UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
__________________________________________________________________
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
_______ SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
_______ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 333-63063
THE LIVING CARD COMPANY, INC.
(Exact Name of small business issuer as specified in its charter)
Nevada 87-0583192
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
1174 East 2700 South, #16, Salt Lake City, Utah 84106
(Address of principal executive offices)
(801) 485-0430
(Issuer's telephone number)
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 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
8,000,000 Shares as of the date of this report.
Transitional Small Business Disclosure Format (check one): YES NO [XX]
<PAGE>
THE LIVING CARD COMPANY, INC.
Form 10-QSB for the Quarter ended September 30, 1999
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Part II - Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
2
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
- ------
September 30, June 30,
1999 1999
-------------- --------------
(Unaudited)
CURRENT ASSETS
Cash $ 11,670 $ 9,634
Accounts receivable 15,763 3,636
Inventory 35,053 38,515
-------------- --------------
Total Current Assets 62,486 51,785
-------------- --------------
FIXED ASSETS
Furniture and equipment - net 3,024 -
-------------- --------------
Total Fixed Assets 3,024 -
-------------- --------------
TOTAL ASSETS $ 65,510 $ 51,785
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ 27,846
Accounts payable - related party - 20,000
-------------- --------------
Total Current Liabilities - 47,846
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock: $0.01 par value, 5,000,000
shares authorized no shares issued and
outstanding - -
Common stock: $0.001 par value, 20,000,000
share authorized; 8,000,000 shares issued
and outstanding 8,000 8,000
Additional paid-in capital 239,575 239,575
Stock subscription receivable (750) (85,000)
Deficit accumulated during the
development stage (181,315) (158,636)
-------------- --------------
Total Stockholders' Equity 65,510 3,939
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 65,510 $ 51,785
============== ==============
3
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
May 8, 1998
For the Three Months Ended Through
September 30, September 30,
1999 1998 1999
------------- ------------- -------------
REVENUES $ 9,374 $ 1,263 $ 13,494
COST OF SALES 1,883 758 4,711
------------- ------------- -------------
GROSS MARGIN 7,491 505 8,783
------------- ------------- -------------
EXPENSES
Depreciation expense 160 - 160
Bad debt expense - - 5,949
Selling, general and administrative 30,074 46,564 184,205
------------- ------------- -------------
Total Expenses 30,234 46,564 190,314
------------- ------------- -------------
OPERATING LOSS (22,743) (46,059) (181,531)
------------- ------------- -------------
OTHER INCOME (EXPENSES)
Other expenses (179) - (179)
Interest income 243 99 395
------------- ------------- -------------
Total Other Income (Expenses) 64 99 216
------------- ------------- -------------
NET LOSS $ (22,679) $ (45,960) $ (181,315)
============= ============= =============
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
============= =============
BASIC WEIGHTED AVERAGE SHARES 8,000,000 6,000,000
============= =============
4
<PAGE>
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on May 8, 1998 through September 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Stock During the
Common Stock Paid-in Subscription Development
Shares Amount Capital Receivable Stage
------------ ------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at inception on
May 8, 1998 - $ - $ - $ - $ -
Issuance of 6,000,000 shares
of common stock for cash at
approximately $0.001 per
share 6,000,000 6,000 (1,000) - -
Contributed capital - - 5,006 - -
Net loss for the year ended
June 30, 1998 - - - - (11,820)
------------ ------- ---------- ------------ ------------
Balance, June 30, 1998 6,000,000 6,000 4,006 - (11,820)
Issuance of 2,000,000 shares
of common stock for cash at
$0.10 per share 2,000,000 2,000 198,000 (85,000) -
Stock offering costs - - (30,754) - -
Contributed capital - - 68,323 - -
Net loss for the year ended
June 30, 1999 - - - - (146,816)
------------ ------- ---------- ------------ ------------
Balance, June 30, 1999 8,000,000 8,000 239,575 (85,000) (158,636)
Receipt of stock subscription
(unaudited) - - - 84,250 -
Net loss for the three months
ended September 30, 1999
(unaudited) - - - - (22,679)
------------ ------- ---------- ------------ ------------
Balance, September 30, 1999
(unaudited) 8,000,000 $ 8,000 $ 239,575 $ (750) $ (181,315)
============ ======= ========== ============ ============
5
</TABLE>
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
May 8, 1998
For the Three Months Ended Through
September 30, September 30,
1999 1998 1999
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (22,679) $ (45,960) $ (181,315)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation expense 160 - 160
Allowance for bad debt - - 5,949
Changes in operating assets and
liabilities:
Increase (decrease) in accounts
payable and accounts payable -
related party (27,846) 19,092 20,000
(Increase) in accounts receivable (12,127) (9,481) (21,712)
(Increase) decrease in inventory 3,462 (39,416) (35,053)
------------- ------------- -------------
Net Cash Used by
Operating Activities (59,030) (75,765) (211,971)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Furniture and equipment (3,184) - (3,184)
------------- ------------- -------------
Net Cash Used by
Investing Activities (3,184) - (3,184)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on note payable -
related party (20,000) (5,000) (110,000)
Note payable - related party - 60,000 90,000
Common stock issued for cash 84,250 - 204,250
Additional capital contributed - - 73,329
Stock offering costs - - (30,754)
------------- ------------- -------------
Net Cash Provided by
Financing Activities $ 64,250 $ 55,000 $ 226,825
------------- ------------- -------------
6
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
May 8, 1998
For the Three Months Ended Through
September 30, September 30,
1999 1998 1999
------------- ------------- -------------
NET (DECREASE) INCREASE IN CASH $ 2,036 $ (20,765) $ 11,670
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 9,634 26,586 -
------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 11,670 $ 5,821 $ 11,670
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
7
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1999
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1999 and 1998
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and note thereto included in the Company's September 30, 1999
audited financial statements. The results of operations for periods ended
September 30, 1999 and 1998 are not necessarily indicative of the operating
results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant operations to date,
nor does it have an established source of revenues sufficient to allow it to
continue as a going concern. It is the intent of management to use a variety
of marketing strategies in order to compete in the greeting card business. In
the interim, shareholders of the Company have committed to meeting its minimal
operating expenses.
8
<PAGE>
Part I
Item 2 - Management's Discussion and Analysis or Plan of Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the
Company or management as well as assumptions made by and information currently
available to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view
of the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered
in light of the accompanying meaningful cautionary statements herein.
(2) Plan of Operations
The Living Card Company, Inc. (the "Company") was organized as a Nevada
corporation on May 8, 1998, to engage in the creation, development and
marketing of unique, educational and low-cost "garden" greeting cards. Upon
organization, the Company's officers and directors, John F. Lund and R. Blair
Lund, transferred to the Company all of their rights to certain self-contained
greeting cards which were designed, created and developed by them over the
preceding two years. The officers also contributed capital to the Company,
for the purpose of further developing a unique line of "garden" greeting cards
with a variety of plants or flowers in a package which can be shipped via U.S.
mail.
The Company has completed the development of a line of products, produced
an initial inventory of products, and, over the past few months, commenced
marketing efforts. The Company's plan of operations has been, and continues
to be, to develop a niche for its unique products in the greeting card
industry, through the establishment of a network of distributors throughout
the United States, and by the marketing and distribution of its products to
grocery stores, gift and specialty stores and other retail stores. To achieve
these objectives, shortly following organization, the Company began efforts to
raise capital through a public offering pursuant to Form SB-1, to provide the
Company with operating capital to fund the further development, production and
marketing of its products. The offering, which was declared effective on
April 22, 1999, was completed in the beginning of July, 1999, resulting in the
sale of a total of 2,000,000 shares of common stock, for gross proceeds of
$200,000 and net proceeds after offering costs, of approximately $168,000. Of
such amount, gross proceeds of $115,000 were received prior to the year ended
June 30, 1999, and the balance of such proceeds, of $85,000, were received by
the Company during the quarter ended September 30,1999.
9
<PAGE>
As indicated, the Company's plan of operations over the next year, is to
actively market its line of "garden" greeting cards in the United States and
Canada. As planned, the Company hopes to accomplish this objective through
(a) continued efforts to establish a network of qualified distributors in the
United States and Canada, which are able to place the Company's product line
in grocery stores, gift and specialty stores and other retail operations; (b)
the direct marketing of the Company's product line through various retail
markets, including convenience stores, fundraising efforts, gift and specialty
stores and direct sale through a toll-free number and via a Company website.
As sales of the Company's existing product line increase, the Company also
plans to develop additional "garden" greeting card products.
The Company has initially established a contractual relationship with a
number of distributors involved in marketing products in this industry in the
United States and Canada. The Company will seek to enter into additional
distributor arrangements with other carefully selected distributors in the
industry, over the next several months.
The Company has required more capital than anticipated for necessary
start-up costs, and it may be anticipated that additional capital will be
necessary before the Company's operations become profitable, if ever. The
Company has limited capital, even after its public offering, and there can be
no assurance the Company will be able to satisfy its cash requirements over
the next six months, unless the Company is able to achieve profits from
operations, or the Company is able to raise additional capital. If the
Company does not achieve profitable operations, of which there can be no
assurance, the Company may be required to raise additional debt or equity
capital to continue operations. There can be no assurance the Company will be
able to raise additional capital when needed, or on terms favorable to the
Company.
The Company plans to develop additional products over the next twelve
months, but does not anticipate that the development of such products will
involve substantial expense or effort by the Company. Similarly, the Company
does not anticipate that it will be required to make any significant
expenditures of equipment, or any significant changes in overhead or
employees.
(3) Results of Operations
For the three months ended September, 1999 and 1998, the Company had
nominal revenues of $9,374, and $1,263, respectively; expenses of $30,234 and
$46,564, respectively, resulting in net losses of $22,743 and $46,059,
respectively. The Company has had total losses since inception of $181,531.
While a large part of the Company's losses may be attributed to expenses
incurred and only nominal revenues realized in the start-up stage since
inception on May 8, 1998, there can be no assurance the Company will not
continue to experience similar losses over the next several months.
(4) Liquidity and Capital Resources
At September 30, 1999, the Company had total assets of $65,510, and no
liabilities, and stockholders' equity of $65,510. Current assets as of
September 30, 1999, consist of cash in the amount of $11,670; accounts
receivable in the amount of $15,763; and inventory in the
10
<PAGE>
amount of $35,053. At the fiscal year ended June 30, 1999, the Company had
total assets of $51,785, total current liabilities of $47,846, and
stockholders' equity of $3,939. The increase in assets is attributable to
proceeds from the Company's public offering during the quarter of $85,000.
Part II - Other Information
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities and Use of Proceeds
During the quarter ended September 30, 1999, the Company has not modified
any of the rights of the holders of common stock, nor has the Company issued
any other class of securities, or taken any other action requiring disclosure
under this item.
In the beginning of July, 1999, the Company completed a public offering of
2,000,000 shares of common stock, par value $0.001 per share, at an offering
price of $.10 per share, or a total offering of $200,000 (the "offering").
The Company's offering was conducted pursuant to a registration statement on
Form SB-1 ("registration statement"), S.E.C. File No. 333-63063, which was
declared effective by the U.S. Securities & Exchange Commission ("SEC") on
April 22, 1999. The offering commenced shortly following the effective date,
and the Company received subscriptions for the entire offering of 2,000,000
shares of common stock by the end of June, 1999. The offering was closed in
the beginning of July, 1999. A total of $115,000 in proceeds were received by
the Company prior to the fiscal year ended June 30, 1999; the remaining
$85,000 in proceeds were received during the quarter ended September 30, 1999.
The offering was offered and sold by the Company's officers and directors,
and the Company did not use the services of any underwriter firm or
broker-dealer firm in the offering, and no expenses were incurred for
underwriting discounts and commissions, finders' fees or other expenses to
underwriters. The common stock offered and sold in the offering is not
convertible into any other securities of the Company. The Company incurred
offering expenses in connection with the issuance and distribution of the
securities registered in the offering of approximately $30,750, resulting in
net proceeds of approximately $169,250. None of such offering expenses were
direct or indirect payments to officers or directors, or their associates.
From the effective date of the Company's registration statement through the
quarter ended September 30, 1999, the Company has utilized the net proceeds of
the offering for the repayment of the sum of $85,000 in indebtedness to John
Lund, an officer; for general and administrative expenses in an amount
estimated at $15,000; for marketing and promotional expenses in an amount
estimated at $15,000; for management compensation in an amount estimated at
$25,000; and for the purchase of product materials and equipment of
approximately $3,000. It is anticipated that the balance of the net proceeds
have been, or will be, used as working capital and/or for the purchase of
materials and product costs.
None of such expenses, except as indicated above, were direct or indirect
payments to
11
<PAGE>
officers or directors, or their associates. The Company does not believe that
the use of proceeds described above represents a material change in the use of
proceeds described in the Company's prospectus included as part of the
registration statement.
<PAGE>
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the period covered by this report, the Company did not submit any
matters to a vote of its security holders, either through the solicitation of
proxies or otherwise.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
None.
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.
THE LIVING CARD COMPANY, INC.
December 17, 1999 /s/ John F. Lund
-------------------------
John F. Lund
Principal Executive Officer
THE LIVING CARD COMPANY, INC.
December 17, 1999 /s/ R. Blair Lund
---------------------------
R. Blair Lund
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 11,670
<SECURITIES> 0
<RECEIVABLES> 15,763
<ALLOWANCES> 0
<INVENTORY> 35,053
<CURRENT-ASSETS> 62,486
<PP&E> 3,024
<DEPRECIATION> 0
<TOTAL-ASSETS> 65,510
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 8,000
<OTHER-SE> 57,510
<TOTAL-LIABILITY-AND-EQUITY> 65,510
<SALES> 9,374
<TOTAL-REVENUES> 9,617
<CGS> 1,883
<TOTAL-COSTS> 1,883
<OTHER-EXPENSES> 30,413
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22,679)
<INCOME-TAX> 0
<INCOME-CONTINUING> (22,679)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,679)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
