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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
AMENDMENT 1
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1999.
Commission file number 0-25747
Beach Couch, Inc.
(Name of Small Business Issuer in its Charter)
Delaware 33-0812709
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4190 Bonita Rd., Suite 105, Bonita, CA 91902
(Address of Principal Executive Offices) (ZIP Code)
(619) 479-2809
(Issuer's Telephone Number, Including Area Code)
Not applicable
(Former Name, Former Address and Former Fiscal Year, if changed
since last report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 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 ____
There were 4,222,750 shares of Common stock outstanding as of June 30,
1999.
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PART I
Item 1. Financial Statements.
BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Un-audited)
JUNE 30, 1999
ASSETS
Current Assets:
Cash in banks $ 5,628
Receivable, trade 3,150
Inventory 3,330
Total Current Assets 12,108
Fixed Assets:
Machinery and equipment $ 3,039
Other Assets:
Patent pending 515
$ 15,662
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Payables, trade $ 2,000
Income taxes payable 850
Payable, related party 800
Total Current Liabilities 3,650
Stockholders' Equity:
Preferred stock, $.0001 par value,
20,000,000 shares authorized, none
issued and outstanding $ -0-
Common stock, $.0001 par value,
50,000,000 shares authorized,
4,222,750 shares issued and
outstanding (Notes B & C) 18,220
Additional paid-in capital 11,590
Accumulated Deficit (17,798)
Total Stockholders' Equity (page 4) 12,012
$ 15,662
Subject to the accompanying notes to financial statements.
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BEACH COUCH, INC. AND SUBSIDIARY
STATEMENT OF LOSS
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Sales $ 5,564
Direct Costs of Sales 4,080
Gross (GAIN) on sales 1,484
General Operating Expenses:
Advertising $ 4,521
Damaged Material 1,230
Legal and audit fees 4,350
Administrative costs 3,160
Total Operating Expenses: 13,351
Net Loss from Operations $ (11,867)
Weighted Average Loss per share $ (0.0028)
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BEACH COUCH, INC. AND SUBSIDIARY
STATEMENT OF LOSS
(Un-audited)
FOR THE PERIOD APRIL 1, 1999 TO JUNE 30, 1999
Sales $ 4,078
Direct Costs of Sales 4,507
Gross (LOSS) on sales (429)
General Operating Expenses:
Advertising $ 2,874
Damaged Material 820
Legal and audit fees 3,700
Administrative costs 1,829
Total Operating Expenses: 9,223
Net Loss from Operations $ (9,652)
Weighted Average Loss per share $ (0.0227)
Since the Company was not in business during the quarter ending June 30, 1998,
there are no comparables.
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BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Addtnl Total
Common Stock Paid-in Net Stock Accum Stockholders
Shares Amount Capital Subscribed Deficit Equity
Balance,
January 1, 1999 100,000 $ 10 $ 90 $ 17,820 $ (5,931) $ 11,989
Common stock
issued 222,750 17,820 (17,280) -0-
Common stock
issued 3,900,000 390 390
Additional
Paid-in Capital 11,500 11,500
Net loss
for year,
page 3 (11,867) (11,867)
Balance,
June 30, 1999
4,222,750 $ 18,220 $ 11,590 -0- $ (17,798) $ 12,012
Subject to the accompanying notes to financial statements.
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BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Cash Flow from Operating Activities:
Net loss for period, page 3 $ ( 11,867)
Adjustments to reconcile net loss
to net cash used in operations:
Increased inventory ( 221)
Increased receivables ( 3,150)
Increased liabilities 1,300
Net Cash Flow - Operations ( 13,938)
Cash Flow from Investing Activities:
Purchase of equipment ( 3,039)
Payment against patent ( 515)
Net Cash Flow - Investing ( 3,554)
Cash Flow from Financing Activities:
Additional donated capital 11,500
Common stock issued for cash 390
Net Cash Flow - Financing 11,890
Net Decrease in Cash during period ( 5,602)
Cash accounts, January 1, 1999 11,230
Cash accounts, June 30, 1999 $ 5,628
Additional disclosures:
Cash disbursed during year for:
Interest $ -0-
Income taxes $ -0-
Subject to the accompanying notes to financial statements.
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BEACH COUCH, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Page 1 of 3
A. Organization and Summary of Significant Accounting Policies:
Organization
Beach Couch, Inc., a Delaware corporation (the "Company") was incorporated
on June 4, 1998. The Company is a development stage business created to engage
in the development of a unique, low to the ground, two-person beach chair.
Principles of Consolidation
The consolidated financial statements include Beach Couch, Inc., and its wholly
owned subsidiary, California Beach Couch, Inc., which was incorporated
in\California on May 19, 1998. All significant intercompany balances and
transactions have been eliminated in consolidation.
Accounting for Business Combinations
The acquisition of California Beach Couch, Inc. was recorded as a
purchase in accordance with Accounting Principle Board Opinion No. 16
(APB No. 16) "Business Combinations". The operating results of the acquired
entity are included in the Company's consolidated financial statements from
the date of acquisition (Note B)
Use of 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, disclosure of contingent
assets and liabilities, and reported amounts of revenue and expenses. Actual
results could differ from those estimates.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, the Company considers all
investments with a maturity of three months of less to be cash equivalents.
Inventory
Inventory is stated at the lower of cost (first-in, first-out) or net realizable
value, and consists of materials and labor.
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BEACH COUCH, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Page 2 of 3
Income Taxes
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes." A deferred tax
asset or liability is recorded for all temporary differences between financial
and tax reporting and net operating loss carry forwards. Deferred tax expense
(benefit) results from the net change during the year of deferred tax assets
and liabilities.
Fixed Assets
The purchase of equipment is recorded at cost. Provision for depreciation
will be made utilizing an even proration over the estimated useful life of
each asset.
B. Acquisition:
On June 5, 1998, the Company authorized the issuance of 100,000 shares of
Beach Couch, Inc. common stock at par value of $.0001 to acquire 100% of
the outstanding shares of California Beach Couch, Inc. valued at $100 by the
Board of Directors. The purchase of shares has been recorded using the
purchase method of accounting. At the date of the transaction, California Beach
Couch, Inc. had no assets or liabilities. At the date of acquisition, the
President of California Beach Couch, Inc. was also the President of the Company.
C. Stockholders' Equity:
1. On June 5, 1998, the Board of Directors authorized the issuance of 400,000
common shares at $.08 per share through a Section 504 (Reg. D) offering. As
of December 21, 1998, the Company had received cash for 222,750 shares but
such shares had not been issued. In early 1999, these shares were issued.
2. Subsequent to March 4, 1999, it was discovered that the date of authorization
by the Board of Directors and the subsequent signing of stock purchase
agreements by certain directors of the Company had been reported in error as
December 1, 1998. On June 5, 1998, the Board of Directors authorized and
purchased 3,900,000 common shares at par value of $.0001 or $390. The Company
had not yet received payment nor issued the shares as of December 31, 1998. In
January 1999, these funds were received by the corporation and common stock
was issued.
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BEACH COUCH, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Un-audited)
FOR THE PERIOD JANUARY 1, 1999 TO JUNE 30, 1999
Page 3 of 3
D. Related Party Transactions:
A stockholder of the Company is also a stockholder of EFM Venture Group,
Inc. ("EFM"). Included in accounts payable -related party at June 30, 1999,
is $800. of expenses EFM paid on behalf of the Company.
E. Income Taxes:
The Company's total deferred tax asset at December 31, 1998, was as follows:
Net operating loss carry forward $ 1,400
Valuation allowance (1,400)
$ -0-
The Company has a net operating loss carry forward of $9,040 which, if not
utilized, will expire in 2012. The valuation allowance increased $2,200 during
the period ended December 31, 1998. It is reasonably possible that the
Company's estimate of valuation allowance will change. As of June 30, 1999,
these have been recognized.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation
(i) The Company manufactures its product in "batches". The initial batch
was manufactured in fiscal 1998 and consisted of 75 couches of which 6 were
sold prior to December 31, 1998. For the year ended December 31, 1998 the
Company had a loss of $5,93l of which $369 was attributed to gross loss and
$4,712 to operating expenses. On December 31, 1998 the Company had an
inventory of $3,109 consisting of 69 finished couches. On June 30, 1999 the
Company had sales of $5,564 for the first six months of 1999 with gross sales
of $(1,484). The Company showed a loss of $11,867) for the first 6 months of
1999. The Company had an inventory of $3,330 and an accounts receivable of
$3,150 at June 30, 1999.
For the three months ended June 30, 1999 the Company had sales of $4,078
with gross sales of$$(429). The company showed a net loss for the quarter
ended June 30, 1999 of $ 9,652. Since the company was not in business
during the quarter ended June 30, 1998 there are no comparable financials.
Prior to June 30, 1999 the Company spent approximately $15,000 on marketing
and promotion of its product. The Company considers this to be attributable to
start-up costs and initial market recognition. During the next 12 months the
Company expects to be able to reduce these overhead expenditures by as much as
80%. The Company's officers and directors will continue to operate the
business with no compensation.
The Company has sufficient liquid capital to continue its business using
profits from present inventory and receivables to finance the production of
future batches. The Company does not at present see the necessity for
additional capital to execute its business plan during the next 12 months.
(ii) The Company does not plan to do any research and development during
the next 12 months.
(iii) The Company plans no sales or purchases of plants or significant
equipment.
(iv) The Company does not expect to change its numbers of employees. The
Company has no employees and work is done by the Company's officers and
directors at no compensation.
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<PAGE> 11 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 a Vote of Security Holders.
None
Item 5.
None
Item 6. Exhibits and Reports on Form 8-K
(a) (2) Filed by reference; Form 10-SB filed April 9, 1999
(3) Filed by reference; Form 10-SB filed April 9, 1999
(11) Statement re: Computation of per share earnings
(27) Financial Data Schedule
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(a) (11)
WEIGHTED AVERAGE SHARES OUTSTANDING
Outstanding January 1, 1999 4,222,750
Outstanding June 30, 1999 4,222,750
Weighted average shares outstanding for the period 4,222,750
Weighted average loss per share: $11,267/4,222,750= $(0.0028)
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[LEGEND]
THIS SCHEDULE CONTAINS SUMARY FINANCIAL INFORMATION EXTRACTED FRON THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE SIX MONTHS ENDING
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIREETY BY FREFERENCE TO
FINANCIAL STATMENTS INCLUDED IN THIS FILING
[LEGEND]
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] JUN-30-1999
[PERIOD-END] JUN-30-1999
[CASH] 5,628
[SECURITIES] 0
[RECEIVABLES] 3,150
[ALLOWANCES] 0
[INVENTORY] 3,330
[CURRENT-ASSETS] 12,108
[PP&E] 3,554
[DEPRECIATION] 0
[TOTAL-ASSETS] 15,662
[CURRENT-LIABILITIES] 3,650
[BONDS] 0
<PERFERRED-MANDATORY> 0
<PERFERRED> 0
[COMMON] 0
[OTHER-SE] 18,220
[OTHER-SE] (6,208)
[TOTAL-LIABILITY-AND-EQUITY] 15,662
[SALES] 5,564
[TOTAL-REVENUES] 5,564
[CGS] 4,080
[TOTAL-COSTS] (1,484)
[OTHER-EXPENSES] 13,351
[LOSS-PROVISION] 0
<INTEREST-EXPENSES> 0
[INCOME-PRETAX] (11,867)
[INCOME-TAX] 850
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (11,867)
<ESP-PRIMARY> (0.0028)
<ESP-DILUTED> (0.0028)
</TABLE>
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
\\ BEACH COUCH, INC.\\
\\ Edward F. Myers III \\
Date: OCTOBER 10, 1999 by:
Edward F. Myers III
President
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