UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly report ended September 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
July 1, 1999 to September 30, 1999
Commission File number 0-30180
FRESH BREATH INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Nevada 88-0404404
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
#7-2316 27TH Ave. N.E. Calgary, Alberta Canada T2E7A7
(Address of principal executive office) (Zip Code)
(403) 259-6838
Registrant's telephone number, including area code
N/A
(Former name, former address, former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports), Yes [X] No [ ] and (2) has been subject
to such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the last practicable date.
Class Outstanding as of September 30, 1999
Common Stock, $0.001 8,748,000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompany unaudited financial statements have
been prepared with accordance with the instructions
for Form 10-Q pursuant to the rules and regulations
of the Securities and Exchange Commission and,
therefore, do not include all information and footnotes
necessary for a complete presentation of the financial
position, results of operations, cash flows, and
stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of
management, all adjustments considered necessary for
a fair presentation of the results of operations and
financial position have been included and all such
adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of
September 30, 1999, and the related audited balance
sheet of the company as of December 31, 1998, the
unaudited statements of operations and cash flows
for the nine months ended September 30, 1998 and 1999
and the unaudited statements of stockholders' equity
for the period from inception, September 1, 1998 through
September 30, 1999, are attached hereto and incorporated
herein by this reference.
Operating results for the quarter ended September 30,
1999, are not necessarily indicative of the results that
can be expected for the year ending December 31, 1999.
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1999 and December 31, 1998
September 30 December 31
1999 1998
Current Assets
Cash $ 4,006 $ 39,673
Inventory 42,487 -
Total Current Assets 46,493 39,673
Other Assets
Distribution Rights 229,970.67 307,231.00
Fixed Assets 4,917.28 -
Total Assets 281,380.29 347,231.00
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1999 and December 31, 1998
September 30 December 31
1999 1998
Current Liabilities
Long Term Liabilities
Account Payable $ 1,168.00 $ 5,000.00
Notes Payable- Related Party 130,790.00 130,790.00
Accrued Interest 7,037.00 5,982.00
Notes Payable - 170,000.00
Total Current Liabilities 138,995.00 311,772.00
Total Liabilities 138,772.00 311,772.00
Stock Equity
Common Stock, $0.001 par
value 50,000,000 authorized
Shares, 7,800,000 issued and
Outstanding at December 31, 1998;
8,748,000 issued and outstanding 8,748.00 -
Stock subscription received <15.00> <5,515.00>
Paid in Capital 298,126.00 70,200.00
Deficit accumulated during
Development stage <164,474.00> <37,026.00>
Total Equity 142,385.00 35,459.00
Total Liabilities and Equity 281,380.00 347,231.00
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Nine Months ended September 30, 1999
And 1998 and the Period September 1, 1998 (date of
Inception) to September 30, 1999
September 1, 1998
September 30 September 30 (date of inception)
1999 1998 to September 30, 1999
(unaudited)
Revenues 1,513.00 - 1,513.00
Cost of Goods sold 1,592.00 - 1,952.00
Gross Profit <79.00> - <79.00>
Operating Expenses
Amortization 48,918.00 - 57,590.00
General and Admin 48,596.00 - 64,734.00
Professional Services 19,840.00 - 25,677.00
Total Operating
Expenses 117,354.00 - 148,311.00
Other Expenses <9,928.00> - <15,910.00>
Net Loss <127,828.00> - <164,474.00>
Basic Loss Per share <.01> - <.02>
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
Statements of Changes in Stockholders Equity
Period from September 1, 1998 (date of
Inception) to September 30, 1999
Stock Deficit
Common Stock Additional Subscription Accumulated
Shares Amount Paid in Capital Received During the
Development
Stage
Inception of - $ - $ - $ - $ -
Development stage
September 30, 1998
September 15 400,000 400 3,600 - -
1998 common stock
issued for cash
at $0.01 per share
September 15, 2,550,000 2,550 22,950 - -
1998 common stock
issued for services
at $0.01 per share
November 15 600,000 600 5,400 - -
1998, common stock
issued for services at
$0.01 per share
December 1 4,250,000 4,250 38,250 <5,515> -
1998 common stock
issued for cash at
$0.01 per share
Net loss for - - - - <37,026>
Year ended
December 31, 1998
Balance 7,800,000 7,800 70,200 <5,515> <37,026>
December 31, 1998
January 5, 150,000 150 37,350 - -
1999, 504
150,000 shares
@ $0.25
January 5, 1999 - - - 5,500 -
Stock sub received
April 1, 1999 36,000 36 8,964 - -
504 36,000
shares @ $0.25
April 29, 1999 160,000 160 39,840 - -
Issued shares
For debt
April 29, 1999 502,000 502 124,998 - -
Issued shares
For debt
Contributed - - 3,374 - -
capital
Current Income - - - - <127,448>
As of 9-30-99
Balance 8,748,000 8,748 301,500 <15> <164,474>
September 30, 1999
FRESH BREATH INDUSTRIES, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
For the Nine months ended September 30, 1999
And 1998 and the period from
September 1,1998 (Date of Inception) to September 30, 1999
September 1, 1998
September 30 September 30 (date of inception)
1999 1998 to September 30, 1999
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (loss) $ <127,448> $ - <164,474>
Adjustments to reconcile
Net (loss) to net cash
Used by operating activities:
(Increase) decrease
Inventory < 28,212> - <28,211>
(Increase) decrease
Accounts Payable < 14,275> - <14,275>
Increase (decrease) <172,777> 316,590 265,894
Net cash provided
(used) by operating
activities <342,712> 316,590 <58,932>
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase Equipment and
Distribution Rights 72,670 <316,390> <243,919>
CASH FLOWS FROM
FINANCING ACTIVITIES
Net Cash provided
By financing 234,374 - 306,857
Increase (Decrease)
in cash <35,667> - -
Cash at beginning
Of period 39,673 - -
Cash at end
Of period 4,006 - 4,006
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the unaudited Financial Statements
September 30, 1999
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
On September 1, 1998, Fresh Breath Industries, Inc.
(the Company) was incorporated under the laws of Nevada
to engage in marketing cigars and cigar related products.
The Company has authorized 50,000,000 shares of $0.001
par value common stock. The Company has elected a calendar
year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using
the accrual method of accounting. The Company has
elected a December 31 year-end.
b. Cash Equivalents
The Company considers all highly liquid investment with
a maturity of three months or less when purchased to be
cash equivalents.
c. Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles required
management to makes estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent 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. Income Taxes
No provision for federal income taxes has been made at
September 30, 1999 due to the accumulated operating
losses. The minimum state franchise tax has been accrued.
The Company has accumulated approximately $164,000 of
net operating losses as of September 30, 1999, which
may be used to reduce taxable income and income taxes
in future years through 2014. The use of these
losses to reduce future income taxes will depend on
the generation of sufficient taxable income prior to
the expiration of the net operating loss carryforwards.
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the unaudited Financial Statements
September 30, 1999
In the event of certain changes in control of the Company,
there will be an annual limitation on the amount of the
net operating loss carryforwards, which can be used. The
potential tax benefits of the net operating loss carryforwards
have been offset by a valuation allowance of the same amount.
e. Unaudited Financial Statements
The accompanying unaudited financial statements include all
of the adjustments, which, in the opinion of management,
are necessary for a fair presentation. Such adjustments
are of a normal, recurring nature.
f. Basic Loss Per Share
Basic loss per share has been calculated based on the weighted
average number of shares of common stock outstanding during
the period.
NOTE 3 - 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. The Company has
not established revenues sufficient to cover its operating
costs and allow it to continue as a going concern. Management
believes that the Company will soon be able to generate
revenues sufficient to cover its operating cost through the
sale of products under its distribution rights. Currently,
management is committed to covering all operating and other
costs until sufficient revenues are generated.
NOTE 4 - DISTRIBUTION RIGHTS
The Company has entered into various agreements with related
companies to purchase the distribution rights of breath
freshening products. The distribution rights are amortized
over the estimated useful life of 7 years using the
straight-line method of amortization.
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the unaudited Financial Statements
September 30, 1999
September 30 December 30
1999 1998
(unaudited)
On October 25, 1998, the Company
Bought for the sum of $50,000 and
100,000 shares of its common stock,
the product line rights
which include the assets,
exclusive distributors rights
and promotional materials
of J&D Cigar Company, Ltd. $ 51,000 $ 51,000
On October 21, 1998 the Company
Bought for the sum of $130,000
The product-line called
Cigar Gone, Coffee Gone and
Other breath related products 120,000 130,000
On October 16, 1998, the Company
Bought for the sum of $135,590
Which consisted of $130,590 and 500,000
Shares of its common stock equaling
$5,000 the exclusive Canadian
distribution rights to Irvine
Breath Products and Gel Cap
Breath Freshner product line 135,590 135,590
Total 316,590 316,590
Less: accumulated amortization (24,107) (9,032)
Total Distribution Rights $ 292,483 $ 307,558
Notes payable related to distribution rights equaled
$300,790 notes and interest is imputed at
10% per annum. All amounts are current payables
and due before December 31, 1999. $170,000 was
paid in cash and the issuance of common shares
during the four months ended April 30, 1999. The
balance outstanding at September 30, 1999 was $130,790.
FRESH BREATH INDUSTRIES, INC.
(A Development Stage Company)
Notes to the unaudited Financial Statements
September 30, 1999
NOTE 5 - COMMON STOCK TRANSACTIONS
During the month of June 1999, the Company paid
off services with a common stock issuance. 100,000
shares were issued at $0.135 for services worth
$13,500. In April of 1999, the Company paid off
debt with common stock issuance. 662,000 shares
were issued at $0.24 for debt in the amount of
$160,000. Also. In April 1999, the Company had
a 504 common stock issuance. 36,000 shares were
issued at $.25; the cash proceeds which totaled
$9,000.00. In February of 1999, the Company had
a 504 common stock issuance. 150,000 shares were
issued at $0.25; the cash proceeds of which totaled
$37,500.
NOTE 6 - RELATED PARTY TRANSACTION
An officer of Quantun Cigar Corporation and 545-205
B.C. LTD., who is also an officer of the Company,
which held the distribution rights of Irvine Breath
Products, sold these rights to the Company (Note 4).
The officer is owed $130,790 at September 30, 1999
and December 31, 1998 respectively.
The Company purchased from the licensor of some of its
products, inventory at a cost of $16,000 and packaging
at a cost of $4,000.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Ability of the Company to Continue
The Company had had a net operating loss
of $164,474 since inception. The company
will need additional working capital in
order to continue as a going concern and
the management believes they can accomplish
this objective through additional equity
funding however there is no assurance that
the Company will be able to obtain this
objective.
Liquidity and Capital Resources
At September 30, 1999 the Company had total
liabilities of $138,772 and assets of
$281,3801 and shareholders equities of
$142,385. It is the opinion of management
that sales revenues projected and the equity
will be able to service the current liabilities.
$130,790 of the liabilities are due to a
shareholder of the Company.
Result of Operations
The Company initiated minimal revenues
during this reporting period.
Sale of Unregistered Securities
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
None.
ITEM 2. CHANGES IN THE SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
FRESH BREATH INDUSTRIES, INC.
[Registrant]
Dated November 15, 1999
By:___________________________
Jeff Walters, President
By:___________________________
Frank Baroudi, Vice President
By: __________________________
Catherine Edwards, Secretary
