SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(B)
OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
ALEC BRADLEY CIGAR CORPORATION
------------------------------
(Name of small business issuer in its charter)
Florida 65-0701352
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(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1750 N.W. 65th Avenue, Plantation, Florida 33313
------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
(954) 321-5991
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(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title Of Each Class Name Of Each Exchange On Which
To Be So Registered Each Class Is To Be Registered
------------------- ------------------------------
None N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock
------------
(Title of class)
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TABLE OF CONTENTS
Page
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<S> <C> <C>
PART I
Item 1. Description of Business 1
Item 2. Management Discussion and Analysis 5
Item 3. Description of Property 8
Item 4. Security Ownership of Certain Beneficial Owners
and Management 8
Item 5. Directors, Executive Officers and Control Persons 9
Item 6. Executive Compensation 9
Item 7. Certain Relationships and Related Transactions 9
Item 8. Description of Securities 10
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity And Other Shareholder Matters 11
Item 2. Legal Proceedings 12
Item 3. Changes in and Disagreements with Accountants 12
Item 4. Recent Sales of Unregistered Securities 12
Item 5. Indemnification of Directors and Officers 13
PART F/S
Financial Statements 14
PART III
Item 1. Exhibit Index III-1
</TABLE>
<PAGE>
INFORMATION REQUIRED IN
REGISTRATION STATEMENT
PART I
Item 1. Description of Business.
General
Alec Bradley Cigars was organized under the laws of the State of
Florida on July 15, 1996. The Company is an importer and distributor of cigars.
The Company's executive offices are located at 1750 N.W. 65th Avenue,
Plantation, Florida and its telephone number is (954) 321-5991.
Description of Operations
The Company is a cigar importer and distributor. The Company initially
sold cigars to golf pro shops and country clubs nationwide. Its first cigar was
the Bogey's Stogies. Through the success of this cigar, the Company has
developed several new cigar lines.
The Company primarily sells to two types of customers:
1. Distributors, including wine and liquor wholesalers; and
2. Retailers, which includes tobacco shops, convenience stores,
bars, restaurants and country clubs.
Background of the Industry
In 1993 the cigar industry began to experience a dramatic increase in
demand from consumers. This created a sizable increase in the number of both
cigar manufacturers and retail tobacconists. Through the end of 1997, many of
the cigar manufacturers were able to sell their entire production. However, by
early 1998, the supply of cigars from the larger manufacturers exceeded demand
from the retail tobacconists thereby causing the market to be flooded with
cigars. This had an adverse effect on both the retailers and manufacturers.
Today, management believes that the industry is still strong.
Company Cigars
Bogey's Stogies
Originally developed and marketed towards the golfing industry, Bogey's
Stogies are now sold to both distributors and retailers. Blended to be full
bodied, yet mild, Bogey's Stogies are sold nationwide in tobacco shops, bars and
restaurants, as well as golf courses.
Bogey's Stogies is a premium long-filler, handmade cigar manufactured
in the Honduran factory from a reserve of aged Cuban-seed Dominican Piloto with
Mexican and Nicaraguan ligero leaf. The Company uses a Sumatran binder and the
cigar is finished with a gold Ecuadorean Connecticut-shade wrapper.
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Bogey's Stogies are available in Spanish Cedar hinge-top boxes in the
following sizes: Robusto (50x5), Corona (44x6-1/4), Double Corona (50x6),
Churchill (49x7), and Pyramid (36/54x7).
Floribbean
Floribbean Cigar is a premium, long-filler, handmade cigar manufactured
in Miami. Manufactured from a private stock of aged Cuban-seed Piloto Cubano and
Nicaraguan Havano, this cigar is bound with a Pennsylvania broad-leaf binder and
finished with a Sumatran wrapper.
Floribbean combines high quality tobaccos from the Caribbean and the
expert Cuban craftsmanship of the Miami cigar rollers providing a traditional
style cigar. Floribbean is available in the following sizes: Robusto (50x5),
Corona (44x6-1/4), Double Corona (50x6), Churchill (49x7), and Pyramid
(36/54x6). Floribbean is packaged in a Spanish cedar hinge-top boxes.
Spirit of Cuba
Spirit of Cuba is a premium, long-filler, handmade cigar manufactured
in Honduras. Manufactured from a reserve of aged Cuban-seed Piloto Cubano and
Nicaraguan Havano, this cigar is bound with a Pennsylvania broad-leaf binder and
finished with an Indonesian wrapper. Spirit of Cuba is available in the
following sizes: Robusto (50x5), Corona (44x6-1/4), Double Corona (50x6),
Churchill (49x7), and Pyramid (36/54x6).
Concept 2000
Concept 2000 is a premium, long-filler, handmade cigar manufactured in
Honduras. It is manufactured from a private reserve of aged Cuban-seed Dominican
Piloto with Mexican and Nicaraguan ligero leaf ensuring its smoothness. The
Company uses a Sumatran binder with a sweet finish, and the cigar is finished
with a gold Ecuadorean Connecticut-shade wrapper. Concept 2000 provides a mild
yet full-bodied taste.
Concept 2000 is available in the following sizes: Robusto (50x5),
Corona (44x6-1/4), Double Corona (50x6), Churchill (49x7), and Pyramid
(35/54x6).
Gourmet Dessert Cigars
Management of the Company believes a trend in today's cigar market is
flavored cigars and Alec Bradley is currently involved in the industry's
flavoring technology. The Alec Bradley line of Gourmet Dessert Cigars is a
high-end, sandwich filler product, enhanced with natural and artificial FDA
approved flavorings processed into the tobacco before it is hand rolled.
Flavors include chocolate, vanilla, rum, cherry, pina colada, amaretto,
and cappuccino. Marketing efforts will focus on the newer generation of cigar
smokers, which includes female cigar enthusiasts.
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Occidental Reserve
Occidental Reserve is a ultra premium cigar manufactured by Hendrik
Kelner. Mr. Kelner produces over 20 million cigars annually and is considered
one of the top producers of premium cigars in the world. The average price of a
cigar produced by Mr. Kelner is over $10.00 and many of the cigars produced
under his supervision are known world-wide.
Occidental Reserve is produced with filler and binder from Tabadom, the
Dominican tobacco supply arm of some of the world's most famous cigars, and is
finished with a U.S. Connecticut shade wrapper.
This cigar directly competes quality wise with cigars that are priced
higher than the retail cost of the Company's cigar. Occidental Reserve is
produced in sizes, a corona, robusto, toro, churchill, and torpedo and is sold
in bundles of 25.
Purchasing and Distribution
The Company purchases and imports the majority of its cigars from cigar
manufacturing plants in Honduras and The Dominican Republic. Occidental Cigar
Corporation, the Company's supplier from The Dominican Republic, is a leading
manufacturer of premium cigars. They produce the Company's Occidental Reserve
line. Located in Santiago, Dominican Republic, Occidental Cigar Corporation
occupies a 20,000 square foot building. The production is 15,000,000 cigars
annually. Occidental Cigar Corporation also stocks over 3 years of raw material
that includes wrapper, filler and binder; assuring consistent quality and
production for several years.
LaPerla Hondurena, located in Danli, Honduras, is the Company's
supplier of gourmet cigars.
The Company does not have any agreements with cigar manufacturers.
Purchases are made on a per order basis. The Company pays all shipping costs.
Customers
The Company has approximately 400 customers. The Company's biggest
customer is Thompsons Cigar Company, located in Tampa. Thompsons accounts for
approximately 25% of the Company's sales.
Other Projects
As the Company continues to expand and improve on its current wholesale
and retail programs, it maintains its focus on creating ways of supplying cigars
to the public. These include:
Mail Order Companies
Alec Bradley has established a relationship with one of the largest
mail order catalog companies in the United States. Alec Bradley presently
supplies Thompsons Cigar Company with two of its cigar lines and is in present
negotiations to add additional cigars to the catalogue. Thompsons mails over
17,000,000 catalogues a year.
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The Company's intent is to focus on dealing with catalog companies and
large sources of distribution. Mail order companies generally sell to the final
consumers which should help bring public awareness to the Company's product
lines.
Alec Bradley Direct
The Company has created a direct sales approach which includes
bi-monthly marketing via fax and daily in-house telemarketing. By removing all
additional layers of distribution such as brokers, agents and outside sales
representatives, the Company is able to keep prices below the industry average
for high quality cigars. This is why Alec Bradley has chosen to deal directly
with tobacconists on its new Occidental Reserve line. By marketing via broadcast
fax and an in-house telemarketing staff the Company has been able to create and
nurture relationships directly with the sales venue.
Personalized and Customized Cigar Band Program
Alec Bradley, in conjunction with an outside consultant, has developed
a computer system for creating high quality, metallic ink cigar bands. This new
technology allows the Company to produce small run (25 to 3,000) high quality
personalized and customized private labeled cigars for a corporation, bar,
restaurant or event. The Company has already produced custom bands for the
Gulfstream Race Track, the Carquest Bowl, Tyson Foods, and many restaurants. The
Company has also recently developed a program for the retail tobacconists to
create house brands utilizing the new Occidental Reserve line.
With this new program, the Company can generate as many as 25 bands.
This technology enabled the Company to enter a contract as the sole provider of
cigars to Signature Gardens, a Miami catering hall that holds as many as 30
events a week. These events include weddings, bar and bat mitzvahs, as well as
corporate meetings and trade shows. Each event will be offered the availability
of Alec Bradley's custom label program.
Competition
The Company experiences competition with respect to each of its
business units. The cigar manufacturing industry is highly competitive. The
Company believes that as a distributor of premium cigars, it competes with a
smaller number of domestic and foreign companies that specialize in premium
cigars, and certain larger companies that maintain premium cigar lines,
including Consolidated Cigar Corporation, Culbro Corporation and General Cigar
Company.
Many competitors have longer operating histories and significantly
greater manufacturing, financial, technical and marketing resources and name
recognition than the Company. No assurance can be given that the Company will
continue to be able to compete effectively against these competitors or any
other or existing or future competitors in any of its market segments.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Introduction
The following discussion is based upon, and should be read in
conjunction with, the audited consolidated financial statements of the Company
as of and for the years ended December 31, 1999 and 1998, together with the
notes thereto, and the unaudited consolidated financial statements of the
Company as of and for the nine months ended September 30, 2000 and 1999,
together with the notes thereto.
Fiscal 1999 Compared to Fiscal 1998
Revenues
Revenues for 1999 were $413,700, a decrease of $145,500, or 26.0%, from
$559,200 for 1998. This was attributable to the difficulty in obtaining product
directly from the manufacturers during 1999, as the Company changed its product
mix to be more reliant upon the sale of proprietary brand cigars. Although
revenues declined for 1999 as compared to 1998, the Company's gross profit was
$201,900, an increase of $11,400, or 6.0%, from $190,500. This was attributed to
the increased gross profits realized by changing the sales mix to be more
dependent upon sales of proprietary product.
Selling Expenses
Selling expenses for 1999 were $25,100, a decrease of $62,000, or
71.2%, from $87,100 in 1998. Selling expenses include all compensation and
related benefits for the sales personnel and advertising and promotional costs.
This was attributable to the reduction in salespersons in 1999 as compared to
1998. Selling expenses represented 6.0% of revenues in 1999, compared to 15.6%
in 1998.
General and Administrative Expenses
General and administrative expenses for 1999 were $172,800, a decrease
of $56,500, or 24.6%, from $229,300 in 1998. General and administrative expenses
primarily include salaries, supplies, and general operating expenses. The
decrease in general and administrative expenses is attributable to the reduction
in salaries of $61,500, travel of $10,000, telephone of $7,700, and insurance
and other office expenses of $8,300 and an increase of $31,000 in professional
fees. General and administrative expenses represented 41.8% of revenues in 1999,
compared to 41.0% in 1998.
Fiscal Nine Months ending September 30, 2000 Compared to Fiscal Nine Months
ending September 30, 1999
Revenues
Revenues for 2000 were $397,500, an increase of $98,400, or 32.9%, from
$299,100 for 1999. This was attributable to the successful introduction of a new
line of proprietary products during 2000. The Company's gross profit increased
for 2000 as compared to 1999 to $128,300,
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an increase of $11,000, or 9.4%, from $117,300. Gross profits, as a percentage
of sales were 32.3% and 39.2% respectively for the nine-month periods ending
September 30, 2000 and 1999. The increase in gross profit was accomplished even
after management's decision to write off non- cigar inventory totaling
approximately $46,500 as of September 30, 2000. Had management not written off
these items then the gross profit for the nine months ending September 30, 2000
would have been approximately $174,800, or 43.9% of sales.
Selling Expenses
Selling expenses for 2000 were $25,300, an increase of $8,000, or
46.2%, from $17,300 in 1999. Selling expenses include all compensation and
related benefits for the sales personnel and advertising and promotional costs.
Selling expenses represented 6.4% of revenues in 2000, compared to 5.8% in 1999.
General and Administrative Expenses
General and administrative expenses for 2000 were $103,800, a decrease
of $38,100, or 26.8%, from $141,900 in 1999. General and administrative expenses
primarily include salaries, supplies, and general operating expenses. The
decrease in general and administrative expenses is primarily attributable to the
reduction in salaries of $8,000, travel of $8,800, interest of $22,300, and
professional fees of $11,400. These reductions offset the increase in supplies
of $19,900. General and administrative expenses represented 26.1% of revenues in
2000, compared to 47.4% in 1999.
Liquidity and Capital Resources
During fiscal 1999, cash utilized by operations was approximately
$51,100 and primarily consisted of the repayment of Directors' loans of $82,500,
reduction of accounts payable of $18,400. This was partially offset by net
income for the period of $4,000, non-cash charges of $14,500, and a reduction in
accounts receivable of $35,000.
The Company's working capital was approximately $78,300 at December 31,
1999, compared to approximately $20,800 at December 31, 1998. The increase in
working capital was primarily attributable to the conversion of approximately
$39,000 of Director's loans to Additional Paid-in Capital.
Management believes that cash generated from the Company's operations
are adequate to support its short-term cash requirements for capital
expenditures and maintenance of working capital.
Employees
The Company currently employs approximately 3 full-time and 2 part-time
employees and has 4 independent sales representatives. Of its employees, 2 are
engaged in sales and marketing and 2 in executive and administrative roles. None
of the Company's employees are covered by any labor union. The Company believes
its relationships with its employees are generally good. The ability of the
Company to fulfill its goals will be highly dependent on its ability to recruit
and maintain a skilled work force. The Company believes its requirements for
skilled workers will be met for the
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foreseeable future, but no assurances can be given in this regard. The Company
does not have an employment contract or agreement with any of its employees.
Trademarks
The Company has trademarked the name Bogie's Stogies. The Company has
applied for other trademarks for its cigars, but these applications are pending.
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Item 3. Description of Property.
Commencing May 1, 1998, the Company began to lease approximately 2,500
feet of office, administrative and warehouse facilities located at 1750 N.W.
65th Avenue, Plantation, Florida 33313, at a monthly rate of $1,400. These
facilities are leased on a monthly basis.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
As of the date of this Registration Statement, there were 4,484,777
shares of the Company's Common Stock issued and outstanding. The following table
sets forth information with respect to the beneficial ownership of each class of
voting securities of the Company by
(1) each person known by the Company to be the owner of more than
5% of the outstanding shares of any class of voting
securities;
(2) each officer and director; and
(3) all officers and directors as a group.
Unless otherwise indicated, the address for each individual listed is
1750 N.W. 65th Avenue, Plantation, Florida 33313.
<TABLE>
<CAPTION>
Beneficial Ownership
Percent of
Name and Address Shares Shares
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<S> <C> <C>
Alan V. Rubin 2,645,000 59.0%
Bruce A. Ginsberg
2523 Monterey Court
Weston, FL 33327 500,000 11.1%
Peter Troiano
7 Bayview Place
Massapequa, NY 11758 400,000 8.9%
Logan Realty, Inc.
555 South Federal Highway, Suite 200
Boca Raton, FL 33432 238,889 5.3%
All Executive Officers
and Directors as a Group
(one person) 2,645,000 59.0%
</TABLE>
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
The Directors, Executive Officers, Promoters and Control Persons of the
Company are as follows:
<TABLE>
<CAPTION>
Name Age Positions Held
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<S> <C> <C>
Alan V. Rubin 39 Director, Chief Executive Officer,
President, Secretary
</TABLE>
Alan Rubin has served as a director and officer of the Company since
its inception. Alan Rubin served as vice president of All Point Screw Bolt &
Speciality Co., a distributor and direct importer of fasteners and building
products from 1984 to 1996. During his 12 year tenure, company sales increased
from $100,000 in 1985 to more than $2 million in 1995. Mr. Rubin attended the
University of Florida.
The Company's directors are elected at the annual meeting of
stockholders and hold office for one year and until their successors are elected
and qualified. The Company's officers are appointed by the Board of Directors
and serve at the pleasure of the Board. The Directors do not currently receive
fees for their services as directors.
The Company's Board of Directors currently does not have an audit
committee, compensation committee or nominating committee.
Item 6. Executive Compensation
The Company has not paid any salary to Alan Rubin, sole officer and
director. In lieu of salary, Mr. Rubin has taken advances of approximately
$1,500 per week since August 1997. To date, Mr. Rubin owes the Company
approximately $27,000. In addition, Mr. Rubin received approximately $525 per
month for automobile lease expenses.
Item 7. Certain Relationships and Related Transactions
Alan Rubin, the sole officer and director of the Company, has been
loaned an aggregate of $27,000 by the Company. These advances are covered by
notes payable to the Company. The notes bear no interest rate nor terms of
repayment.
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Item 8. Description of Securities
Capital Stock
The Company's authorized capital consists of 30,000,000 shares of
common stock, par value $.0001, and 1,000,000 shares of preferred stock, par
value of $.0001.
Common Stock
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As of the date of this Registration Statement, there were 4,484,777
shares of the Company's Common Stock issued and outstanding.
Preferred Stock
---------------
The Company has not designated nor issued any shares of preferred
stock.
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PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
The Company's Common Stock is listed on the pink sheets. The Company
trades under the symbol ABDC. The stock is thinly traded and transactions in the
stock are sporadic and infrequent.
As of the date of this Registration Statement, there were approximately
35 holders of record of the Company's Common Stock.
The Company has never paid a cash dividend on its Common Stock nor does
the Company anticipate paying cash dividends on its Common Stock in the near
future. It is the present policy of the Company not to pay cash dividends on the
Common Stock but to retain earnings, if any, to fund growth and expansion. Any
payment of cash dividends on the Common Stock in the future will be dependent
upon the Company's financial condition, results of operations, current and
anticipated cash requirements, plan for expansion, as well as other factors the
Board of Directors deems relevant.
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Item 2. Legal Proceedings.
As of the date of this Registration Statement, the Company is not a
party to any pending legal proceeding and is not aware of any threatened legal
proceeding.
Item 3. Changes in and Disagreements with Accountants.
None.
Item 4. Recent Sales of Unregistered Securities.
The following provides information concerning all sales of securities
within the last three years which were not registered under the Securities and
Exchange Act:
The Company issued an aggregate of 2,670,000 to two founding officers
in 1997. The Company issued these shares relying on the exemption from
registration requirements of the Securities Act provided by Section 4(2) of the
Securities Act.
In addition, in late 1997 the Company issued an additional 497,777
shares of its common stock to 3 individuals as payment for services performed.
The issuance of these shares was exempt from registration under the Securities
Act under Section 4(2) of the Securities Act. This individual had access to
financial and other information concerning the Company and had the opportunity
to ask questions concerning the Company and its operations.
During November 1997, the Company sold an aggregate of 351,000 shares
of its common stock to 30 investors in a private placement. These shares were
offered at $1.00 per share. The offering was exempt from registration under the
Securities Act pursuant to Rule 506 of Regulation D. All investors received a
disclosure document regarding the Company and had the opportunity to ask
questions concerning the Company and its operations.
In October 1998, the Company issued 54,000 shares of common stock to an
individual investor for approximately $25,000. The issuance was made in reliance
upon the exemption from registration requirements of the Securities Act by
Section 4(2) of the Securities Act. This individual had access to financial and
other information concerning the Company and had the opportunity to ask
questions concerning the Company and its operations.
In April 1999, the Company issued an aggregate of 900,000 shares of
common stock to two investors for $9,000. The issuance of these shares was
exempt from registration under the Securities Act under Section 4(2) of the
Securities Act. These individuals had access to financial and other information
concerning the Company and had the opportunity to ask questions concerning the
Company and its operations.
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Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation, as amended, provide that the
Company must, to the fullest extent permitted by the Florida Business
Corporation Act, indemnify all persons whom it has the power to indemnify from
and against all expenses, liabilities or other matters. The Company's By-laws
further provide that the Company shall indemnify its directors, officers,
employees and agents to the fullest extent permitted by Florida law. The
indemnification provided in the By-laws is expressly deemed to not be exclusive
of any other rights to which a person seeking indemnification may otherwise be
entitled. The Company's indemnification obligation applies where the party to be
indemnified acted in good faith and in a manner such party reasonably believed
to be in, or not opposed to, the best interests of the Company. The foregoing
indemnification covers violations of federal securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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PART F/S
FINANCIAL STATEMENTS
See "Index to Consolidated Financial Statements" for a listing of the
consolidated financial statements filed with this Form 10-SB.
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ALEC BRADLEY CIGAR CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C>
Independent Auditor's Report F-1
Balance Sheets - December 31, 1999 and 1998 F-2
Statements of Operations - Years Ended December 31, 1999 and 1998 F-3
Statements of Shareholders' Equity - Years Ended December 31, 1999 and 1998 F-4
Statements of Cash Flows - Years Ended December 31, 1999 and 1998 F-5
Notes to Combined Financial Statements - Years Ended December 31, 1999 and 1998 F-6
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors and Shareholders
Alec Bradley Cigar Corp.
Plantation, Florida
We have audited the accompanying balance sheets of Alec Bradley Cigar Corp. as
of December 31, 1999 and 1998, and the related statements of operations,
shareholders' 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 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 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 Alec Bradley Cigar Corp. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
SPEAR, SAFER, HARMON & CO.
Miami, Florida
February 10, 2000
F-1
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<TABLE>
<CAPTION>
ALEC BRADLEY CIGAR CORP.
Balance Sheets
December 31, 1999 and 1998
A S S E T S September 30, 2000 1999 1998
------------------ ----------------- ---------------
(Unaudited)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 26,159 $ 18,652 $ 30,674
Accounts receivable, net of allowance for
doubtful accounts of $5,700 in 1999 60,289 42,405 77,362
Inventory 72,443 93,186 90,480
Directors loans and advances 27,424 - -
Prepaid expenses 1,500 - -
--------------- --------------- ---------------
Total Current Assets 187,815 154,243 198,516
Furniture and Equipment, net 15,184 20,236 28,502
Trademarks and Other Assets 6,752 8,252 10,532
--------------- --------------- ---------------
$ 209,751 $ 182,731 $ 237,550
=============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 100,038 $ 50,068 $ 68,420
Payroll taxes payable 3,568 16,227 17,200
Directors' loans and advances - 9,575 92,120
--------------- --------------- ---------------
Total Current Liabilities 103,606 75,870 177,740
--------------- --------------- ---------------
Shareholders' Equity:
Common stock 448 448 351
Paid in capital 234,597 234,597 191,649
Accumulated deficit (128,900) (128,184) (132,190)
--------------- --------------- ---------------
Total Shareholders' Equity 106,145 106,861 59,810
--------------- --------------- ---------------
$ 209,751 $ 182,731 $ 237,550
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
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<TABLE>
<CAPTION>
ALEC BRADLEY CIGAR CORP.
Statements of Operations
Years Ended December 31, 1999 and 1998
September 30, September 30,
2000 1999 1999 1998
--------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $ 397,549 $ 299,096 $ 413,751 $ 559,241
Cost of Sales 269,168 181,744 211,888 368,790
--------------- -------------- -------------- --------------
Gross Profit 128,381 117,352 201,863 190,451
--------------- -------------- -------------- --------------
Operating Expenses:
Selling 25,269 17,345 25,051 87,123
General and administrative 103,828 141,897 172,806 229,318
--------------- -------------- -------------- --------------
129,097 159,242 197,857 316,441
--------------- -------------- -------------- --------------
Income (Loss) from Operations (716) (41,890) 4,006 (125,990)
Other Income - - - 1,920
--------------- -------------- -------------- --------------
Net Income (Loss) $ (716) $ (41,890) $ 4,006 $ (124,070)
=============== ============== ============== ==============
Net income (Loss) per Common Share $ - $ (.012) $ .001 $ (.035)
=============== ============== ============== ==============
Weighted Average shares Outstanding 4,484,777 3,510,777 4,484,777 3,510,777
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
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<TABLE>
<CAPTION>
ALEC BRADLEY CIGAR CORP.
Statements of Shareholders' Equity
Years Ended December 31, 1999 and 1998
Total
Number of Common Additional Shareholders'
Shares Stock Paid-in Capital Accumulated Deficit Equity
------------- ----------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 3,510,777 $ 351 $ 191,649 $ (8,120) $ 183,880
Net loss - - - (124,070) (124,070)
------------- ----------- ------------- -------------- ----------------
Balance at December 31, 1998 3,510,777 351 191,649 (132,190) 59,810
Common shares issued 974,000 97 3,903 - 4,000
Conversion of directors' loans to
additional paid-in capital - - 39,045 - 39,045
Net income - - - 4,006 4,006
------------- ----------- ------------- -------------- ----------------
Balance at December 31, 1999 4,484,777 448 234,597 (128,184) 106,861
Net loss (unaudited) - - - (716) (716)
------------- ----------- ------------- -------------- ----------------
Balance at September 30, 2000 4,484,777 $ 448 $ 234,597 $ (128,900) $ (106,145)
============= =========== ============= ============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ALEC BRADLEY CIGAR CORP.
Statements of Cash Flows
Years Ended December 31, 1999 and 1998
September 30, 2000 September 30, 1999 1999 1998
------------------ ------------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (716) $ (41,890) $ 4,006 $ (124,070)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 7,800 7,999 10,546 10,654
Common stock issued for services - - 4,000 -
Changes in assets and liabilities:
Accounts receivable (17,884) 48,327 34,957 (1,548)
Inventory 20,743 (35,636) (2,706) (9,991)
Prepaid expenses (1,500) - - 26,643
Accounts payable 49,970 10,881 (18,352) 55,729
Payroll taxes payable (12,659) 8,343 (973) -
Directors' loans and advances (36,999) (27,500) (43,500) (46,000)
--------------- ------------ ----------- ------------
Net Cash Provided by (Used in) Operating Activities 8,755 (29,476) (12,022) (88,583)
--------------- ------------ ----------- ------------
Cash Flows from Investing Activities:
Cash payments for the purchase of property (1,248) - - (18,785)
--------------- ------------ ----------- ------------
Net Increase (Decrease) in Cash and Cash Equivalents 7,507 (29,476) (12,022) (107,368)
Cash and Cash Equivalents - Beginning of Year 18,652 30,674 30,674 138,042
--------------- ------------ ----------- ------------
Cash and Cash Equivalents - End of Year $ 26,159 $ 1,198 $ 18,652 $ 30,674
=============== ============ =========== ============
Supplemental Disclosure of Non-Cash Financing Activities:
Directors' loans and advances converted to
additional paid-in capital $ - $ - $ 39,045 $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
ALEC BRADLEY CIGAR CORP.
Notes to Combined Financial Statements
Years Ended December 31, 1999 and 1998
(Unaudited with Respect to the Nine Months Ending September 30, 2000 and 1999)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Alec Bradley Cigar Corp. ("Alec Bradley"), a
Florida corporation, was organized in July 1996. The Company
imports and distributes cigars domestically, with offices located
in Davie, Florida.
Basis of Accounting - The financial statements are prepared using
the accrual basis of accounting where revenues are recognized when
earned and expenses are recognized when incurred. This basis of
accounting conforms to generally accepted accounting principles.
Cash and Cash Equivalents - The Company considers all highly
liquid investments with an original maturity of three months or
less to be cash equivalents.
Credit Risk - Financial instruments which potentially subject the
Company to concentration of credit risk consist principally of
cash and trade accounts receivable. The Company places its cash
with high credit financial institutions. However, the Company
occasionally maintains cash balances in excess of the F.D.I.C.
insurance limits, thereby failing to limit the amount of credit
exposure to any one financial institution. Concentrations of
credit risk with respect to trade accounts receivable are reduced
due to the Company's large number of customers. The Company
conducts ongoing credit evaluations of its customers and generally
does not require collateral or other security from these
customers.
Income Taxes -The Company, with the consent of its shareholders,
elected to be an "S" Corporation under the Internal Revenue code.
Under those provisions, the Company is not subject to Federal
Income taxes, but rather, the shareholders are liable for
individual Federal Income taxes or their respective shares of
corporate income.
Inventory - Inventory consists primarily of cigars, humidors,
displays, boxes and labels and is stated at the lower of cost
(first-in, first-out) or market.
Furniture and Equipment - Furniture and equipment are recorded at
cost. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets ranging from five to
seven years.
Advertising Costs - Advertising costs are charged to expense
during the period in which they are incurred. Advertising expenses
for the years ended December 31, 1999 and 1998, approximated
$11,000 and $72,000, respectively.
F-6
<PAGE>
ALEC BRADLEY CIGAR CORP.
Notes to Combined Financial Statements (Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ
from those estimates.
NOTE 2 - FURNITURE AND EQUIPMENT
Furniture and equipment consist of the following as of December 31,:
<TABLE>
<CAPTION>
September 30,
2000 1999 1998
------------- -------------- ------------
<S> <C> <C> <C>
Computer and office equipment $ 26,170 $ 26,170 $ 26,170
Furniture and fixtures 17,682 16,434 16,434
------------- -------------- ------------
43,852 42,604 42,604
Less accumulated depreciation 28,568 22,368 14,102
------------- -------------- ------------
$ 15,184 $ 20,236 $ 28,502
============= ============== ============
</TABLE>
Depreciation expense for the years ended December 31, 1999 and
1998 approximated $8,000 and $11,000, respectively and for the
nine month periods ending September 30, 2000 and 1999 approximated
$6,300 and $6,700.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company had notes payable to directors in the amount of
approximately $9,600 and $92,000 at December 31, 1999 and 1998,
respectively. The notes payable bear no interest. As of September
30, 2000, principal obligations under notes payable were satisfied
in full. Additionally, subsequent to December 31, 1999, a director
and shareholder of the Company received advances of approximately
$27,000.
F-7
<PAGE>
ALEC BRADLEY CIGAR CORP.
Notes to Combined Financial Statements (Continued)
NOTE 4 - SHAREHOLDERS' EQUITY
The shareholders' equity of Alec Bradley as of December 31, is as
follows:
<TABLE>
<CAPTION>
1 9 9 9
---------------------------------------------------
Common Preferred Paid-In
Stock Stock Capital
---------------- ---------------- -------------
<S> <C> <C> <C>
Alec Bradley:
$.001 stated value common stock,
30,000,000 shares authorized;
4,484,777 shares issued and
outstanding $ 448 $ - $ 234,597
$.001 stated value preferred stock,
1,000,000 shares authorized; no
shares issued or outstanding - - -
----------- ---------- ------------
$ 448 $ - $ 234,597
=========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
1 9 9 8
---------------------------------------------------
Common Preferred Paid-In
Stock Stock Capital
---------------- ---------------- -------------
<S> <C> <C> <C>
Alec Bradley:
$.001 stated value common stock,
30,000,000 shares authorized;
351,000 shares issued and
outstanding $ 351 $ - $ 191,649
$.001 stated value preferred stock,
1,000,000 shares authorized;
no shares issued or outstanding - - -
----------- ---------- ------------
$ 351 $ - $ 191,649
=========== ========== ============
</TABLE>
F-8
<PAGE>
ALEC BRADLEY CIGAR CORP.
Notes to Combined Financial Statements (Continued)
NOTE 5 - TRADEMARKS
The Company incurred approximately $10,000 in legal and
registration fees for its trade name, Bogie's Stogies. These
amounts have been capitalized and are being amortized over the
life of the trademark, 15 years using the straight-line method.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Lease - The Company currently operates out of leased premises
pursuant to a month to month rental agreement.
F-9
<PAGE>
PART III
Item 1. Index to Exhibits.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.0 Articles of Incorporation
3.1 Amendment to Articles of Incorporation
3.2 Bylaws
21 Subsidiaries of the registrant
27 Financial Data Schedule
III-1
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Alec Bradley Cigar Corporation
Date: December 18, 2000 By: /s/ Alan Rubin
----------------------------
Alan Rubin, President
III-2
