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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED: SEPTEMBER 30, 2000
COMMISSION FILE NUMBER: 000-27087
LITEGLOW INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
UTAH 65-05164035
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2301 N.W. 33RD COURT, UNIT 112, POMPANO BEACH, FLORIDA 33069
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(Address, including zip code, of principal executive offices)
(954) 971-4569
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filings for the past 90 days. YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 30, 2000, the number of the Company's shares of par value $.001
common stock outstanding was 4,273,287.
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-Q
SEPTEMBER 30, 2000
INDEX
Part I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Balance Sheet.................................................................3
Statement of Operations.......................................................4
Statement of Cash Flows.......................................................5
Notes to Financial Statements.................................................6
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................7
PART II - OTHER INFORMATION...................................................9
SIGNATURES...................................................................10
2
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
BALANCE SHEET
SEPTEMBER 30, 2000
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,591
Accounts receivable 814,726
Inventory 752,888
Prepaid expenses 48,906
Deferred tax asset 79,000
-----------
Total current assets 1,697,111
Property and equipment less accumulated depreciation 218,347
Goodwill, net 189,580
Deposits 51,795
Advances to stockholders 16,787
-----------
$ 2,173,620
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 3,960
Current maturities of long-term debt 23,757
Current maturities of capital leases 10,777
Line of credit 400,000
Accrued loss on sale of subsidiary 17,606
Accounts payable and accrued expenses 742,384
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Total current liabilities 1,198,484
-----------
Long-term debt less current maturities 116,556
Long term capital lease obligations less current maturities 17,416
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133,972
-----------
Stockholders' equity:
Preferred stock par value $.001
issued and authorized 1,000,000 1,000
Common stock, $.001 par value; authorized
10,000,000 shares;4,273,287 shares issued and outstanding 4,273
Additional paid-in capital 3,413,871
Retained Deficit (2,577,980)
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Total stockholders' equity 841,164
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$ 2,173,620
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See accompanying notes
3
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 3,363,654 $ 3,547,435 $ 1,255,819 $ 1,212,667
Cost of Sales 1,525,111 1,566,219 520,119 509,371
----------- ----------- ----------- -----------
Gross profit 1,838,543 1,981,216 735,700 703,296
Selling, general and administrative expenses 1,828,148 1,524,873 716,233 594,695
----------- ----------- ----------- -----------
Income from operations 10,395 456,343 19,467 108,601
----------- ----------- ----------- -----------
Other income (expenses):
Interest expense (48,743) (39,964) (8,720) (18,162)
Gain on disposal of assets 6,748 -- (7,600) --
----------- ----------- ----------- -----------
Total other income (expenses) (41,995) (39,964) (16,320) (18,162)
----------- ----------- ----------- -----------
Income (loss) before income taxes (31,600) 416,379 3,147 90,439
Income tax expense (benefit) -- -- -- --
----------- ----------- ----------- -----------
Net income (loss) $ (31,600) $ 416,379 $ 3,147 $ 90,439
=========== =========== =========== ===========
Net income (loss) per common share:
Basic:
Net income (loss) per common share (.01) .10 .00 (.02)
Diluted:
Net income (loss) per common share (.01) .05 .00 (.02)
Weighted average shares outstanding basic 4,273,287 3,645,556 4,273,287 3,645,556
=========== =========== =========== ===========
Weighted average shares outstanding diluted 4,273,287 8,645,556 9,273,287 3,645,556
=========== =========== =========== ===========
</TABLE>
See accompanying notes
4
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (31,600) $ 416,379
Adjustments to reconcile net income to net:
Cash provided by (used for) operating activities
Depreciation and amortization 36,954 45,000
Deferred tax liability (60,897) --
Non cash compensation 37,333 --
Changes in assets and liabilities:
Accounts receivable (243,452) (314,359)
Inventory (92,860) (191,250)
Prepaid expenses 86,577 (70,767)
Deposits and other assets (13,290) (8,109)
Accounts payable and accrued expenses 296,925 (140,434)
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Net cash provided from (used for) operations 15,690 (263,540)
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Net cash used in investing activities:
Proceeds from sale of equipment 12,000 --
Purchase of equipment (34,050) (72,698)
--------- ---------
Net cash used for investing activities (22,050) (72,698)
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Cash flows from (used in) financing activities
Repayment from (loan to) stockholder, net (24,970) 42,492
Proceeds from line of credit -- 20,000
Proceeds from long term debt -- 22,248
Payments of long term debt and leases (83,044)
Proceeds from issuance of common stock -- 275,000
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Net cash provided by (used for) financing activities (108,014) 359,740
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Net increase (decrease) in cash
and cash equivalents (114,374) 23,502
Cash and cash equivalents, beginning of period 112,005 68,296
--------- ---------
Cash and cash equivalents, end of period $ (2,369) $ 91,798
========= =========
Supplemental disclosure:
Interest paid $ 48,743 $ 30,719
========= =========
</TABLE>
See accompanying notes
5
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1: FINANCIAL STATEMENTS
The balance sheet as of September 30, 2000, the statements of operation for the
nine months and three months ended September 30, 2000, and 1999 and the
statements of cash flows for the nine months and three months ended September
30, 2000, and 1999, have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at September 30, 2000, and for all periods presented,
have been made.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto as of
December 31, 1999.
NOTE 2: NET INCOME PER SHARE
Net income per share is computed by dividing net income by the average number of
common shares outstanding, increased by common stock equivalents determined
using the treasury stock method. The difference between basic and diluted
earnings per share is the result of 1,000,000 shares of preferred shares being
converted into 5,000,000 common shares when those shares would not be
antidilutive.
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-QSB
SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with the
Financial Statements appearing elsewhere in this Report. It includes an analysis
of the nine months and three months ended September 30, 2000, and 1999,
respectively.
FORWARD-LOOKING STATEMENTS
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward-looking statements" as
defined in the Securities Act of 1933 and the Securities Exchange Act of 1934,
as amended. These forward-looking statements rely on a number of assumptions
concerning future events, and are subject to a number of risks and uncertainties
and other factors, many of which are outside the control of the Company, that
could cause actual results to differ materially from such statements.
Readers are cautioned not to put undue reliance on such forward-looking
statements, each of which speaks only as of the date hereof. Factors and
uncertainties that could affect the outcome of such forward-looking statements
include, among others, market and industry conditions, increased competition,
changes in governmental regulations, general economic conditions, pricing
pressures, and the Company's ability to continue its growth and expand
successfully into new markets and services. The Company disclaims any intention
or obligation to update publicly or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Net sales for the nine months ended September 30, 2000, were $3,363,654 compared
to net sales of $3,547,435 for the comparable period. For these same periods,
costs of sales decreased from $1,525,111 from $1,566,219. Gross profit decreased
from $1,981,216 for the nine months ended September 30, 1999, to $1,838,543 for
the nine months ended September 30, 2000. The Company's selling, general and
administrative expenses increased from $1,524,873 for the nine months ended
September 30, 1999 to $1,828,148 for the nine months ended September 30, 2000.
The Company had net income of $416,379 during the nine months ended September
30, 1999, compared to a net loss of $31,600 during the nine months ended
September 30, 2000.
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-QSB
SEPTEMBER 30, 2000
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
During the quarter ended September 30, 2000, the Company's revenues increased to
$1,255,819 compared to $1,212,667 for the comparable 1999 period. Gross profit
also increased from $703,296 for the three months ended September 30, 1999, to
$735,700 for the three months ended September 30, 2000. The Company had income
from operations of $19,467 for the three months ended September 30, 2000,
compared to income from operations of $108,601 for the comparable 1999 period.
The Company had net income of $3,147 for the three months ended September 30,
2000, compared to net income of $90,439 for the comparable 1999 period.
During the quarter ended September 30, 2000, the Company moved into
substantially larger offices to accommodate an anticipated business expansion.
The cost of this move, together with increases in staff incident to the
Company's planned business expansion, materially increased its selling, general
and administrative expenses for the three- and nine-month periods ended
September 30, 2000, compared to the comparable 1999 periods.
LIQUIDITY AND CAPITAL RESOURCES
Total current assets increased from $1,436,383 at September 30, 1999 to
$1,697,111 at September 30, 2000, primarily as a result of substantial increases
in accounts receivable and inventory. The Company's total assets increased to
$2,173,620 at June 30, 2000 compared to total assets of $1,940,298 at September
30, 1999, primarily as a result of increased current assets.
The Company's accounts payable increased substantially from $169,345 at
September 30, 1999 to $649,723 at September 30, 2000, as the Company had
difficulty paying its accounts on a current basis, primarily as a result of
selling to chain stores with extended payment terms. The Company's total current
liabilities increased from $685,001 at September 30, 1999 to $1,198,483 at
September 30, 2000, primarily due to the increase in accounts payable. The
Company had net cash used for operations of $263,540 for the nine months ended
September 30, 1999 compared to net cash provided from operations of $15,690 for
the nine months ended September 30, 2000. The Company's cash and cash
equivalents decreased to an overdraft of $2,369 from a balance of cash and cash
equivalents of $91,798 at September 30, 1999. While the Company increased its
net cash provided from operations during the nine months ended September 30,
2000 compared to that if the comparable 1999 period, the Company's substantial
increase in inventory and accounts receivable in 2000 compared to 1999 created a
material cash shortage. The Company has borrowed the maximum amount permitted by
its line of credit facility and has had to turn to a principal shareholder for
loans to meet its continuing obligations. The company is exploring additional
and increased line of credit facilities and also other financing alternatives to
meet its ongoing cash requirements.
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-QSB
SEPTEMBER 30, 2000
PART II - OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS
None
Item 2 - CHANGES IN SECURITIES
None
Item 3 - DEFAULTS UPON SENIOR SECURITIES
None
Item 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
Item 5 - OTHER INFORMATION
None
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
27 (For SEC use only)
(b) There were no reports filed on Form 8-K during the quarter
ended September 30, 2000.
9
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
FORM 10-QSB
SEPTEMBER 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LITEGLOW INDUSTRIES, INC.
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Registrant
Date: November 20, 2000 /s/ Spencer Krumholtz
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Spencer Krumholz, President
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