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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 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
1
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(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 September 30,
1999.
PART I
Item 1. Financial Statements.
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BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
Sept.30,1999 Dec.31,1998
(UNAUDITED)
Current Assets:
Cash in banks $1,150 $ 1,123
Receivable, trade 240 -0-
Inventory 5,700 3,109
------ ------
Total Current Assets 7,090 14,339
Fixed Assets:
Machinery and equipment 3,039 -0-
Other Assets:
Patent pending 515 -0-
------- -------
TOTAL ASSETS $10,644 $14,339
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Payables, trade 443 50
Income taxes payable 800 800
Payable, related party 2,400 1,500
Total Current Liabilities 3,643 2,350
Stockholders' Equity:
Preferred stock, $.0001 par value,
20,000,000 shares authorized,
none issued and outstanding -0- -0-
Common stock, $.0001 par value,
50,000,000 shares authorized,
4,222,750 shares issued and
outstanding (Notes B & C)
Sept.30,1999; 100,000 issued
and outstanding Dec. 31, 1998. 432 10
Additional paid-in capital 30,878 90
Stock to be issued -0- 18,210
Stock subscriptions receivable -0- ( 390)
Accumulated Deficit (24,309) (5,931)
Total Stockholders Equity 7,001 11,989
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,644 $ 14,339
3
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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
CONSOLIDATED STATEMENT OF LOSS
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 30, 1999
Sales $ 12,331
Direct Costs of Sales (11,994)
Gross (loss) on sales 337
General Operating Expenses:
Advertising $ 7,085
Legal and audit fees 5,050
Administrative costs 6,580
Total Operating Expenses: (18,715)
Net Loss from Operations $ (18,378)
Loss per share outstanding $ (.0044)
BEACH COUCH, INC. AND SUBSIDIARY
STATEMENT OF LOSS
(UNAUDITED)
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
Sales $ 6,767
Direct Costs of Sales (6,594)
Gross (loss) on sales 173
General Operating Expenses:
Advertising $ 2,565
Legal and audit fees 200
Administrative costs 3,919
Total Operating Expenses: ( 6,684)
Net Loss from Operations $ ( 6,511)
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BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Addtn'l Total
Common Stock Paid-in Net Stock Accum Stockholders
Shares Amount Capital Subscribed Deficit Equity
<S> <C> <C> <C> <C> <C> <C>
Balance,
Jan.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 13,000 13,000
Net loss for year,
page 3 (18,378) (18,378)
Balance,
June 30, 1999
4,222,750 $ 18,220 $ 13,090 -0- $ (24,309) $ 7,001
</TABLE>
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BEACH COUCH, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 30, 1999
Cash Flow from Operating Activities:
Net loss for period, page 3 $ ( 18,378)
Adjustments to reconcile net loss
to net cash used in operations:
Increased inventory ( 2,591)
Increased receivables ( 240)
Increased liabilities 1,293
Net Cash Flow - Operations ( 19,916)
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 13,000
Common stock issued for cash 390
Net Cash Flow - Financing 13,390
Net Decrease in Cash during period ( 10,080)
Cash accounts, January 1, 1999 11,230
Cash accounts, September 30, 1999 $ 1,150
Additional disclosures:
Cash disbursed during year for:
Interest $ -0-
Income taxes $ -0-
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BEACH COUCH, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 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
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 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
carryforwards. 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
(UNAUDITED)
FOR THE PERIOD JANUARY 1, 1999 TO SEPTEMBER 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 September
30, 1999, is $1,800. of expenses EFM paid on behalf of the Company.
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 September 30, 1999
the Company had sales of $12,331 for the first nine months of 1999 with
gross sales of $ 337. The Company showed a loss of $18,378 for the first 9
months of 1999. The Company had an inventory of $5,700 and an accounts
receivable of $240 at September 30, 1999.
For the three months ended September 30, 1999 the company had sales of 6,767
with gross sales of $173. The company showed a net loss for the quarter
ended September 30, 1999 of $6,511. Since the company was not in business
during the quarter ended September 30, 1998 there are no comparable
financials.
Prior to September 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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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
(a) (11)
WEIGHTED AVERAGE SHARES OUTSTANDING
Outstanding January 1, 1999 4,222,750
Outstanding September 30, 1999 4,222,750
Weighted average shares outstanding for the period 4,222,750
Weighted average loss per share: $18,378/4,222,750= $(0.0043)
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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 NINE 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] 9-mos
[FISCAL-YEAR-END] SEP-30-1999
[PERIOD-END] SEP-30-1999
[CASH] 1,150
[SECURITIES] 0
[RECEIVABLES] 340
[ALLOWANCES] 0
[INVENTORY] 5,700
[CURRENT-ASSETS] 7,090
[PP&E] 3,554
[DEPRECIATION] 0
[TOTAL-ASSETS] 10,644
[CURRENT-LIABILITIES] 3,643
[BONDS] 0
<PERFERRED-MANDATORY> 0
<PERFERRED> 0
[COMMON] 432
[OTHER-SE] 30,878
[TOTAL-LIABILITY-AND-EQUITY] 10,644
[SALES] 12,331
[TOTAL-REVENUES] 12.331
[CGS] 11,994
[TOTAL-COSTS] 337
[OTHER-EXPENSES] 18,715
[LOSS-PROVISION] 0
<INTEREST-EXPENSES> 0
[INCOME-PRETAX] (18,378)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (18,378)
<ESP-PRIMARY> (0.0043)
<ESP-DILUTED> (0.0043)
</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: November 14, 1999 by:
Edward F. Myers III
President
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