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 March 31, 2000
_______ 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
incorporation or organization) (IRS Employer ID Number)
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 XX 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 March 31, 2000
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or
Plan of Operation 12
Part II - Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
<PAGE> 2
Part I - Financial Information
Item 1. Financial Statements
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors
Living Card Company, Inc.
Salt Lake City, Utah
We have reviewed the accompanying balance sheet of Living Card Company, Inc.
as of March 31, 2000 and the related statements of operations, stockholders'
equity (deficit) and cash flows for the periods ended March 31, 2000 and
1999. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed financial statements referred to
above for them to be in conformity with accounting principles generally
accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet of Living Card Company, Inc.
as of June 30, 1999, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein) and in
our report dated October 12, 1999, we expressed an unqualified opinion on
those consolidated financial statements.
/s/ HJ & Associates, LLC
HJ & Associates, LLC
Salt Lake City, Utah
May 9, 2000
<PAGE> 3
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
March 31, June 30,
2000 1999
------------- ------------
CURRENT ASSETS
Cash $ 168 $ 9,634
Accounts receivable 1,721 3,636
Inventory 43,504 38,515
------------- ------------
Total Current Assets 45,393 51,785
------------- ------------
FIXED ASSETS
Furniture and equipment - net 2,494 -
------------- ------------
Total Fixed Assets 2,494 -
------------- ------------
TOTAL ASSETS $ 47,887 $ 51,785
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 10,650 $ 27,846
Accounts payable - related party 40,500 20,000
------------- ------------
Total Current Liabilities 51,150 47,846
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
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 (250,088) (158,636)
------------- ------------
Total Stockholders' Equity (Deficit) (3,263) 3,939
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 47,887 $ 51,785
============= ============
See Accountants' Review Report and the
accompanying notes to the reviewed financial statements.
4
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From
Inception on
May 8, 1998
For the Nine Months Ended For the Three Months Ended Through
March 31, March 31, March 31,
2000 1999 2000 1999 2000
------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales $ 2,932 $ 1,893 $ 1,039 $ 358 $ 14,756
COST OF SALES 1,960 1,535 425 290 5,496
------------- ----------- -------------- ------------ --------------
GROSS MARGIN 972 358 614 68 9,260
------------- ----------- -------------- ------------ --------------
EXPENSES
Depreciation expense 691 - 265 - 690
Bad debt expense - 2,187 - 1,230 5,949
Selling, general and
administrative 91,733 61,464 28,303 48,002 252,987
------------- ----------- -------------- ------------ --------------
Total Expenses 92,424 63,651 28,568 49,232 259,626
------------- ----------- -------------- ------------ --------------
OPERATING LOSS (91,452) (63,293) (27,954) (49,164) (250,366)
------------- ----------- -------------- ------------ --------------
OTHER INCOME (EXPENSES)
Other expenses - - - - (179)
Interest income - 122 - - 457
------------- ----------- -------------- ------------ --------------
Total Other Income
(Expenses) - 122 - - 278
------------- ----------- -------------- ------------ --------------
NET LOSS $ (91,452) $ (63,171) $ (27,954) $ (49,164) $ (250,088)
============= =========== ============== ============ ==============
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.00)
============= =========== ============== ============
BASIC WEIGHTED AVERAGE
SHARES 8,000,000 6,000,000 8,000,000 6,000,000
============= =========== ============== ============
See Accountants' Review Report and the
accompanying notes to the reviewed financial statements.
5
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on May 8, 1998 through March 31, 2000
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 nine months
ended March 31, 2000 - - - - (91,452)
----------- ----------- ----------- ------------ ------------
Balance, March 31, 2000 8,000,000 $ 8,000 $ 239,575 $ (750) $ (250,088)
=========== =========== =========== ============ ============
See Accountants' Review Report and the
accompanying notes to the reviewed financial statements.
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
May 8, 1998
For the Nine Months Ended For the Three Months Ended Through
March 31, March 31, March 31,
2000 1999 2000 1999 2000
------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (91,452) $ (63,171) $ (27,954) $ (49,164) $ (250,088)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation expense 690 - 265 - 690
Allowance for bad debt ( 1,550) 2,187 - 1,230 4,399
Changes in operating assets
and liabilities:
Increase (decrease) in accounts
payable and accounts
payable - related party (17,196) 15,565 6,674 1,227 39,650
(Increase) in accounts
receivable 3,466 (5,742) (355) (4,062) (6,119)
(Increase) decrease in
inventory (4,990) (38,514) (2,476) (2,570) (43,505)
------------- ----------- -------------- ------------ --------------
Net Cash Used by Operating
Activities (111,032) (89,675) (23,846) (53,339) (254,973)
------------- ----------- -------------- ------------ --------------
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 - - - - (110,000)
Note payable - related party 20,500 55,000 22,500 55,000 121,500
Common stock issued for cash 84,250 - - - 204,250
Additional capital contributed - 10,000 - - 73,329
Stock offering costs - - - - (30,754)
------------- ----------- -------------- ------------ --------------
Net Cash Provided by
Financing Activities $ 104,750 $ 65,000 $ 22,500 $ 55,000 $ 258,325
------------- ----------- -------------- ------------ --------------
See Accountants' Review Report and the
accompanying notes to the reviewed financial statements.
7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception on
May 8, 1998
For the Nine Months Ended For the Three Months Ended Through
March 31, March 31, March 31,
2000 1999 2000 1999 2000
------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
NET (DECREASE) INCREASE IN CASH $ (9,466) $ (24,675) $ (1,346) $ 1,661 $ 168
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 9,634 26,586 1,514 330 -
------------- ----------- -------------- ------------ --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 168 $ 1,911 $ 168 $ 1,911 $ 168
============= =========== ============== ============ ==============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ - $ - $ - $ - $ -
Income taxes paid $ - $ - $ - $ - $ -
See Accountants' Review Report and the
accompanying notes to the reviewed financial statements.
8
</TABLE>
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and June 30, 1999
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Living Card Company, Inc.
(a development stage company) (The Company). The Company was organized under
the laws of the State of Nevada on May 8, 1998. The Company was organized to
manufacture, merchandise, sell and distribute at wholesale and retail, a
specialized line of greeting cards and other related products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a June 30, year end.
b. Provision for Taxes
At March 31, 2000, the Company had net operating loss carryforwards of
approximately $ 250,000 that may be offset against future taxable income from
the year 1999 through 2019. No tax benefit has been reported in the
financial statements because the Company believes that there is a 50% chance
or greater the net operating loss carryforwards will expire unused.
Therefore, the potential tax benefits of the loss carryforwards are offset by
a valuation allowance of the same amount.
c. 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
e. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements.
9
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000 and June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Accounts Receivable
Accounts receivable are shown net of an allowance for doubtful accounts
of $ 4,399 as of March 31, 2000.
g. Inventory
The inventory is carried at its lower of cost or market value using the
average cost method. At March 31, 2000, inventory was as follows:
March 31,
2000
-----------
Raw materials and supplies $ 13,460
Finished goods 30,044
------------
Total $ 43,504
===========
NOTE 3 - RELATED PARTY TRANSACTIONS
During the nine months ended March 31, 2000, an officer of the Company
loaned the Company $105,500 of which $65,000 was paid back during the period
leaving a $40,000 balance which bears no interest and is due on demand.
NOTE 4 - STOCK SUBSCRIPTION RECEIVABLE
During the year ended June 30, 1999, the Company issued 2,000,000 shares
of common stock at $0.10 per share for cash, of which $115,000 was received
prior to June 30, 1999. $84,250 was received subsequent to June 30, 1999.
NOTE 5 - PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series as may from
time to time be determined by the board of directors. Each series shall be
distinctly designated. All shares of any one series of the Preferred Stock
shall be alike in every particular, except that there may be different dates
from which dividends thereon, if any, shall be cumulative, if made
cumulative. The powers, preferences, participating, optional and other
rights of each such series and the qualifications, limitations, or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding.
10
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage company)
Notes to the Financial Statements
March 31, 2000 and June 30, 1999
NOTE 6 - 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.
11
<PAGE>
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 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 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.
12
<PAGE>
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 extremely limited capital, 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.
(3) Results of Operations
During the quarter and the nine months ended March 31, 2000, the Company
had expenses of $28,568 and $92,424, respectively, resulting in net losses of
$27,954 and $91,452, respectively. During the quarter and nine months ended
March 31, 1999, the Company had expenses of $49,232 and $63,651,
respectively, resulting in net losses of $49,164 and $63,171, respectively.
The Company had nominal revenues of $1,039 and $358 for the quarters ended
March 31, 2000 and 1999, respectively, and revenues of $2,932 and $1,893, for
the nine months ended March 31, 2000 and 1999. The Company has had total
losses since inception of $250,088. While a large part of the Company's
losses may be attributed to an absence of revenue, and expenses incurred 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 March 31, 2000, the Company had total assets of $47,887, and total
liabilities of $51,150, and a stockholders' deficit of $3,263. Current
assets as of March 31, 2000 consist of cash in the amount of $168; accounts
receivable in the amount of $1,721; and inventory in the amount of $43,504.
Current liabilities total $51,150, including accounts payable ($10,650), and
a note payable to a related party ($40,500). 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.
13
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities and Use of Proceeds
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2000, the Company held no regularly
scheduled, called or special meetings of shareholders during the reporting
period, nor were any matters submitted to a vote of this Company's security
holders.
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.
May 15, 2000 /s/ John F. Lund
John F. Lund
Principal Executive Officer
THE LIVING CARD COMPANY, INC.
May 15, 2000 /s/ R. Blair Lund
R. Blair Lund
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 168
<SECURITIES> 0
<RECEIVABLES> 1,721
<ALLOWANCES> 0
<INVENTORY> 43,504
<CURRENT-ASSETS> 45,393
<PP&E> 2,494
<DEPRECIATION> 0
<TOTAL-ASSETS> 47,887
<CURRENT-LIABILITIES> 51,150
<BONDS> 0
0
0
<COMMON> 8,000
<OTHER-SE> (11,263)
<TOTAL-LIABILITY-AND-EQUITY> 47,887
<SALES> 2,932
<TOTAL-REVENUES> 2,932
<CGS> 1,960
<TOTAL-COSTS> 1,960
<OTHER-EXPENSES> 92,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (91,452)
<INCOME-TAX> 0
<INCOME-CONTINUING> (91,452)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,452)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
