivery of $12,339, professional fees of $25,530,
rent of $15,137, telephone of $2,012, utilities of $1,825, store
supplies of $1,716, insurance of $3,248, payroll and other taxes of
$2,561 and other miscellaneous expenses of $9,235.
For the year ended March 31, 1999, the Company had a net loss of
$52,453. The Company had net sales of $262,140 with a cost of goods
sold of $212,266 resulting in gross profit of $49,874 for the year
ended March 31, 1999.
<PAGE>6
The Company had operating expenses of $119,520 for the year ended March
31, 1999. These expenses primarily consisted of officer's salaries of
$60,796, auto and delivery of $9,049, professional fees of $12,642,
rent of $14,400, telephone of $1,842, utilities of $2,047, store
supplies of $1,696, insurance of $3,097, payroll and other taxes of
2,893 and other miscellaneous expenses of $11,058.
Gross Profit Increase From 19.3% (1999) to 28.77% (2000)
The Company increased prices to both retail and wholesale customers
during the year. The price increases ranged from 12 to 15 percent.
Sales volume decreased as a direct result. In 1999, the Company
issued 1999 invoices and in 2000 the Company only issued 1935
invoices, a 3% decrease.
The Company changed its purchasing policy and was able to purchase for
less. The Company purchased larger volumes to achieve better
pricing. Merchandise purchased during 1999 was approximately
$208,000 as compared to only approximately $175,000 for year 2000, a
15% decrease. Inventory levels basically remained the same.
Auto and delivery expenses increased approximately $3,300 as a direct
result of the Company's delivery van (a 1996 vehicle) repairs. The
van required a new transmission and motor repairs during the year
totaling approximately $3,400.
Professional fees are up approximately $13,000 due to additional
accounting fees paid for interim quarterly accounting services
($8,000) and additional legal fees paid to the Company's attorney for
annual and quarterly SEC filings.
Miscellaneous expenses decreased by approximately $2,600 due to the
Company's attendance at a trade show in 1999 while in 2000, there were
no trade show expenses. The trade show costs in 1999 were
approximately $2,900.
The major cause of the Company's losses from operations have been the
low sales volume. Management is looking for new suppliers at more
favorable prices and to increase their customer base and sales volume.
Additionally, management has implemented inventory controls which has
resulted in additional profits by eliminating unproductive lines of
products.
Management believes that the implementation of its inventory controls
and obtaining supplies from new sources will have a favorable impact on
the Company's results of operations within the next 12 months.
Plan of Operation. During the next twelve months, the Company may
to obtain new product lines by negotiating with various manufacturers,
hire new sales representatives and hire a technician to conduct product
knowledge classes based on then current market conditions.
If the Company does not achieve the milestones within the above time
schedule, their operating costs will be higher and the Company will
lose even more money.
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.
<PAGE>7
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 10.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have not been any changes in or disagreements with accountants on
accounting and financial disclosure.
<PAGE>8
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Board of Directors. The following persons listed below have been
retained to provide services as directors and executive officers until
the qualification and election of his successor. All holders of Common
Stock will have the right to vote for Directors of the Company. The
Board of Directors has primary responsibility for adopting and
reviewing implementation of the business plan of the Company,
supervising the development business plan, review of the officers'
performance of specific business functions. The Board is responsible
for monitoring management, and from time to time, to revise the
strategic and operational plans of the Company. Directors receive no
cash compensation or fees for their services rendered in such capacity.
Name Position Held Term of Office
Carmine Catizone, age 54 President, Director Inception
to present
Daniel Generelli, age 36 Secretary/Treasurer Inception
Vice-President/Director to present
Resumes:
Carmine Catizone. Mr. Catizone has been President and a director of
the Company since its inception in August 1995. 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. 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 the Company since inception in August 1995. From December
1989 to July 1996, 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.
Remuneration. To date, the Company has not entered into employment
agreements nor are any contemplated. Mr. Generelli is paid
approximately $30,000 per year, however, all of Mr. Catizone's $30,000
salary has been accrued.
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, the Company has paid $0.00 in directors'
expenses.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following tabulates holdings of shares of the Company by each
person who, subject to the above, at the date of this registration
statement, 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 the Company 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.
<PAGE>9
Shareholdings at Date of
This Prospectus
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Shares
Carmine Catizone Common 808,000 43.33%
10 1/2 Walker Avenue
Morristown, NJ 07960
Daniel T. Generelli Common 80,000 4.29%
24 Kansas Street
Hackensack, NJ 07601
Pat Catizone Common 160,000 8.58%
Common 160,000(2) 8.58%
266 Cedar Street
Cedar Grove, NJ 07009
Barbara Catizone Common 160,000 8.58%
Common 160,000(2) 8.58%
266 Cedar Street
Cedar Grove, NJ 0709
Robyn Conforth Common 140,000 7.51%
266 Cedar Street
Cedar Grove, NJ 07009
David Wong Common 108,050 5.79%
300 Rector Place #41
New York, NY 10280
All Directors & Officers 888,000 47.62%
as a group (2 persons)
(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)Pat Catizone and Barbara Catizone are husband and wife and are
deemed to be the beneficial owners of each other's shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
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 Public Auditors................F-1
Balance Sheet........................................F-2
Statement of Operations..............................F-3
Statement of Stockholder's Equity....................F-4
Statement of Cash Flows..............................F-5
Notes to Financial Statements.....................F-6 - F-9
Schedules Omitted: All schedules other than those shown have been
omitted because they are not applicable, not required, or the required
information is shown in the financial statements or notes thereto.
<PAGE>10
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Creative Beauty Supply, Inc.
Totowa, New Jersey
We have audited the accompanying balance sheets of Creative Beauty
Supply, Inc. As of March 31, 2000 and 1999, and the related
statements of operations, stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audits 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 audits provide 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 Creative
Beauty Supply, Inc. at March 31, 2000 and 1999 and the results of its
operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
BEDERSON & COMPANY LLP
West Orange, New Jersey
May 18, 2000
F-1
<PAGE>11
CREATIVE BEAUTY SUPPLY, INC.
BALANCE SHEETS
MARCH 31, 2000 AND 1999
ASSETS
2000 1999
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents $321,509 $324,683
Accounts receivable 3,634 3,263
Inventory 67,707 72,904
Prepaid expenses 2,248 2,431
-------- ---------
TOTAL CURRENT ASSETS 395,098 403,281
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 2,052 4,216
OTHER ASSETS:
Organization cost, net of accumulated
amortization - 197
--------- ----------
TOTAL ASSETS $397,150 $407,694
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 16,217 $ 9,863
Payroll taxes withheld and accrued 55 698
Accrued expenses - officers salaries 128,654 98,365
Accrued expenses 20,509 19,770
--------- ----------
TOTAL CURRENT LIABILITIES 165,435 128,696
--------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001,
authorized 10,000,000 shares
issued and outstanding -0- - -
Common stock, par value $.001,
authorized 100,000,000 shares;
issued and outstanding
1,864,650 shares 1,865 1,865
Additional paid-in capital 472,541 472,541
Accumulated deficit (242,691) (195,408)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 231,715 278,998
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $397,150 $407,694
========= =========
The accompanying notes are an integral part
of these financial statements.
F-2
<PAGE>12
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2000 AND 1999
2000 1999
------ -------
NET SALES $ 245,309 $ 262,140
COST OF GOODS SOLD 174,722 212,266
---------- ----------
GROSS PROFIT 70,587 49,874
---------- ----------
OPERATING EXPENSES:
Salaries - officers 61,189 60,796
Payroll taxes 2,561 2,600
Auto and delivery 12,339 9,049
Employee welfare 3,433 3,143
Insurance 3,248 3,097
Office 2,551 2,293
Professional fees 25,530 12,642
Rent 15,137 14,400
Store supplies 1,716 1,696
Taxes 200 293
Telephone 2,012 1,842
Utilities 1,825 2,047
Miscellaneous 690 3,345
Depreciation and amortization 2,361 2,277
------- -------
TOTAL OPERATING EXPENSES 134,792 119,520
------- -------
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (64,205) (69,646)
OTHER INCOME
Interest Income 16,922 17,193
------- --------
NET LOSS $ (47,283) $ (52,453)
========== ==========
NET LOSS PER COMMON SHARE,
BASIC $ (.03) $ (.03)
========= ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,864,650 1,863,371
========= ==========
The accompanying notes are an integral part
of these financial statements.
F-3
<PAGE>13
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
Common Stock
--------------------- Additional
Number of Paid-in Accumulated
Shares Amount Capital Deficit Total
---------- ------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
BALANCE, April 1, 1998 1,855,100 $ 1,855 $424,801 $(142,955) $283,701
April 17, 1998, issuance of
common stock for cash 6,200 6 30,994 - 31,000
May 12, 1998, issuance of
common stock for cash 300 1 1,499 - 1,500
June 27, 1998, issuance of
common stock for cash 50 - 250 - 250
July 27, 1998, issuance of
common stock for cash 3,000 3 14,997 - 15,000
Net loss for the year - - - (52,453) (52,453)
--------- ------ -------- --------- --------
BALANCE, March 31, 1999 1,864,650 1,865 472,541 (195,408) 278,998
Net loss for the year - - - (47,283) (47,283)
--------- -------- -------- --------- --------
BALANCE, March 31, 2000 1,864,650 $ 1,865 $472,541 $(242,691) $231,715
========= ======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-4
<PAGE>14
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (47,283) $ (52,453)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization 2,361 2,277
(Increase) decrease in operating assets:
Accounts receivable (371) (722)
Inventory 5,197 3,628
Prepaid expenses 183 (180)
Increase (decrease) in operating
liabilities:
Accounts payable 6,354 2,455
Payroll taxes withheld and accrued (643) (22)
Accrued expenses - officers salaries 30,289 30,096
Accrued expenses 739 180
-------- --------
NET CASH USED BY OPERATING ACTIVITIES (3,174) (14,741)
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Issuance of common stock - 47,750
-------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (3,174) 33,009
CASH AND CASH EQUIVALENTS -
beginning of year 324,683 291,674
-------- --------
CASH AND CASH EQUIVALENTS - end of year $321,509 $324,683
======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-5
<PAGE>15
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Creative Beauty Supply, Inc. was incorporated in the State of New
Jersey on August 28, 1995, and commenced operations on January 2,
1996. The Company sells cosmetic and beauty supplies both on the
retail and wholesale levels to the general public and beauty salons in
Northern and Central New Jersey.
The Company is located in Totowa, New Jersey and has two employees
As of March 31, 2000.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the period. Actual results could differ from
those estimates.
Basis of Accounting
The Company maintains its records on the accrual basis of accounting.
Income is recognized when customers take title to the goods and
expenses are recorded when incurred.
Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Provision for Doubtful Accounts
Bad debts are provided on the allowance method based on historical
experience and management's evaluation of outstanding accounts
receivable. Management considered accounts receivable at March 31,
2000 and 1999 to be fully collectible; accordingly, no allowance for
doubtful accounts was provided for at March 31, 2000 and 1999.
Inventory
Inventory, consisting of finished goods, is valued at the lower of
cost or market, with cost being determined on the first-in, first-out
(FIFO) method.
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 based 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 and amortization are
eliminated from the accounts and any resulting gain or loss is
reflected in income.
F-6
<PAGE>16
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Deferred tax assets and liabilities are determined on the differences
between financial statement and tax bases of assets and liabilities,
using enacted tax rates in effect for the year in which the
differences are expected to reverse. Current income taxes are based
on the year's income taxable for federal and state tax reporting
purposes.
Impairment of Long-Lived Assets
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of. In Accordance with SFAS No.
121, the Company reviews long-lived assets for impairments whenever
events or changes in business circumstances occur that indicate that
the carrying amount of the assets may not be recoverable. The Company
assesses the recoverability of long-lived assets held and to be used
based on undiscounted cash flows, and measures the impairment, if any,
using discounted cash flows. Adopting SFAS No. 121 did not have a
material impact on the Company's financial position, operating results
or cash flows.
Expenses Related to Sale and Issuance of Securities
All costs incurred in connection with the sale and issuance of the
Company's common stock have been charged to additional paid-in
capital.
Net Loss per Common Share
The Financial Accounting Standards Board issued "SFAS" No. 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 diluted 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.
NOTE 2 - RISK ARISING FROM CASH DEPOSITS IN EXCESS OF INSURED LIMITS
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 March 31, 2000, the Company's uninsured
cash balances approximated $218,900.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures its financial assets and liabilities in
accordance with general 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.
F-7
<PAGE>17
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 4 - PROPERTY AND EQUIPMENT
The components of property and equipment are as follows:
2000 1999
------- -------
Delivery equipment $ 9,750 $ 9,750
Furniture and office equipment 1,500 1,500
------- -------
11,250 11,250
Less: Accumulated depreciation 9,198 7,034
------- -------
TOTAL $ 2,052 $ 4,216
======= =======
Depreciation expense for the years ended March 31, 2000 and 1999 was
$2,164 each year.
NOTE 5 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standard 109
("SFAS"). SFAS 109 provides for an asset and liability approach to
accounting for income taxes that requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of
events that will be recognized in the Company's financial statements
or tax returns.
In estimating future consequences, SFAS 109 generally considers all
expected future events other than proposed changes in the tax law or
rates prior to enactment.
Deferred income taxes at March 31, 2000 relates to federal and state
net operating losses of approximately $95,000 each, and an accrued
liability of approximately $146,000 which is currently not deductible
for income tax purposes. The resulting deferred income tax asset has
been fully offset by a valuation allowance. The valuation allowance
has been established equal to the full amount of the deferred tax
assets, as the Company is not assured at March 31, 2000 that it is
more likely than not that these benefits will be realized.
Net operating loss carryforwards and temporary differences between the
financial statement carrying amounts and tax bases of assets that give
rise to the net deferred assets relate to the following:
2000 1999
----- -----
Net operating loss $ 7,413 $ 9,637
Accrued liabilities, principally
due to expenses not
currently deductible for
income tax purposes 12,900 12,900
Less Allowance ($20,313) ($20,313)
------- -------
Net deferred income tax asset 0 0
======= =======
A reconciliation between the statutory federal income tax rate (34%) and
the effective income tax rates based on continuing operations is as
follows:
2000 1999
------ ------
Statutory federal income tax benefit $(16,076) $(17,834)
State income tax benefit (4,237) (4,703)
Valuation allowance 20,313 22,537
-------- --------
Total federal provision for income tax $ - $ -
======== ========
Federal net operating loss carryforward of $96,255 will expire in the
year 2015 and the state net operating loss of $95,405 will expire in
the year 2005.
F-8
<PAGE>18
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 6 - SALES
Wholesale sales consist of sales to beauty salons of merchandise for
resale. Sales of merchandise to beauty salons for their own consumption,
not for resale, are considered retail sales. All sales to the general
public are also considered retail sales.
Sales are summarized as follows:
2000 1999
Wholesale $103,470 $118,935
Retail 141,839 143,205
-------- --------
$245,309 $262,140
======== ========
NOTE 7 - COMMITMENTS
In April of 1996, the Company entered into a lease agreement with a
non-related party for a term of three (3) years commencing May 1, 1996
for the rental of its executive offices, retail, wholesale and
warehouse facilities in Totowa, New Jersey at a monthly rental of
$1,200 per month. The total rent charged to operations for the year
ended March 31, 1999 was $14,400.
In April of 1999, the Company renewed its lease for a term of three
(3) years commencing May 1, 1999 at a monthly rental of $1,200 per
month for the first twelve (12) months and $1,300 a month for each of
the remaining twenty four (24) months. The total rent charged to
operations for the year ended March 31, 2000 was $15,137.
The minimum annual future payments are as follows:
Years Ended
March 31,
------------
2001 $15,500
2002 15,600
2003 1,300
F-9
<PAGE>19
(b) List of Exhibits
The following exhibits are filed with this report:
(2.1) Articles of Incorporation incorporated by reference to Form 10SB
filed June 14, 1999, file #0-26361
(2.2) Bylaws incorporated by reference to Form 10SB filed June 14,
1999, file #0-26361
(3.1) Common Stock Certificate incorporated by reference to Form 10SB
filed June 14, 1999, file #0-26361
(B) REPORTS ON FORM 8-K
None
<PAGE>20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this
Report to be signed on its behalf by the undersigned duly authorized
person.
Date: June 14, 2000 Creative Beauty Supply, Inc.
/s/ Carmine Catizone
------------------------------------
By: Carmine Catizone, President
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 Company and in the capacities and on the dates indicated.
/s/Carmine Catizone 6/14/2000
------------------------
Carmine Catizone
President and Director
(Principal Executive Officer)
/s/Daniel Generelli 6/14 /2000
------------------------
Daniel Generelli
Principal Financial Officer/Controller/Director
