CENTRE CAPITAL CORP /NV/
FILING TYPE: 10KSB
DESCRIPTION: ANNUAL REPORT
FILING DATE: JAN 15, 2001
PERIOD END: SEP 30, 2000
PRIMARY EXCHANGE: N/A
TICKER: N/A
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TABLE OF CONTENTS
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10KSB
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EX-27
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Year Ended September 30, 2000
Commission File No. ___________
CENTRE CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter)
Nevada 87-0385103
State of Incorporation (I.R.S. Employer Identification Number)
2619 Gravel Drive, Ft. Worth, Texas 76118
(Address of Principal Executive Offices-zip code)
(817) 284-5365
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (10 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 Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
On September 30, 2000, the Registrant's common stock was trading.
At such date, 11,402,621 shares of Registrant's common stock were held
by non-affiliates.
As of September 30, 2000, Registrant had outstanding 18,902,756 shares of
Common Stock.
<PAGE>
CENTRE CAPITAL CORPORATION
FORM 10-KSB
YEAR ENDED SEPTEMBER 30, 2000
INDEX
ITEM 1 BUSINESS
ITEM 2 PROPERTIES
ITEM 3 LEGAL PROCEEDINGS
ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9 DIRECTORS AND EXECUTIVE OFFICERS
ITEM 10 EXECUTIVE COMPENSATION
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
SIGNATURES
I
<PAGE>
ITEM 1. BUSINESS
REGISTRANT. Centre Capital Corporation, the Registrant herein, is a Nevada
corporation, whose offices are located at 2619 Gravel Drive, Ft. Worth, Texas
76118. It can be reached by phone at (817) 284-5365 and by fax at (817)
284-8204.
The Company was organized February 1, 1999, as a Nevada corporation named Vista
InterNatural Products 1, Inc. ("VIP"). Effective June 1, 1999 VIP merged with
Centre Capital Corporation ("Centre"), ("the Merger"). The results of
operations of Centre are included in the financial statements since the date of
acquisition.
Centre was incorporated in Nevada on September 6, 1988 for the purpose of
exchanging stock with Burke Oil Company ("Burke"), a Utah corporation. Centre
acquired the controlling block (in excess of 60%) of the stock of Burke. Centre
was dormant at that time, and never activated or operated Burke.
In January, 1996 Centre issued 500,000 shares of its common stock for all of The
outstanding shares of KFA, Inc. ("KFA"). KFA marketed a non-toxic insecticide
designed primarily for the extermination of fire ants. Centre sold all of its
shares of KFA to a shareholder of Centre in May, 1999.
In Connection with the Merger, Centre effected a one for three reverse stock
split its common shares (all share figures have been adjusted to reflect this
reverse split). Centre then issued one share for every two shares of VIP common
stock to the shareholders of VIP in exchange for 100% of the outstanding shares
of VIP.
The Merger has been accounted for as a reverse merger with VIP being the
acquirer. Therefore, VIP's historical financial statements are now the
Company's historical financial statements.
EMPLOYEES. Registrant currently has 3 Employees, of whom 2 are executive
officers or members of management.
DISTRIBUTOR NETWORK. Registrant has approximately 1,753 independent
distributors located in 22 states. Registrant actively recruits individuals who
can effectively demonstrate and promote products sold in the registrant's
product line and use Registrant's direct marketing techniques to sell its
products and sponsor other distributors. Registrant uses a multi-level
marketing system to compensate its distributors. Under this system, the
Registrant pays a commission based on products purchased within his/her network.
These commissions are paid weekly. Distributors are responsible for all
expenses incurred by them for their sales efforts.
CAPITAL STOCK. Registrant has authorized 50,000,000 shares of its $0.001 par
value common stock of which 18,902,756 are issued and outstanding.
ITEM 2. PROPERTIES
Registrant leases approximately 4,000 square feet of office space in Ft. Worth,
Texas. Registrant purchased 5 acres of land in Duncan, Oklahoma. This land has
2 existing buildings that are registered with the local historical society.
They represent a total of 11,636 square feet in Duncan, Oklahoma.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings are pending by or against Registrant or its subsidiaries or
their directors, officers or affiliates, and to Registrant's knowledge no such
legal proceedings are threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
No current matters are pending that would require it to be submitted to the
stockholders for a vote.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK ANR RELATED
STOCKHOLDER MATTERS
The Registrants stock is traded and has been assigned the symbol CCCX.
There is currently an active public trading market for Registrant's Common
Stock. At September 30, 2000, Registrant had 600 record holders of its
Common Stock.
1
<PAGE>
ITEM 6. MANAGEMENT DISCUSSION AND ANALYSIS:
Registrant formed its corporation on February 1, 1999. It had acquired
most of the assets from an existing Oklahoma corporation and has continued to do
business as Vista InterNatural Products 1, Inc. The registrant has considerable
knowledge and experience in the area of multi-level marketing of nutritional
supplements and body care products.
PRODUCTS:
The Registrant currently offers a full line of leading edge nutritional
supplements, personal care, home and auto, and pest control products of the
highest quality. Several of these products are of a proprietary nature and are
manufactured exclusively for the Registrant. The Registrant is continually
seeking new leading edge products to add to its already successful product line.
The Registrant directly contracts with independent manufacturers to produce its
products in accordance with highest quality standards attainable. There are
several qualified manufacturers available to the Registrant to produce and
package the products sold. All dietary and nutritional supplements are produced
in licensed pharmaceutical laboratories for maximum quality control.
The Registrant is also developing supplier relationships that will give
first priority for its packaging in order to supply quality packaging in short
notice situations. This feature will greatly benefit the Registrant as it
increases inventory to match its anticipated rapid growth.
Several of the key ingredients are kept on hand to avoid costly supply
delays.
The Registrant anticipates its inventory requirements on a ninety day
forward requirement. The Registrant also carries a substantial quantity of
preprinted packaging products to avoid unnecessary delays.
Registrant incurred a loss in the amount of $3,976,362 for the year ended
September 30, 2000. These losses were not anticipated as the Company was unable
to consummate several mergers that they had anticipated completing. Consulting
fees of $3,304,847 were written off in the current year because of the failed
mergers. Cost of sales in the amount of $266,909 comprised of product
purchases, commissions and freight was approximately 67% which is lower with
enterprises in the same industry and similar size. Operating expenses such as
advertising, compensation costs, and general and administrative expenses
amounted to $770,056 for the year and included costs incurred because of the
anticipated merger. Normally, as sales increase with expansion, the operating
expenses should be increase only slightly and place the registrant in a
profitable position.
2
<PAGE>
Revenue:
Revenue is from the sale of nutritional supplements and body care products
sold through its network of distributors.
Cost of sales:
For the initial eight months, cost of sales totaling $266,909 consisted of
the following:
Purchases and inventory acquired 35,550
Commissions and contract labor 212,907
Freight 18,452
-------
Total 266,909
=======
Operating expenses:
Operating expenses totaling $4,074,903 for the year consisted
of the following:
Advertising and selling 15,404
Depreciation 21,275
General and administrative 420,093
Consulting 3,304,847
Compensation costs 313,284
---------
Total 4,074,903
=========
Property:
During the initial eight months of operations, the registrant purchased two
building on three parcels of land located in Duncan, Oklahoma. The building was
financed with a short term note payable to the former owner in the amount of
$525,000. $125,000 has already been paid on the note leaving a balance of
$400,000 to pay by August 20, 2000. At September 30, 2000, the principal
balance of $400,000 was in default and the Company is current with its monthly
interest payment. The Company is currently trying to restructure the terms with
the former owner, or alternately, is trying to sell the property.
Liquidity and Capital Resources:
The registrant has financed its operations since inceptions by cash
advances by several individuals.
MARKET ANALYSIS:
The Registrant sells products that are in high demand by the general
public. The market for these and similar products grows by 50,000 people per
week in the United States. The Registrant competes with other products and
providers with quality, service, price, and guarantees. The Registrant has
numerous experts throughout the industry seeking quality leading edge products
to promote through its network of trained distributors.
A Look to the Future:
The registrant has relied on financing from certain individuals to fund its
operations and acquisition of property. There are also financial commitments
from these and other individuals who believe very strongly in the dynamic future
growth of the company. Management believes that it can issue new shares of
common stock to retire all major debt.
The products are priced reasonably to the consumer and provide the company with
a very favorable profit margin. Registrant's products are produced under FDA
guidelines in licensed pharmaceutical laboratories and directly competes with
healthcare products that cost more and are often found less effective.
The registrant is looking for quality distributors to market its products
and hopes to double/triple its distributor base within one year. The registrant
is currently distributing products in 22 states and plans to be in 22 more
before the end of the next fiscal year.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The financial statements of registrant are set forth immediately following
the signature page of this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL
DISCLOSURE
Registrant has had no disagreements with its certified public accountant
with respect to accounting practices or financial disclosures.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table presents the name, age, and position of each Executive
Officer and Director. Each was elected in February of 1999 and all directors
serve until replaced.
NAME AGE POSITION
---- --- --------
Karl Jacobs 50 Chairman of the Board
Catherine Jacobs 51 President
Linda Lohman 51 Vice president
John Marrou 59 Chief Financial Officer
Susan McNair 30 Secretary
Mark Spradling 42 Director
Stephen Nibarger 28 Director
BIOGRAPHICAL INFORMATION
Set forth below is certain biographical information regarding each of the
registrant's Executive Officers and Director.
Karl F. Jacobs, Chairman of the Board and Chief Executive Officer. Mr. Jacobs
graduated from Oklahoma State University in 1972 with honors and a Bachelor's of
Science Degree in Business Administration. He worked in banking, real estate
and insurance and owned and operated retail music and video stores from 1968 to
1995. Since 1995 Mr. Jacobs has been engaged in direct multi-level marketing,
achieving numerous performance awards while developing and managing a large
multi-level sales organizations
4
<PAGE>
Catherine Jacobs, President. Ms. Jacobs is the wife of Karl Jacobs and has
over 14 years experience in the oil and gas industry. She has also trained and
managed a large network marketing organization and won numerous performance
awards.
Linda Lohman, Vice-President. Ms. Lohman has more than 30 years experience in
medical health insurance with Traveler's Insurance Company and she presently has
a supervisory position with a major insurance company as Client Administrator
while working part-time for Centre.
John Marrou, Chief Financial Officer. Mr. Marrou has been involved in all
phases of accounting for over thirty years.
Susan McNair, Secretary. Ms. McNair has been involved inmulti-level
direct marketing since 1994 and has trained and developed large sales
organizations.
Mark Spradling, Director. Mr. Spradling owns and operates a construction and
real estate company since Duncan, Oklahoma. He has also worked in multi-level
marketing since 1994 and trained and developed a large sales organization
nationwide.
Stephen Nibarger, Director. Mr. Nibarger is a Technology Manager for a Fortune
500 Company in Dallas, Texas. Mr. Nibarger has considerable experience in
multi-level marketing and direct sales.
ITEM 10. EXECUTIVE COMPENSATION
NAME CAPACITY 2000
---- -------- ----
Catherine Jacobs President $16,262
Linda Lohman Vice-President $17,692
Financial Officer
ITEM 11. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 2000, the name address and
number of shares of Registrants common stock, par value $0.001 per share, held
of record or beneficially by each person who held of record, or was known by
Registrant to own beneficially, more than 5% of the then 18,902,756 issued and
outstanding shares of Registrant's Common Stock, and the name and share holdings
of each director and of all officers and directors as a group.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
CLASS BENEFICIAL OWNER AMOUNT
----- ---------------- ------
Common Karl Jacobs 412,500
1526 N. 13th St.
Duncan, Oklahoma 73533
Common Cede & Co. 4,246,649
P.O. Box 222
Bowling Green Station
New York, New York 10274
Common Vista International Products, Inc. 6,060,704
P.O. Box 750057
Duncan, Oklahoma 73533
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
CLASS BENEFICIAL OWNER AMOUNT
----- ---------------- ------
Common Karl Jacobs 412,500
Common Catherine Jacobs 102,558
Common Linda Lohman 423,395
Common Susan McNair 132,846
Common Mark Spradling 68,132
Common Stephen Nibarger 300,000
ALL OFFICERS, DIRECTORS & BENEFICIAL PERSONS
AS A GROUP (7 PERSONS) 1,439,431
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain beneficial owners have advanced cash and paid expenses and
purchased property on behalf of the Registrant.
During the year ended September 30, 2000, $974,412 was repaid through the
issuance of 6,060,704 of common stock of the Company. At the end of the
current fiscal year, there remained $5,300 in Advances From Stockholders and
$131,650 in Notes Payable, Stockholders.
ITEM 13. EXHIBITS
Exhibit No. Description
27 Financial Data Schedule
6
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Form 10KSB to be signed on its behalf by the undersigned
hereunto duly authorized, this 15 day of January, 2001. Centre Capital
Corporation.
/s/ JOHN MARROU By: /s/ KARL JACOBS
-------------------- ----------------------
JOHN MARROU/ Karl Jacobs
Chief Financial Officer Chairman of the Board
7
<PAGE>
[TURNER STONE & CO. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
----------------------------
Board of Directors
Centre Capital Corporation
and Subsidiary
Fort Worth, Texas
We have audited the accompanying consolidated balance sheets of Centre Capital
Corporation and subsidiary as of September 30, 2000, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
consolidated financial statements of Centre Capital Corporation and subsidiary
as of September 30, 1999 and for the year then ended were audited by other
auditors whose report dated November 22, 1999 expressed an unqualified opinion
on those consolidated financial statements and included an explanatory paragraph
relating to the Company's ability to continue as a going concern.
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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2000 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Centre
Capital Corporation and subsidiary, as of September 30, 2000, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Certified Public Accountants
December 26, 2000
8
<PAGE>
<TABLE>
<CAPTION>
CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED BALANCE SHEETS
---------------------------
SEPTEMBER 30, 2000 AND 1999
---------------------------
Assets
------
2000 1999
-------- --------
<S> <C> <C>
Current assets:
Cash $ - $ -
Accounts receivables, trade net of
allowance for doubtful accounts
of $0 1,602 -
Inventory 127,041 141,381
Prepaid expenses 830 1,537
-------- --------
Total current assets 129,473 142,918
-------- --------
Property, plant and equipment, at cost, net of
accumulated depreciation of $26,812
and $5,537, respectively 589,327 598,525
-------- --------
$718,800 $741,443
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
9
<PAGE>
<TABLE>
<CAPTION>
CENTRE CAPITAL CORPORATION
---------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED BALANCE SHEETS
---------------------------
SEPTEMBER 30, 2000 AND 1999
---------------------------
Liabilities and Stockholders' Deficit
-------------------------------------
2000 1999
------------ -----------
<S> <C> <C>
Current liabilities:
Accounts payable, trade $ 308,794 $ 57,302
Accrued expenses 8,132 -
Advances from stockholders 5,300 620,266
Note payable 400,000 500,000
Notes payable, stockholders 131,650 -
------------ -----------
Total current liabilities 853,876 1,177,568
------------ -----------
Commitments and contingencies - -
Stockholders' deficit:
Common stock, $.001 par value, 50,000,000
shares authorized, 18,902,756 and 10,042,052
shares issued and outstanding, respectively 18,902 10,042
Paid in capital in excess of par 4,438,942 170,391
Accumulated deficit (4,592,920) (616,558)
------------ -----------
(135,076) (436,125)
------------ -----------
$ 718,800 $ 741,443
============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
10
<PAGE>
CENTRE CAPITAL CORPORATION
----------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
----------------------------------------
2000 1999
------------ ----------
Revenues, net of returns and allowances $ 399,742 $279,595
Cost of revenues 266,909 218,000
------------ ----------
Gross profit 132,833 61,595
------------ ----------
Operating expenses:
Advertising and selling 15,404 42,487
Depreciation 21,275 5,537
General and administrative 420,093 242,776
Consulting 3,304,847 -
Compensation costs 313,284 240,422
------------ ----------
4,074,903 531,222
------------ ----------
Operating loss (3,942,070) (469,627)
Interest expense 34,292 2,666
------------ ----------
Loss before income taxes (3,976,362) (472,293)
Federal and state income taxes - -
------------ ----------
Net loss $(3,976,362) $(472,293)
============ ==========
Loss per share:
Basic $ (.30) $ (.05)
The accompanying notes are an integral part of the consolidated financial
statements.
11
<PAGE>
<TABLE>
<CAPTION>
CENTRE CAPITAL CORPORATION
----------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
------------------------------------------------
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
----------------------------------------
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1998 6,881,447 $ 6,881 $ 147,863 $ (129,270) $ 25,474
Reverse split of common
shares 1 for 3 (4,587,631) (4,588) 4,588 -
Issuance of common stock for
outstanding common stock of VIP 7,748,236 7,749 2,945 - 10,694
Adjustment of equity accounts to give
effect for reverse merger accounting - - 14,995 (14,995) -
Net loss - - - (472,293) (472,293)
----------- -------- ---------- ------------ ------------
Balance at September 30, 1999 10,042,052 10,042 170,391 (616,558) (436,125)
Issuance of common stock
for payment of services 2,800,000 2,800 3,297,200 3,300,000
Issuance of common stock
to retire debt 6,060,704 6,060 971,351 977,411
Net loss - - - (3,976,362) (3,976,362)
----------- -------- ---------- ------------ ------------
Balance at September 30, 2000 18,902,756 $18,902 $4,438,942 $(4,592,920) $ (135,076)
=========== ======== ========== ============ ============
</TABLE>
The accompany notes are an integral part of the consolidated financial
statements.
12
<PAGE>
<TABLE>
<CAPTION>
CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
YEAR ENDED SEPTEMBER 30, 2000 AND 1999
--------------------------------------
2000 1999
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,976,362) $(472,293)
------------ ----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 21,275 5,537
Common stock issued for services 3,300,000 -
Changes in operating assets and liabilities
Accounts receivable (1,602) -
Inventories 14,340 (112,512)
Prepaid expenses 707 4,296
Accounts payable 251,491 317,466
Accrued expenses 8,132 -
------------ ----------
3,594,343 214,787
------------ ----------
Cash used in operations (382,019) (257,506)
------------ ----------
Cash flows from investing activities:
Purchase of property and equipment (12,076) (577,493)
------------ ----------
Cash used in investing activities (12,076) (577,493)
------------ ----------
Cash flows from financing activities:
Advances from stockholders 419,945 330,478
Repayment of stockholder advances (57,500) -
Proceeds from note payable - 525,000
Repayments of note payable (100,000) (25,000)
Proceeds from notes payables, stockholders 154,150 -
Repayment of stockholder advances (22,500) -
------------ ----------
Cash provided by financing activities 394,095 830,478
------------ ----------
Net increase (decrease) in cash - (4,521)
Cash at beginning of period -
------------ ----------
Cash at end of period $ - $ -
============ ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
13
<PAGE>
CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and operations
-------------------------
Centre Capital Corporation, d/b/a Vista InterNatural Products 1, resulted from
the merger of Centre Capital Corporation (CCC) with Vista InterNatural Products
1, Inc., (VIP) on June 1, 1999. The Company packages and markets health and
beauty care products through a multi-level marketing program to customers
located in the southwestern United States.
CCC was incorporated in the state of Nevada on September 6, 1988 and, prior to
its merger with VIP, the Company had limited operations most recently owning the
rights to distribute and sell a product used for the control of fire ants.
VIP was incorporated in the state of Nevada on February 1, 1999 to distribute
and sell health and beauty care products.
On June 1, 1999, CCC issued 7,748,236 common stock shares in exchange for all of
the outstanding common stock shares of VIP. In connection with and prior to the
merger, CCC effected a one for three reverse split of its common stock.
Stockholders' deficit has been restated to give retroactive recognition to the
stock split for all periods presented, such that all references in the
accompanying consolidated financial statements to number of shares, per share
amounts and par value of common stock have been restated.
The transaction was accounted for as a reverse merger using the purchase method
of accounting under Accounting Principles Board Opinion No. 16 with VIP being
the acquirer for financial reporting purposes. The purchase price of the net
assets acquired has been allocated among the net assets based on their relative
fair values. No portion of the purchase price was allocated to goodwill.
Results of operations of CCC are included in the accompanying consolidated
statements of operations beginning June 1, 1999. Results of operations on a pro
form basis for the year ended September 30, 1999, assuming the acquisition
occurred as of October 1, 1998, are as follows.
Revenues $ 279,595
Net Loss $(504,946)
Principles of consolidation
---------------------------
The accompanying consolidated financial statements include the general accounts
of the Company and its wholly owned subsidiary, Vista InterNatural Products 1,
Inc. (VIP) each of which have fiscal years ending September 30th. All material
intercompany transactions, accounts and balances have been eliminated in the
consolidation.
14
<PAGE>
CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Basis of presentation and going concern uncertainty
---------------------------------------------------------
The consolidated financial statements of the Company have been prepared assuming
that the Company will continue as a going concern. The Company has incurred
recurring losses and, as of September 30, 2000, has a working capital deficit of
approximately $724,403 and was in default on its building loan. These
conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. The Company is pursuing the sale of its building
and land in Oklahoma and attempting to raise additional equity capital. In
addition, the Company is downsizing its Fort Worth facilities and plans to
concentrate on current product sales and finding other products to sale.
Management believes that these steps will provide the Company with the
opportunity to achieve its objectives of increasing sales and meeting
obligations to its creditors and stockholders alike. There is, however, no
assurance that the steps taken or programs in place will meet all of the
Company's needs or that it will continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Management 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.
Cash flows
-----------
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents. None of the Company's cash is restricted.
Revenue recognition
--------------------
The Company primarily sales its products to distributors through a multi-level
marketing approach. Sales to distributors are made pursuant to agreements that
provide the distributors with certain rights of return on unsold merchandise
(Note 4). Revenues from such sales are recognized upon shipment. Revenue from
direct sales are also recognized upon shipment of product.
Advertising costs
------------------
Advertising costs, which consist primarily of sales catalogues and promotional
brochures, are charged to expense as incurred. For the years ended September 30,
2000 and 1999, advertising expense totaled $15,404 and $37,935, respectively.
15
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CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Property and equipment
------------------------
Property and equipment is stated at cost less accumulated depreciation.
Depreciation of property and equipment is being provided by the straight-line
method over estimated useful lives of three to forty years. At September 30,
2000 and 1999, property and equipment was comprised of the following.
2000 1999
--------- ---------
Land $130,000 $130,000
Building 420,000 420,000
Equipment 50,628 41,500
Furniture and fixtures 15,511 12,562
--------- ---------
616,139 604,062
Less accumulated depreciation (26,812) (5,537)
--------- ---------
$589,327 $598,525
========= =========
Inventories
-----------
Inventory consists of health and beauty care products and is stated at the lower
of cost or net realizable value (market) and it consists of finished goods that
have not been shipped to customers. The cost of inventory is determined using
the first-in, first-out method.
Loss per share
----------------
For the years ended September 30, 2000 and 1999, basic loss per share amounts
are computed using the weighted-average number of common stock shares
outstanding totaling 13,203,085 and 10,042,052, respectively.
Long-lived assets
------------------
The Company periodically reviews its long-lived assets and certain identifiable
intangibles for impairment. When events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable, the Company writes
the asset down to its net realizable value. The Company incurred no impairment
of long-lived assets charge during the years ended September 30, 2000 and 1999.
Stock based incentive program
--------------------------------
SFAS No. 123, "Accounting for Stock-Based Compensation," encourages entities to
recognize compensation cost for stock-based employee compensation plans using
the fair value method of accounting, as defined therein, but allows for the
continued use of the intrinsic value method of accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees." The Company has not granted any options or warrants however, it
plans to use the accounting prescribed by APB Opinion No. 25. As such, the
Company will be required to disclose pro forma net income and loss per share
amounts as if the fair value method of accounting has been applied.
16
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CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
2. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires companies to
recognize all derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge, the objective of which
is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedge asset or
liability that are attributable to the hedge risk or (ii) the earnings effect of
the hedged forecasted transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of change.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.
The Company has not entered into derivatives contracts either to hedge existing
risks or for speculative purposes. Accordingly, the adoption of this new
standard in July 1999 did not affect its financial statements.
3. PROMISSORY NOTE PAYABLE
-------------------------
On July 30, 1999, the Company purchased land and a building located in Duncan,
Oklahoma and executed an 8% per annum promissory note in the amount of $ 525,000
secured by the land and building. The note is payable $25,000 on August 31, 1999
, $100,000 on October 31, 1999 and the balance on July 31, 2000. Interest is
payable monthly. At September 30, 2000 the principal balance of this note is in
default and the Company is current with its monthly interest payments.
4. COMMITMENTS AND CONTINGENCIES
Leases
------
The Company conducts its operations from facilities leased located in Ft. Worth,
Texas under non-cancelable operating lease agreements expiring through 2003.
For the years ended September 30, 2000 and 1999, rent expense approximated
$32,000 and $18,000 respectively. Future minimum rental payments required under
the terms of these leases are as follows.
Year Ended
September 30 Amount
------------ ------
2001 $ 51,310
2002 40,600
2003 40,895
2004 3,410
---------
$ 136,215
=========
Legal matters
--------------
The Company is subject to legal proceedings that arise in the ordinary course of
business. Management does not believe that the outcome of any of these matters
will have a material adverse effect on the Company's financial position,
operating results or cash flows.
17
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CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Product warranties
-------------------
The Company offers a money back guarantee on all products sold for a period of
one year. The accompanying financial statements do not contain any reserve for
such claims based on its history of minimal product returns.
5. RELATED PARTY TRANSACTIONS
Notes payable, stockholders
-----------------------------
During the year ended September 30, 2000, the Company issued notes payable to
various stockholders of $154,150, which bears interest at 8.0% per annum. During
the year ended September 30, 2000 the Company repaid $22,500. At September 30,
2000, unpaid stockholder notes totaled $131,650 and accrued interest payable on
these notes totaled $2,289.
Advances from stockholders
----------------------------
During the years ended September 30, 2000 and 1999, the Company received
advances from various stockholders of $419,945 and $620,266, respectively.
During the year ended September 30, 2000 and 1999, $57,500 and $0 was repaid,
respectively. In addition, during the year ended September 30, 2000, $977,412 of
these advances were repaid through the issuance of 6,060,704 of common stock
shares. At September 30, 2000 and 1999, unpaid stockholder advances total $5,300
and $620,266, respectively.
6. INCOME TAXES
The Company accounts for corporate income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109. Under SFAS No. 109, deferred tax
assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. In addition,
future tax benefits, such as those from net operating loss carry forwards, are
recognized to the extent that realization of such benefits is more likely than
not. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. A reconciliation of income tax expense
at the statutory federal rate of 34% to income tax expense at the Company's
effective tax rate for the years ended September 30, 2000 and 1999 is as
follows.
2000 1999
------------ ----------
Tax benefits computed at statutory rate $(1,351,963) $(160,580)
Increase in valuation allowance 1,350,729 159,553
Permanent differences 1,234 1,027
------------ ----------
$ - $ -
============ ==========
18
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CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
As of September 30, 2000 the Company has approximately $4.58 million of regular
net operating losses to offset future federal income taxes. These carryforwards
expire in the year 2009 through 2010. As a result of this net operating loss
carryforwards the Company has a deferred tax asset of $1,559,332, which has been
fully offset by a valuation allowance.
The Tax Reform Act of 1986 imposed substantial restrictions of the utilization
of net operating loss and tax credit carryforwards in the event of an "ownership
change" as defined by the Internal Revenue Code of 1986. If the Company has an
"ownership change" as defined by the Internal Revenue Code, the Company's
ability to utilize the federal net operating losses could be reduced.
7. OTHER STATEMENT OF CASH FLOWS DISCLOSURES
For the years ended September 30, 2000 and 1999 , supplemental disclosures of
cash flow information is as follows:
2000 1999
------------- ------------
Cash paid for interest $ 34,292 $ 2,666
Cash paid for income taxes - -
Non-cash investing and financing activities:
Issuance of common stock in payment of
stockholder loans $ 977,411 -
Issuance of common stock in exchange for
services $ 3,300,000 -
Issuance of common stock in reverse merger - $ 116,490
8. FINANCIAL INSTRUMENTS
The Company's financial instruments, which potentially subject it to credit and
other risks, consists of its cash, accounts receivable, note payable and notes
and advances from stockholders.
Cash
----
The Company maintains its cash in bank deposit and other accounts, which, at
times, may exceed federally insured limits. The Company has not experienced any
losses in such accounts and does not believe it is exposed to any significant
credit risks involving its cash.
Accounts receivable, trade
----------------------------
The Company accounts receivable result from credit card sales. The Company does
not issue credit to its customers. Management believes their accounts
receivable are fairly stated at estimated net realizable amounts and not exposed
to any significant credit risks.
Note payable
-------------
Management believes the carrying value of the note payable represents the fair
value of this financial instrument because its terms are similar to those in the
lending market for comparable debt with comparable risks.
19
<PAGE>
CENTRE CAPITAL CORPORATION
--------------------------
AND SUBSIDIARY
--------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Notes and advances from stockholders
----------------------------------------
Management believes the carrying value of these notes and advances represent the
fair value of these financial instruments because their terms are similar to
those in the lending market for comparable loans with comparable risks.
20
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
27 Financial Data Schedule
21
<PAGE>
