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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
QUARTERLY REPORT ISSUED UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the six month period ending June 30, 2000
LITEGLOW INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 65-05164035 0-27087
---------------------------- ------------- ---------------
(State or other jurisdiction (IRS Employer Commission File
of Incorporation) Identification Number) Number
2301 N.W. 33rd Court, Unit 112, Pompano Beach, Florida 33069
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(Address of principal executive offices)
Registrant's telephone number, including area code: (954) 971-4569
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 during the preceding 12 months (or such shorter period that
the Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE TO CORPORATE ISSUERS
On August 18, 2000, the Registrant had outstanding 4,273,287 shares of common
stock.
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LITEGLOW INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holdings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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LITEFLOW INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 2000 JUNE 30, 1999
------------- --------------
<S> <C> <C>
Current assets
Cash 16,937 111,142
Accounts receivable, net 632,765 587,111
Inventory 802,378 543,615
Prepaid expenses 78,979 208,111
---------- ----------
Total current assets 1,531,059 1,449,979
---------- ----------
Property and equipment
Property and equipment, at cost 325,692 345,008
Less accumulated depreciation (98,579) (73,754)
---------- ----------
Property and equipment, net 227,113 271,254
---------- ----------
Other Assets:
Goodwill, net 197,944 203,697
Deposits 55,570 15,237
Advances to stockholder 0 12,632
Deferred consulting fees 37,333 0
Deferred income taxes 79,000 0
---------- ----------
Total other assets 369,847 231,566
---------- ----------
Total assets 2,128,019 1,952,799
========== ==========
Current Liabilites
Line-of-Credit 400,000 400,000
Accounts payable 553,633 249,663
Accrued liabilities 43,746 61,601
Accrued loss on disposal of subsidiary 17,606 28,071
Due to stockholder 47,427 0
Current maturities of note payable 109,000 24,000
Current maturities of capital leases 13,994 21,000
---------- ----------
Total current liabilities 1,185,406 784,335
---------- ----------
Long-term liabilities (exclusive of current maturities):
Note payable 99,044 144,722
Capital leases payable 23,654 37,251
---------- ----------
Total long-term liabilities 122,698 181,973
---------- ----------
Total liabilites 1,308,104 966,308
---------- ----------
Stockholders' equity:
Preferred stock, $.001 par value, authorized
1,000,000 shares;
issued and outstanding - 1,000,000 1,000 1,000
Common stock, $.001 par value, authorized,
10,000,000 shares: issued and outstanding-
June 30, 2000, - 4,273,287 and
June 30, 1999, - 3,931,000 shares 4,273 3,931
Additional paid-in captial 3,413,871 3,420,214
Accumulated deficit (2,599,229) (2,438,654)
---------- ----------
Total stockholders' equity 819,915 986,491
---------- ----------
Total liabilities and stockholders' equity 2,128,019 1,952,799
========== ==========
</TABLE>
See notes to Consolidated Financial Statements
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
2000 1999
--------- ---------
Revenues 2,107,835 2,334,768
Cost of sales 1,004,992 1,056,848
--------- ---------
Gross profit 1,102,843 1,277,920
Selling, general and administrative
expense 1,111,916 930,178
--------- ---------
Income (loss) from operations (9,073) 347,742
Other income (expenses):
Interest expense (40,023) (21,802)
Sale of truck 14,349 0
--------- ---------
Total other (expense) (25,674) (21,802)
--------- ---------
Income (loss) from operations
before income taxes (34,747) 325,940
--------- ---------
Provision for income taxes 0 0
--------- ---------
Net income (loss) (34,747) 325,940
--------- ---------
Net income per share-basic (0.01) 0.10
--------- ---------
Weighted average common shares outstanding 4,273,287 3,156,087
========= =========
See notes to Consolidated Financial Statements
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
2000 1999
--------- ---------
Revenues 1,185,640 1,280,406
Cost of sales 550,809 566,404
--------- ---------
Gross profit 634,831 714,002
Selling, general and administrative
expense 518,010 521,250
--------- ---------
Income (loss) from operations 116,821 192,752
Other income (expenses):
Interest expense (22,810) (14,151)
Sale of truck 0 0
--------- ---------
Total other (expense) (22,810) (14,151)
--------- ---------
Income (loss) from operations
before income taxes 94,011 178,601
--------- ---------
Provision for income taxes 0 0
--------- ---------
Net income (loss) 94,011 178,601
--------- ---------
Net income per share-basic 0.02 0.06
--------- ---------
Weighted average common shares outstanding 4,273,287 3,156,087
========= =========
See notes to Consolidated Financial Statements
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LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 30, 2000 JUNE 30, 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income (34,747) 325,940
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation and amortization 11,823 30,000
Changes in operating assets and liabilities
(increase) decrease in:
Accounts receivable (61,491) (341,147)
Inventory (142,350) (85,981)
Prepaid expenses 94,837 (143,500)
Deposits (17,065) (330)
Deferred expenses (116,333)
(Decrease) increase in:
Accounts payable 121,687 123,345
Accrued liabilities 30,235 (158,100)
-------- --------
Net cash used by operating activities: (113,404) (249,773)
Cash flows from investing activities:
Purchases of property and equipment (26,051) (67,610)
Proceeds from sale of equipment 12,000 0
-------- --------
Net cash provided by (used in) investing activities (14,051) (67,610)
-------- --------
Cash flows from financing activities:
Loans from shareholders - net 11,061 47,723
Borrowings on line-of-credit 11,580 20,000
Net decrease in notes payable (10,132) 0
Net increase (repayment) of capital leases 19,327 0
Issuance of common stock 3,067 19,061
Increase in additional paid in capital (1,516) 273,446
-------- --------
Net cash from financing activities 33,387 360,230
-------- --------
Net increase in cash (94,068) 42,847
Cash balance at beginning of period 112,005 68,295
-------- --------
Cash balance at end of period 17,937 111,142
======== ========
Supplementary Disclosure of Cash Flow Information:
Interest paid 17,213 21,082
======== ========
Income taxes paid 0 0
======== ========
</TABLE>
See notes to Consolidated Financial Statements
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The following discussion and analysis should be read in conjunction with the
Financial Statements appearing elsewhere in this Report on Form 10-QSB.
RESULTS OF OPERATIONS
Net sales for the six months ended June 30, 2000, were $2,107,835
compared to net sales of $2,334,768 for the comparable 1999 period. For these
same periods costs of sales decreased to $1,004,992 from $1,056,848. Gross
profit decreased from $1,277,920 for the six months ended June 30, 1999, to
$1,102,843 for the six months ended June 30, 2000. The Company's selling,
general and administrative expenses increased from $930,178 for the six months
ended June 30, 1999, to $1,111,916 for the six months ended June 30, 2000. The
Company had net income of $325,940 during the six months ended June 30, 1999,
compared to a net loss of $34,747 during the six months ended June 30, 2000.
During the quarter ended June 30, 2000, the Company's revenues
decreased to $1,185,640 compared to revenues of $1,280,406 for the comparable
1999 period. Gross profit also decreased from $714,002 for the three months
ended June 30, 1999, to $634,831 for the three months ended June 30, 2000. The
Company had income from operations of $116,821 for the three months ended June
30, 2000, compared to income from operations of $192,752 for the comparable 1999
period. The Company had net income of $94,011 for the three months ended June
30, 2000, compared to operating net of $178,601 for the comparable 1999 period.
The Company substantially increased its inventory during the first six
months of 2000 compared to the comparable 1999 period in anticipation of new
customers and new business from those customers and its existing customers.
However, the Company believes that its sales were adversely affected by the
general softness in the United States retail market and, in the first quarter,
by unfavorable weather in major markets. As a consequence of these matters,
while the Company substantially increased its inventory it was unable to sell a
substantial portion of its additional inventory because of lack of demand from
its retail accounts. Also during the threeand six-month periods ended June 30,
2000, the Company experienced increases in accounts receivable as its customers
paid more slowly than in the comparable 1999 periods.
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LIQUIDITY AND CAPITAL RESOURCES
Total current assets increased from $1,952,799 for the six months ended
June 30, 1999, to $2,128,019 for the six months ended June 30, 2000, primarily
as a result of substantial increases in accounts receivable and inventory. The
Company's total assets increased from $1,952,799 at June 30, 1999, to $2,128,019
at June 30, 2000, primarily as a result of increased current assets.
The Company's accounts payable increased substantially from $249,663 at
June 30, 1999, to $553,633 at June 30, 2000, as the Company had difficulty
paying its accounts on a current basis. The Company's total current liabilities
increased from $784,335 at June 30, 1999, to $2,128,019 at June 30, 2000,
primarily as a result of the increase of its short-term borrowings and accounts
payable. The Company had net cash used by operating activities of $249,773 for
the six months ended June 30, 1999, compared to $113,404 for the six months
ended June 31, 2000, and its cash balance decreased from $111,142 at June 30,
1999, to $17,937 at June 30, 2000. While the Company decreased its negative cash
flow from operations in the first six months of 2000 compared to 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
arrangement 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 arrangements and other financing operations to meet its ongoing cash
requirements.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits.
Exhibit 27 Financial Data Schedule
B. REPORTS ON FORM 8-K
None.
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SIGNATURES
In accordance with 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, duly authorized.
LITEGLOW INDUSTRIES, INC.
(Registrant)
Dated: August 18, 2000 By: /s/ SPENCER KRUMHOLZ
----------------------------------
Spencer Krumholz, President
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