<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
AMENDMENT 6
General Form for Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
Beach Couch, Inc.
(Name of Small Business Issuer in Its Charter)
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Delaware 33-0812709
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4190 Bonita Rd., Suite 105, Bonita, 91902
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(Address of Principal Executive Offices) (ZIP Code)
(619) 297-2717
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(Issuer'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
Securities to be Registered under Section 12(g) of the Act:
Common Stock
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ITEM 1 DESCRIPTION OF BUSINESS
All financial information is current as of June 30, 1999. Other information is
current as of the date of filing.
General
1. Beach Couch, Inc., a Delaware corporation ("the Company") was
incorporated on June 4, 1998.
2. On June 5, 1998 the Company acquired all of the stock of
California Beach Couch, Inc. ("CBC") from Edward F. Myers III, the president
of the Company in an exchange of 100,000 shares of the Company's common stock
for 10,000 shares of CBC.
3. The Company has not and does not use computers in its business and
therefore does not expect to be impacted by a Y2K problem.
4. Business Description
Mission
The mission of the Company is to create profit by selling its beach
couch product to the general public, directly, via retail outlets, and
using a variety of other marketing methods.
Product
The Company's product is a low-to-the ground, two person beach chair
made of nylon sheets and tubular aluminum. It is approximately 40
inches wide. The product allows two people to sit next to each other. It can
be folded and stored in a typical auto back seat or trunk. It can be carried
more easily than two separate chairs and provides a 'togetherness' quality for
family and loved ones. A small child can sleep stretched out.
Manufacturing
An initial batch of 75 couches was produced by the end of 1998 and sold mostly
in early 1999. A second batch of 240 units was in process on June 30, 1999.
All materials for the 240 units had been purchased. One Hundred ten units
were completed as of July 15.
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Negotiations with the aluminum supplier recently made it possible to
take advantage of the economics of larger material orders. The next batch of
250 units should make possible savings in manufacturing costs. The minimum
period of time for a run of 250 is approximately three weeks. As production
runs become larger, modification of production techniques will provide for
greater efficiency.
Marketing
Marketing efforts include availability of couches in the following shops
in the San Diego area: Surf Hut (Imperial Beach, CA), Emerald City
(Mission Beach and Coronado, CA), Killer Dan (Dana Point, CA), and the
San Clemente Surf Co. (San Clemente, CA). Sample chairs are also with
consultants, Pocket Products in Taiwan whose office is in San Diego, CA.
The Company also has a sales representative in Sacramento, CA.
The marketing arrangements with the entities above are oral and are net
30 days.
Company officers have had meetings with buyers for large discount stores.
Interest has been expressed in large orders for couches with imprinted
company names.
Event marketing is taking place most recently at the Over the Line
Tournament (July 8-20) in San Diego, CA. Soccer tournaments and local fairs
are also anticipated market possibilities.
The Company presently has a web site on the Internet for informational
purposes only. Products cannot be ordered directly from the site.
Company has no present plans for placement in catalogs.
Credit card charging ability is being pursued to make possible sales on
the Internet as well as placement of the product in suitable catalogs. Those
arrangements are not yet in place.
Sales
As chairs came off the assembly line they were placed in shops or sold by
direct sales. As of June 30, approximately 110 chairs had been sold with
requests for more as soon as available.
Suppliers
Suppliers were selected on the basis of best price and service but other
companies are available also. It is not believed there is likely to develop a
scarcity of available aluminum, steel or cloth at acceptable prices which are
the product's components.
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Suppliers are:
Specialty Metals Industries of Temecula, CA (aluminum tubing); Industrial
Metal Supply of San Diego, CA (steel); Top Value Fabrics of Carson, CA
(cloth); and Boolie Seating Co. of San Diego, CA (aluminum fabrication).
The Company knows of no state or federal governmental regulations for the
product.
There was no money spent on research. Development consisted of the
production of the prototype.
The Company believes that the product will have no environmental impact.
Competition
Currently, as best can be determined, there is no closely similar product
on the market today. The Southern California area is a prime location for
marketing this product. Unless and until there is another company producing a
very similar, chair, the Company should be able to capture a large market
share as the 'first' to develop such a beach 'couch'. It is unlikely that the
Company can completely prevent competition into the market and will
concentrate on early establishment of business relationships with the
customers in the Southern California region.
Although the Company has a patent on its product, substantial amounts of
capital may be required to defend the patent against competitors if
competitors choose to market a similar product. A patent, however, may
discourage others from entering this market.
The Company as of October 1, 1999 estimates that the feasible batch size is
300 couches with a production time of 3 weeks Estimated time between the
finish of a production batch and sale of the batch depends on the time of
year. The Summer months are expected to provide greater sales activity than
Winter. Projected average sales price is $50 at an average cost of goods of
$30 making a gross profit per couch of $20.
Patent
On November 25, 1998 Messrs. Myers (president of the Company) and Jordon
<PAGE> 5
("the Inventors") filed a patent application for a "foldable couch seat"
(application No. 29/097,015). On March 9, 1999 the patent was allowed by the
U.S. Patent and Trademark Office. The invention is owned by California Beach
Couch, Inc.("CBC") a wholly owned subsidiary of the Company. On
June 10, 1998 the Inventors signed an agreement with CBC whereby any invention
of theirs made during their terms as employees, officers and/or directors of
CBC would be assigned to CBC and become the sole property of CBC. An
assignment has been filed with the US patent office.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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 $(1,336). The Company showed a loss of $10,531) 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
and a net loss on sales of $429. Net loss from operations for the period was
$9,652. Since the Company was not in business during this period in 1998 there
are no comparable financial statements.
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 number of employees. The
Company has no employees and work is done by the Company's officers and
directors at no compensation.
ITEM 3. DESCRIPTION OF PROPERTY
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The Company owns no real property. The Company rents approximately 1000 square
feet from a non-affiliated party for $175.00 per month. This space is
used to assemble the product and is considered sufficient for the foreseeable
future. The Company rents this property on a month to month basis. The
Company has no reason to believe that it may not continue this rental for the
foreseeable future. Similar property is readily available at similar
cost.. The Company also maintains an address rent free from Califia Realty
at 4190 Bonita Road #105, Bonita, CA 91902. This offily for the delivery of
mail.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information concerning the Common Stock
ownership as of October 1, 1999, of each officer, director and who is known to
the Company as management or to be the beneficial owner of more than five
percent of the Company's Common Stock.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent Ownership
of Beneficial Beneficial Ownership
Owner
<S> <C> <C>
Edward F. Myers III 125,000 3.1
J. Michael Page 1,925,000 48.1
Edward F. Myers II 1,900,000 47.5
Dal N.R. Grauer 25,000 .6
Gary A. Stannell 25,000 .6
</TABLE>
Unless otherwise indicated, the named party is believed to be the sole
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investor and have voting control of the shares set forth in the above table.
Based on 4,222,750 outstanding shares on October 1, 1999.
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
A. The Directors and Officers of the Company, all of whose terms will
expire one year from their election, or at such a time as their successors
shall be elected and qualified are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION DATE ELECTED
<S> <C> <C> <C>
Edward F. Myers III 31 President and Director 6/5/98
9031 Rosedale Dr.
Spring Valley, Ca 91977
Dal N. R. Grauer 53 Secretary and Director 6/5/98
4190 Bonita Rd. #105
Bonita, CA 91902
J. Michael Page 53 Director 6/5/98
4190 Bonita Rd. #105
Bonita, CA 91902
Gary A. Stannell 45 Director 6/5/98
4190 Bonita Rd. #105
Bonita, CA 91902
</TABLE>
B. Resumes of the Directors and Officers of the Company are:
Mr. Edward F. Myers III has served as President and a Director of the Company
since June 5, 1998. Since 1987, he has operated Myers Painting, a sole
proprietorship. Mr. Myers is a licensed contractor in the State of
California. He is an experienced hang gliding pilot whose product is of a
similar tubular construction as the Company product. . Mr. Myers is an
experienced entrepreneur who has produced many inventions and formed
new companies. In 1997 he formed Call On- Line, Inc. which developed one
of the first publicly available Internet access machines. In 1998 he formed
Digital Sign Corporation which developed a sign for parking lots which could
be controlled via cellular phone.
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Mr. Dal N. R. Grauer has held the position of Corporate Secretary and Director
of the Company since June 5, 1998. From January 1994 to August of 1995 he was
employed by FCN Financial Services, Inc. in the area of stockholder relations.
Between August 1995 and December 1998 he was employed by Airstar Technologies,
Inc. where he was also corporate secretary and a Director. Airstar
Technologies is a public company in the telecommunications field. At Airstar
he was involved in corporate finance and investors relations. Since the end of
1998 he has not been employed. Airstar Technologies Inc. filed for a Chapter
11 reorganization on October 13, 1998 in the U.S. Bankruptcy Court in the city
of Riverside in the County of Riverside, California. Airstar Technologies
remains in Chapter 11 as of the date of this filing.
J. Michael Page has been a director of the Company since June 5, 1998. For
the last five years Mr. Page has been a self employed business consultant,
consulting in the area of corporate structure and finance.
Gary A. Stannell has been a Director of the Company since June 5, 1998.
Between 1993 and 1995 he was employed by Autogas Propane Ltd. He was in
charge of merchandising and supply of products for the Provence of British
Columbia, Canada. Since 1995 Mr. Stannell has been President and CEO of
Stannell Petroleum Ltd.("Stannell Ltd"). Stannell Ltd is a supplier of Marine
and Aviation fuels. Stannell Ltd operates a truck stop and fueling facility
at the Vancouver International Airport located in Richmond, B.C., Canada.
ITEM 6. EXECUTIVE COMPENSATION
A. None of the officers or directors receives or has received any
remuneration from the Company.
B. There is no annuity, pension or retirements benefit proposed to be paid to
officers, directors or employees of the Company in the event of retirement at
normal retirement date pursuant to any presently existing plan provided or
contributed to by the Company or any of its subsidiaries, if any.
C. No remuneration is proposed to be paid in the future directly or indirectly
by the Company to any officer or director under any plan which is presently
existing. No options have been granted. The Company has not decided when
and in what circumstances it will start paying officers and directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 5, 1998 the Company issued 100,000 shares of its common stock to its
president Edward F. Myers III for all the outstanding stock of California
Beach Couch, Inc. The Company's board of directors valued this transaction
at $100 which was based on the out-of -pocket expenses of Mr. Myers in the
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formation of the CBC.
On June 5, 1998 the company issued 25,000 shares of its common stock to Edward
F. Myers III, J. Michael Page, Dal N.R. Grauer and Gary A. Stannell,
respectively, for par value ($2.50 each).
On June 5, 1998 the Company issued 1,900,000 of its common stock to Edward F.
Myers II for $190.
On June 5, 1998 the Company issued 1,900,000 shares of its common stock to
J. Michael Page for $190.
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Title of Class Number of Record Holders
Common 49
There is, as of the date of filing, no public market in any class of stock of
the Company.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On June 5, 1998 the Company issued 100,000 shares of its common stock to Edward
F. Myers III (the Company's president) in exchange for all of the outstanding
stock of California Beach Couch, Inc., a California corporation. The issuance
was made a non-public offering in reliance on Section 4(2) of the Securities
Act of 1933 as amended ("the Act").
On June 5, 1998 the Company sold 25,000 shares of its common stock for $2.50
to each of its directors. The sale was made as a non-public offering in
reliance on Section 4(2) of the Act.
On June 5, 1998 the Company sold to Edward F. Myers II, 1,900,000 shares of
common stock for $190 and sold to J. Michael Page, a director, 1,900,000
shares of common stock for $190. These sales were made as a non-public
offering in reliance on Section 4(2) of the Act.
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Between June 15, 1998 and Dec. 31, 1998 the Company sold 222,750 shares of its
common stock to 44 personal acquaintances of the officers and directors at
$0.08 per common share. These sales were made in reliance on an exemption from
registration contained in Regulation D (504).
ITEM 11. DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.0001 per share. As of June 30, 1999, the Company had outstanding
4,222,750 shares of Common Stock. All Common Shares are equal to each other
with respect to voting, and dividend rights, and subject to the rights of the
preferred shareholders. There are 20,000,000 shares of preferred par value
$0.0001, none of which are outstanding.
Special meetings of the Shareholders may be called by the officers, directors,
or upon the request of holders of at least ten percent of the outstanding
voting shares. Holders of Common Shares are entitled to one vote at any
meeting of the Shareholders for each Common Share they own as of the record
date. fixed by the Board of Directors. At any meeting of Shareholders, a
majority of the outstanding Common Shares of the Company entitled to vote,
represented in person or by proxy, constitutes a quorum. A vote of the
majority of the Common Shares represented at a meeting will govern, even if
this is substantially less than a majority of the Common Shares outstanding.
Subject to the rights of the preferred shareholders described below, holders
of shares are entitled to receive such dividends as may be declared by the
Board of Directors out of funds legally available therefore, and upon
liquidation are entitled to participate pro rate in a distribution of assets
available for such a distribution to Shareholders. There are no conversion,
pre-emptive or other subscription rights or privileges with respect to any
share. Reference is made to the Certificate of Incorporation and Bylaws of the
Company as well as to the applicable statutes of the State of Delaware for a
more complete description of the rights and liabilities of holders of shares.
It should be noted that the Bylaws may be amended by the Board of Directors
without notice to the Shareholders.
Non-Cumulative Voting
The shares of the Company do not have cumulative voting rights, which means
that the holders of more than fifty percent of the Common Shares voting for
election of directors may elect all the directors if they choose to do so.
In such event, the holders of the remaining shares aggregating less than fifty
percent will not be able to elect directors.
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"Penny Stock"
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The Securities and Exchange commission has adopted rule 15g-9 which
established the definition of a "penny stock", for the purposes relevant to
the Company, as any equity security that has a market price of less than $5.00
per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require: (1) that a broker or dealer approve a person's
account for transactions inpenny stocks: and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve
person's account for transactions in penny stocks, the broker or dealer must
(i)obtain financial information and investment experience objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to
be made about the risks of investing in penny stocks in both public offerings
and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company provides for indemnification
of Directors and Officers of the Company as follows:
ARTICLE IX
"The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7)
of subsection (b) of * 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented."
ARTICLE X
"The corporation shall, to the fullest extent permitted by the provisions of *
145 of the General Corporation Law of the State of Delaware, as the same may
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be amended and supplemented indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person."
ITEM 13. FINANCIAL STATEMENTS
Audited Financial Statements for the year ended December 31, 1998.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
a). Audited Financial Statements for the fiscal year ended December 31, 1998.
b) 2.1 Plan of Acquisition*
3.(i) Articles of Incorporation*
3.(ii) By-Laws*
4.1 Instruments defining the rights of holders*
10.1 Purchase agreement dated June 8, 1998 between Beach Couch, Inc. and
J. Michael Page.*
11.1 Computation of per share earnings*
21.1 Subsidiaries of the registrant*
23.1 Consent of Auditor*
27.1 Financial Data Schedule*
*On file, filed in previous filing.
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INDEPENDENT AUDITOR S REPORT
To the Board of Directors and Stockholders of Beach Couch, Inc. and Subsidiary:
We have audited the accompanying consolidated balance sheet of Beach Couch,
Inc. (a development stage company) and subsidiary (collectively, the
Company ) as of December 31, 1998 and the related consolidated statements of
operations, changes in stockholders equity and cash flows for the period
rom June 4, 1998 (date of inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolid
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
we nancial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
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In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1998 and the results of its operations and its
cash flows for the period from June 4, 1998 (date of inception) to
December 31, 1998, in conformity with generally accepted accounting principles.
As discussed in Note G to the consolidated financial statements, the
Company has restated its consolidated financial statements for the year ended
December 31, 1998.
\\ Harlan & Boettger \\
Harlan & Boettger, LLP
San Diego, California
March 4, 1999, except for Note G,
as to which the date is July 26, 1999
BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 11,230
Inventory 3,109
TOTAL CURRENT ASSETS $ 14,339
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Income taxes payable $ 850
Accounts payable - related party (Note F) 1,500
TOTAL LIABILITIES 2,350
STOCKHOLDERS EQUITY
Preferred stock, $.0001 par value, 20,000,000 shares
authorized, none issued and outstanding -
Common stock, $.0001 par value, 50,000,000 shares
authorized, 100,000 issued and outstanding (Note B) 10
Additional paid-in capital 90
Stock to be issued (Note C and G) 18,210
Stock subscriptions receivable (390)
Deficit accumulated during development stage (5,931)
TOTAL STOCKHOLDERS EQUITY 11,989
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 14,339
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 4, 1998
(DATE OF INCEPTION) TO DECEMBER 31, 1998
NET SALES $ 315
COSTS OF SALES 684
----------
GROSS (LOSS) (369)
OPERATING EXPENSES 4,712
----------
LOSS FROM OPERATIONS (5,081)
INCOME TAXES 850
----------
NET LOSS $ (5,931)
BASIC NET LOSS PER COMMON SHARE (Note A) $ (.00)
WEIGHTED AVERAGE SHARES OUTSTANDING 4,074,202
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Stock Stock During Total
Common Stock Paid-in Stock to Subscriptions Development Stockholders
Shares Amount Capital be issued Receivable Stage Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 4,
1998 - $ - $ - $ - $- $ - $ -
Common
stock
issued
for
purchase
of
subsidiary 100,000 10 90 - - - - 100
Proceeds
Received
on stock
to be issued - - - 17,820 - - 17,820
Common stock
to be issued
to company
directors
(Note G) - - - 390 (390) - -
Net loss - - - - (5,931) (5,931)
Balance,
December
31, 1998 100,000 $10 $90 $18,210 $(390) $(5,931) $11,989
</TABLE>
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 4, 1998
(DATE OF INCEPTION) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
Net loss $ (5,931)
Adjustments to reconcile net loss to net
cash used in operating activities:
Other 100
Changes in assets and liabilities:
Inventory (3,109)
Income taxes payable 850
Accounts payable - related party 1,500
NET CASH USED IN OPERATING
ACTIVITIES (6,590)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock to be issued 17,820
NET CASH PROVIDED BY FINANCING
ACTIVITIES 17,820
NET INCREASE IN CASH 11,230
CASH AT BEGINNING OF PERIOD -
CASH AT END OF PERIOD $11,230
</TABLE>
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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
revenues 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 or 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.
Earnings Per Share
Earnings per share are provided in accordance with Statement of Financial
Accounting Standard No.128 (FAS No. 128) Earnings Per Share . Due to the
Company s simple capital structure, with only common stock outstanding, only
basic earnings per share is presented. Basic earnings per share are
computed by dividing earnings available to common stockholders by the
weighted average number of common shares outstanding plus the weighted
average of common stock to be issued during the period. In January 1999,
the Company received $390 for 3,900,000 shares of common stock to be issued.
For the purposes of computing earnings per share, the3,900,000 shares of
common stock to be issued were included in earnings per share for the period
ended December 31, 1998.
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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.
A. Organization and Summary of Significant Accounting Policies: (continued)
Income Taxes
Income taxes are provided in accordance with Statement of Financial
ccounting 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.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.
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:
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 31, 1998, the Company had received cash for 222,750 shares
but such shares had not been issued. Cash received on common stock to be
issued is presented as Stock to be Issued on the accompanying consolidated
balance sheet.
D. Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes and interest during the period ended December 31,
1998 were as follows:
Income taxes $ -
Interest -
Noncash investing and financing transactions during the period were as
follows:
During the period ended December 31, 1998, the Company issued 100,000 shares
of its common stock, valued at $100 to acquire 100% of the outstanding
shares of California Beach Couch, Inc. in a stock for stock transaction.
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E. Income Taxes:
The Company s total deferred tax asset at December 31, 1998 is as follows:
Net operating loss carryforward$ 1,400
Valuation allowance
(1,400)
$ -
The Company has a net operating loss carryforward of $9,040 which, if not
utilized, will expirein 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.
F. 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 December 31,
1998, is $1,500 of expenses EFM paid on behalf of the Company.
G. Restatement:
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, and accordingly, has recorded Subscriptions Receivable
and Stock to be Issued for the $390. This restatement had no effect on
income taxes. Subsequent to year end, subscriptions receivable were paid in
full and the common stock was issued.
Additionally, management discovered costs associated with inventory held at
December 31, 1998 had been expensed to cost of sales in the statement of
operations in error instead of being recorded as inventory.
Accordingly,
the Company has restated the balance sheet to include $3,109 of inventory at
December 31, 1998. This restatement decreased the net loss by $3,109
and had no effect on income taxes.
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 4, 1998
(DATE OF INCEPTION) TO DECEMBER 31, 1998
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITOR S REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of December 31, 1998 F-2
Consolidated Statement of Operations for the period from
June 4, 1998 (date of inception) to December 31, 1998 F-3
Consolidated Statement of Changes in Stockholders Equity for the
period from June 4, 1998 (date of inception) to December 31, 1998 F-4
Consolidated Statement of Cash Flows for the period from
June 4, 1998 (date of inception) to December 31, 1998 F-5
Notes to Consolidated Financial Statements F-6 - F-8
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this disclosure statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
BEACH COUCH, INC.
Dated: 11/19/1999 \\ EDWARD F. MYERS \\
__________________________
EDWARD F. MYERS, III
President
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