US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB/12g/A
General Form for registration of securities of small business issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SKINTEK LABS, INC.
------------------
(Name of Small Business Issuer in its charter)
DELAWARE 65-0636227
-------- ----------
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation)
1750 NW 65th Avenue, Plantation, FL 33313
----------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
954-327-8548
------------
(Issuer's telephone number)
Securities registered under Section 12 (b) of the Exchange Act: None
(Title of class)
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001
-----------------------------
(Title of class)
Page 1 of 41
Table of Content
PART I
Page No.
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Finical Condition and
Results of Operations
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
PART II
Item 1. Market for Common Equity and Related Stockholder Matters
Item 2. Legal Proceedings
Item 3. Changes In and Disagreement with Accountants
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
PART F/S
Financial Statements
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
PART I
Item 1. Description of Business
- - -------------------------------
Organization
Skintek Labs, Inc., a Colorado corporation incorporated
on December 13, 1994 under the name, Biologistics, Inc.
(hereinafter the "Company" or the "Registrant"), to engage in the
business of clinical consulting, contract packaging and labeling
services for clinical studies. The Company never commenced
business operations. On April 22, 1997, as a result of a merger
into its subsidiary, Biologistics, Inc., which was incorporated
on March 19, 1997, the Company became a Delaware corporation.
Performance Brands, Inc., incorporated on September 21,
1995, under the laws of the State of the State of Florida.
Performance Brands is engaged in the wholesale and retail
distribution and sale of a variety of products for the skin-care
market. See "Business-Operations" below. On March 31, 1999, the
Company incorporated a wholly owned subsidiary, PBI Acquisition
Corp. ("PBI") and on the same date, Performance Brands, Inc.
merged with PBI. This merger involved the exchange of shares,
pursuant to which the sole shareholders of Performance Brands,
Inc., Stacy and Cathy Kaufman, exchanged all of their capital
stock of Performance Brands, Inc. for shares of the Company's
common stock. This exchange was accounted for as a reverse
purchase for reporting and accounting purposes. See the
Consolidated Financial Statements of the Company and its
subsidiary, Performance Brands, Inc., which are attached hereto
as Part F/S.
The Company and the Industry
Performance Brands, Inc. Has been in business since 1995,
engaged in the sale of products for skin fitness and self-
tanning. Hereinafter, Performance Brands, Inc. and its business
operations shall be referred to as the "Company". The skin
fitness and self-tanning business is part of the Sun and Body
Care Industry, which has been a growing industry. The Company's
products are sold though specific classes of trade: i.e. direct
mail, drug chains, mass market outlets, health food stores, gyms,
and tanning, nail and hair salons, as well as private label
sales.
This growth has been the result, in part, of the
increasing public awareness of the potential danger to skin and
health from prolonged exposure to the sun and the fact that the
ozone layer will continue to erode over the next 20 years. A
recent article in Soap/Cosmetics/Chemical Specialties magazine
projected a trend toward products with higher SPFs (Sun
Protection Factor), which is the measure of the UVB protection in
a sun care product. In the same publication, it was reported that
there was a trend in the US for the use of sunscreens year-round.
As the public becomes more and more educated on the dangers of
excess exposure to the sun, it will be realized that UVA rays are
present the entire year, not just during the summer, when UVB
rays are the strongest.
In 1994, the National Weather Service, in its daily
weather reports, started projecting the amount of ultraviolet
intensity expected in 58 different cities in the United Stated
between 11:30a.m. and 12:30p.m. the following day. Called the UV
Index, ultraviolet intensity is ranked on a scale of 1 to 15.
This program, created in cooperation with the Environmental
Protection Agency and the Center for Disease Control and
Protection, relates the UV intensity with the SPF or 20 or higher
is recommended for an index over 10.
The Company believes that this focus by Federal agencies on the
impact of the sun's intensity, and the daily reporting on
television and radio and other media of the index, should
continue the trend to greater consumption of protective sun care
products.
Authorities in the sun care industry have noted that the
significant growth appears to be in "niche" products, those that
are prepared for a select market or packaged for a select market.
Examples are products oriented toward children, products
asserting to be "all natural", self-tanning products, and
products that combine sunscreen with insect repellent, among
other products.
In addition to the Company's line of sun-care products,
the Company also markets a line of body washes, which have been
enjoying increasing consumer use and acceptance. Until
approximately four to five years ago, most Americans relied upon
bar soaps and wash clothes for their personal cleansing needs.
Presently, it is estimated that 25% or more of the population
have already changed the way they bathe, using body washes and
cleansing puffs rather than bar soap. In fact, since their wide
introduction in 1994, body washes have become the fastest growing
trend in the personal cleansing category. The Company believes
that the current trend is to liquid soaps.
Competition and Ease of Entry Into The Sun and Body Care Industry
There are few barriers to entry into the industry.
Further, there exists substantial competition in the sun and body
care industry, virtually of which have longer operating history,
far greater financial, personal and other resources, with
substantial product lines and sales and marketing budgets and
proven records of success. Among other entities that the Company
must compete with include the very large corporations such as
Cheeseborough-Pond'sr, Gilletter, Proctor & Gambler and Lever
Brothersr, and the smaller, but well-established companies such
as Tom's of Mainer and Freeman Cosmeticsr. These latter two
companies have entered and established themselves in the
specialized body wash product market.
Major corporations as well as individual entrepreneurs
and businesses are capable of modifying existing sun care
formulas on the market and, with a reasonable investment, begin
selling competitive products in a fairly quick time-frame, as
large staffs are not needed to be successful in this industry,
provided that a company has qualified sales and marketing
efforts. After ten years in business, Sun Pharmaceuticals, Ltd.,
manufacturer of the Banana Boatr product line, reached the $80
million sales level, with only 100 employees.
The industry is growing in many ways domestically and
internationally, which should continue to serve to attract
competition. There are many new sun care products and many new
consumers, for which the Company must compete.
In order for the Company to be competitive, the Company
must devote substantial time, professional and management
efforts, and retain outside marketing experts, to promote its new
product line, SOAPSCREENr, which involves a high front-end cost,
presently estimated at approximately $100,000. The Company
projects that initial sales of its body wash and sunscreen
products under the SOAPSCREENr name will commence in the Spring
of 2000. Further, if the Company is successful in establishing
the SOAPSCREENr product line, it may be expected that competitive
products will enter the market, notwithstanding the fact that the
Company has patent pending status of the Company's 10-SBS
Polyscreen formulation.
The Company's ability to compete will also be dependent
upon its success in establishing itself as a leader in the filed
of SPF soaps/body washes. Sunscreens have been used as a major
ingredient in face creams for several years by major
manufacturers, which entities will be in position to compete with
the Company.
With respect to the Company's professional skin fitness
line, sold in gyms and health food stores, the Company has one
principal competitor, Jan Tana. The Company believes that it will
be able to successfully compete.
Notwithstanding the foregoing, the Company believes that
it will be able to compete with larger, more established firms,
because its primary focus is to market its products into the
niche markets, for specialty products that include skin care
products with sunscreens. The Company's professional tanning
product line, sold under the ProTanr name, is distributed to the
professional gym/health club and the health food markets. These
are examples of the niche markets where competition is not as
intense, and where the Company believes that it will be able to
successfully compete.
The Company's professional line of indoor tanning
products, marketed under the ProTanr name, presently competes
with six key producers, including the established Australian
Goldr, California Tanr, Swedish Beautyr, Suprer, Power Tanr and
Most products. While there can be no assurance, the Company
believes that it will be able to successfully compete on the
basis of quality and price in the market for its ProTanr line.
However, in order for the Company to compete, the Company must
maintain and increase its distribution network.
The Bar and Liquid Soap Industry
Total 1997 sales of bar soaps for all retail outlets in
the country were $1.4 billion, a slight drop of 4% from the prior
year. However, the sales of other soaps and cleansers (body
washes) increased 33% during that year to $670 million. The
current trend in the industry is to liquid soaps. Until three
years ago, most Americans relied on bar soaps and wash clothes
for their personal cleansing needs. Today, approximately one-
quarter have already changed the way they bathe, using body
washes and cleansing puffs instead. Introduced in 1994, they have
become the fastest growing trend in the personal cleansing
category. According to an article in the October, 1997,
Soap/Cosmetics/Chemical Specialties, "The rising popularity of
the body wash can be attributed to two things--body washes are
cleaner and more convenient to use in the shower or bath and they
simplify the skin care process by combining the cleansing and
moisturizing steps."
The significant growth pattern of body washes has
attracted a variety of products from many manufacturers,
including the long-established and financially strong companies
such as Cheesebrough-Pond'sr, Gilletter, Procter & Gambler, and
Lever Bros.r The industry also includes established smaller
producers such as Tom's of Mainer and Freeman Cosmeticsr, which
have also entered and become competitive in the specialized body
wash products into the market.
Sources of Supply
The component ingredients for the Company's products are
manufactured by third parties. The Company does not believe that
it is dependent upon any single manufacturer, and that other
sources of supply would be available, if necessary. At present,
Cosmetic Corporation of America, located in Medley, FL ("CCA"),
the prime filler for the new product line, is estimated by the
Company to be operating at significantly less than capacity and
the Company believes that it will be able to continue to utilize
the services and components from CCA for the foreseeable future.
The Company also sources other manufacturers, including Custom
Manufacturing Corporation, Medley, FL, Farmanatural, Davie, FL,
Five Star Brands LLC, Grand Rapids, MI and Rovar Soap Company,
Los Angeles, CA.
While the Company contemplated during the 1998 fiscal
year the possibility of establishing its own manufacturing
facility to fulfill its need for component ingredients and
complete product manufacture, at present the Company believes
that it may continue to rely upon third party manufacturers, to
supply the components for its product lines. In addition to the
use of third party manufacturers to manufacture and supply the
component ingredients for the Company's products, and to
manufacture the packaging for the display and sale of its
finished products, such third parties also provide the Company,
at no additional cost, storage space for such components and
packaging materials, as needed. The Company believes that this
arrangement shall also be satisfactory for the foreseeable
future, and that no additional facilities or space will be
required by the Company.
Sales, Marketing and Distribution of Products
The Company's products are sold through a variety of
retail outlets, including drug chains, grocery/supermarkets,
health food stores, and tanning nail and hair/beauty salons,
among other outlets. The Company owns the following registered or
trademarked proprietary names: ProTan(R), SOAPSCREEN(R), Sun-
screen Barrier System(R), Earthen Naturals(TM), Earthen Treasures(TM),
Beauty Bites(TM), and Meta Slim 2000(TM). In addition, the Com-
pany has a patent pending and several PCT patents pending for
its liquid body wash and sunscreen compositions. The Company
presently is marketing and selling products under the names
ProTan(R), SOAPSCREEN(R), Sunscreen Barrier System(R), Earthen
Naturals(TM), Earthen Treasures(TM), and plans to commence marke-
ting efforts under the trade names, Beauty Bites(TM), and Meta
Slim 2000(TM). There can be no assurance that the Company will
be able to generate market acceptance for the new products or
be able to continue to develop and grow the market for existing
products.
The announcement in June, 1999, of the Company's
proprietary, patent pending liquid body wash and sunscreen
formula under the registered trademark, SOAPSCREENr The Company
also utilizes approximately fifty wholesale distributors to
market and sell its products, which distributors also inventory,
ship and bill the Company's customers directly, as part of their
distribution services.
The Company also generates sales via mail order, from
direct mail and Internet marketing by the Company. In addition,
the Company uses the services of independent sales brokers
nationwide, who are paid commissions equal to 5% of the sales
generated. These independent brokers primarily sell the Company's
products to the drug, mass retail and grocery/supermarket
markets. The Company also generates sales under a private label
program for products designed and marketed exclusively for a
select group of national direct mail order merchants.
The Company's ability to successfully market and sell its
products will be dependent upon the acceptance of its products in
the various markets into which it presently sells as well as
those markets into which it hopes to expand. In order to be
successful, of which there can be no assurance, the Company must
be able to devote substantial resources to its sales and
marketing efforts and budget, which budget the Company projects
shall reach $1,000,000 during the next twelve months. As noted,
the Company presently sells its products through fifty
distributors, which market to ten thousand outlets, several
national drug and mass market chains and over 200 independent
drug stores, as well as several national catalogs.
Government Regulations
At present, there are no specific regulations or approvals
required by or from the Federal or state government or any agency
for the products manufactured by the Company. Further, all of the
Company's products are manufactured under GRAS (generally
recognized as safe) for the cosmetic industry. Further, each of
the Company's products that are or have been produced are
retained for three years. As a result, there are no present or
anticipated regulations that have or may have any effect upon the
Company or its business.
Item 2. Management's Discussion and Analysis of Finical Condition
and Results of Operations
- - -----------------------------------------------------------------
Results of Operations
During the Company's fiscal years ended December 31, 1998
and 1997, respectively, the Company had sales of $429,914 and
$463,002, respectively. The reason for the slight decline in
sales from fiscal 1997 to 1998, was due to the delay in the
Company bringing certain new products to the market. The Company
incurred a net loss of $469,573 ($0.12 per Share) during 1998,
compared to a net profit of $60,323 ($0.02 per Share) for the
prior fiscal year. For the nine-month period ended September 30,
1999, the Company had sales of $848,396, compared to sales of
$347,349 during the nine month period ended September 30, 1998.
During such nine month periods ended September 30, 1999 and 1998,
respectively, the Company has net losses of $85,663 ($0.02 per
Share) and $301,720 ($0.09 per Share), respectively. During the
three-month period ended September 30, 1999, the Company had
sales of $305,561 compared to sales of $125,045 for the
comparable three-month period in 1998. For these three-month
periods, the Company had a net loss of $85,131 ($0.01 per Share),
compared to $86,552 ($0.03 per Share) for the prior year. See the
Financial Statements attached hereto, which reflect increased
sales and operating expenses associated with the increased sales
efforts and results.
The Company's net loss for the year ended December 31,
1998, was principally the result of significantly higher
expenditure on selling, general and administrative expenses,
which was $636,743 during 1998, compared to $165,133 during the
prior fiscal year. The Company expended more funds (an increase
of 800%) during 1998, compared to fiscal 1997, for selling
expenses, to pay for the introduction of its SOAPSCREENr product
line. The Company's administrative expense increase by
approximately 225% from 1997 to 1998, which was principally the
result of costs associated with the merger, and general expenses
increased slightly related to the use of outside consultants for
the development and marketing stages to launch the SOAPSCREENr
product line. The Company believes that it will be required to
continue to expend funds for sales and marketing, which it
estimates, will be approximately $1,000,000 over the next 12
months.
Liquidity and Capital Resources
The Company, at September 30, 1999 had current assets of
$806.476, compared to current assets of $186,927 at December 31,
1998. The increase in current assets is the result of increased
sales, which led to increased cash, accounts receivable,
inventory and stock subscriptions receivable. The Company's
accounts receivable are all current and collectible, with no
return privileges, and the inventory is all ready for sale. The
increase in inventory consists of both finished products and
components used for manufacturing finished products. The
Company's sales policies do not provide any customers with any
return privileges and sales are not contingent.
The Company's current liabilities were $180,263 at
September 30, 1999 compared to $372,033 at December 31, 1998. The
Company achieved this improvement principally as a result of the
conversion of short-term debt into equity, and increased cash
flow from operations. On November 13, 1998, a merger consultant's
note for $82,333 was converted into 164,667 Shares and 208,333
Shares were issued under Rule 144. On March 31, 1999, $541,667 of
merger consultant's note was converted into 1,083,338 Shares, and
on July 6, 1999, a total of 1,034,933 Shares were sold to the
merger consultant at price of $.50 per Share, resulting in stock
subscriptions receivable of $392,286, after the quarter's
payments to the Company by consultants. During 1998 and 1999, a
merger consultant advanced the Company $514,000 and paid an
additional $117,915 in merger related expenses for the Company.
There are no trends that the Company is aware of that
would adversely impact upon its liquidity and the Company has no
plans for any large capital expenditures. There is a trend, as
discussed above under Description of Business, as a result of the
increased public awareness of the risks associated with excess
exposure to the sun, of the need for skin protection products,
such as those of the Company. There can be no assurance, however,
of the Company's ability to exploit this increased public
awareness, notwithstanding the growing demand.
The season for the Company's sun protection products is
from January through August. The Company believes that as it adds
to its product line, it would hope to increase the use of its
products year round. Material events that would effect the
Company's financial condition relate directly to the market
acceptance for existing and new products. Any decline in
acceptance would adversely effect the Company's ability to
increase its distribution, which in turn would increase its
sales. The Company's liquidity and future success shall be
dependent upon the market acceptance of the Company's proprietary
liquid body wash with sunscreen, which the Company believes is
the only product of its kind on the market. The Company hopes to
expand into the "functional foods" market with a new line of
products under the Beauty Bites(TM) name. It does not presently
have a budget allocated for this new product line.
Year 2000
The Year 2000 issue results from certain computer systems and
software applications that use only two digits (rather than four)
to define the applicable year. As a result, such systems and
applications may recognize a date of "00" as 1900 instead of the
intended year 2000, which could result in data miscalculations
and software failures. The Company has conducted a preliminary
assessment of its key computer systems and software applications
and believes they are Year 2000 compliant. The Company is in the
process of communicating with all key suppliers, financial
institutions and customers to identify and coordinate the
resolution of any Year 2000 issues that might arise. Based on the
initial assessment, the Company believes the cost of addressing
the Year 2000 issue should not have a material impact on the
Company's financial position or results of operations.
Item 3. Description of Property
- - -----------------------------------
The Company presently leases approximately 6800 square
feet of executive office space at 1750 NW 65th Avenue,
Plantation, FL 33313, for $3,500 per month. The condition of the
Company's leased facilities in Plantation, FL are excellent, and
are sufficient for its use for the foreseeable future. The
Company, as noted above, also has available from third party
manufacturers of the components used to manufacture the Company's
products and the manufacturer/suppliers of the packaging for its
products the use of storage space to store such components and
materials at no cost. This arrangement is also adequate for the
Company's purposes for the foreseeable future.
Item 4.Security Ownership of Certain Beneficial Owners and
Management
As of November 30, 1999, the security ownership of the
following persons and entities, who were either executive
officers of the Company or were known to the Company to own more
than five percent (5%) of the Company's outstanding voting
securities was as follows:
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Title of Class Name and Amount and Percent of
Address of Nature of Class(1)
Beneficial Beneficial
Owner Ownership
- - -----------------------------------------------------------
Common Stock Stacy Kaufman 3,371,666 (2) 56.94%
1750 NW 65th
Avenue
Plantation, FL
33313
Common Stock Cathy Kaufman 0 (3) 52.1%
1750 NW 65th
Avenue
Plantation, FL
33313
</TABLE>
______
(1) Based upon 5,921,271 shares issued and outstanding at
November 30, 1999, but does not include shares underlying
stock options as discussed below.
(2) Includes 3,083,333 shares owned of record and
beneficially by Stacy Kaufman and Cathy Kaufman, jointly and
288,333 owned of record and beneficially by Stacy Kaufman.
(3) A total of 3,083,333 shares are owned of record and
beneficially by Stacy Kaufman and Cathy Kaufman, jointly.
On March 30, 1999, the Company entered into an employment
agreement with Stacy Kaufman, the Company's president and
majority stockholder, in which was included an incentive
compensation stock option plan. This plan allows the president to
purchase up to 2,500,000 shares of common stock by March 29,
2009, when and provided that certain annual revenue levels are
reached, beginning at December 31, 1999. These shares were not
included in the diluted shares for the earnings per share
calculation. See the Consolidated Financial Statements attached
hereto.
Item 5. Directors, Executive Officers, Promoters and
Control Persons.
- - ----------------------------------------------------
(a) The directors and executive officers are:
<TABLE>
<S> <C> <C>
Name Age Title
Stacy Kaufman 34 President, Chief Executive
Officer, and a Director
Cathy Kaufman 41 Secretary, Treasurer and a
Director
</TABLE>
All directors hold office until the next annual meeting of
stockholders of the Company and until their successors have been
elected and shall qualify. Officers serve at the discretion of
the Board of Directors. The Company contemplates prior to the end
of the current fiscal year or during the first quarter of fiscal
2000, that it shall enter into an employment agreement with a
chief chemist, Michael Dulak, the terms of which have not been
determined as of the date of this Form 10-SB.
Stacy Kaufman has served as President, Chief Executive
Officer and a Director of the Company from its inception, having
organized the Company in September, 1995. Mr. Kaufman serves the
Company in a full time capacity. Mr. Kaufman formulated and
developed SkinTekr brand of products in 1985 and developed the
PRO TANr instant tanning products in 1986. Mr. Kaufman has worked
for the Company and its predecessor for more than the past five
years. Effective March 30, 1999, the Company entered into a five
(5) year executive employment agreement with Stacy Kaufman. See
"Executive Compensation" below.
Cathy Kaufman has been Secretary, Treasurer and a Director
of the Company since September, 1995. During the past five years,
Cathy Kaufman, who is married to Stacy Kaufman, prior to he
employment with the Company, served as comptroller of a private
company has served as comptroller in the mail order business.
Item 6. Executive Compensation
- - ------------------------------
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities All other
Name and Other Restricted Underlying LTIP Compen-
Principal Annual Stock Options/SAR Payouts sation
Position Year Salary Bonus($) Compen- Awards (#) ($) ($)
(*) Sation($)
- - -----------------------------------------------------------------------------------------------------
Stacy
Kaufman 1998 65,942 0 80,000 0 0 0 0
President,
CEO
Stacy
Kaufman 1997 1,200 0 0 0 0 0 0
President,
CEO
Stacy
Kaufman 1996 0 0 0 0 0 0 0
President,
CEO
Cathy
Kaufman
Secretary 1998 6,350 0 0 0 0 0 0
Treasurer
Cathy
Kaufman
Secretary 1997 0 0 0 0 0 0 0
Treasurer
Cathy
Kaufman
Secretary 1996 0 0 0 0 0 0 0
Treasurer
</TABLE>
Stacy Kaufman has served as the Company's chief executive officer and
president during the respective years set forth above. On March 30 ,1999,
the Company entered into a five (5) year executive employment agreement
with Mr. Kaufman, which provides for annual base salary of $100,100,
subject to an annual increase of 10%, a bonus based upon performance
determined by the board of directors, consisting presently of Mr. Kaufman
and his wife, Cathy Kaufman, and incentive compensation in the form of
stock options, under the Company's 1999 Stock Option Plan. This plan
provides for the right to purchase 2,500,000 shares ("Option Shares"),
exercisable until the close of business on March 29, 2009, at an exercise
price of $.50 per Option Share, which was in excess of 110% of the fair
market value of the Company's shares on the date of the agreement and
grant. The right to exercise the options shall be contingent upon the
Company's receipt of revenues, as follows: if and when the cumulative
revenues reach $700,000, the right to exercise 500,000 Option Shares;
$1,540,000 in revenues, and additional 500,000 Option Shares; $2,548,000 in
revenues, an additional 500,000 Option Shares; $3,757,600 in revenues, and
additional 500,000 Option Shares, and $5,209,120, the last 500,000 in
Option Shares. Cathy Kaufman has served as Secretary and Treasurer during
the respective years set forth above.
Item 7. Certain Relationships and Related Transactions
- - -----------------------------------------------------
During fiscal 1997 and 1998 and to date, the Company has
had no transactions with related parties, except for the
executive employment agreement between the Company and its
president and chief executive officer, Stacy Kaufman. See the
discussion in the footnote to the table under "Executive
Compensation" above.
Item 8. Description of Securities
- - ---------------------------------
The Company's authorized capital stock consists of
50,000,000 shares of common stock, par value $.001 per share, and
1,000,000 shares of preferred stock, par value $.001, of which
360,000 shares are designated as series `A' preferred stock.
There are no shares of preferred stock issued or outstanding.
The series `A' preferred stock has the following rights,
preferences and limitations:
(1) Dividends: Mandatory preferential dividends, as a
group, equal to 10% of the Company's adjusted gross profit as
reflected on its annual corporate income tax return, which
dividend is to be paid, pro rata, among the holders of the issued
and outstanding shares of A preferred within ten days of the
filing of such return.
(2) Liquidation Preference: In the event of any
liquidation, dissolution or winding-up of the Company, 10% of the
Company's assets shall be distributed, pro rata, to the holders
of the A preferred before division and distribution of assets to
the holders of the Company's common stock.
(3) Voting Rights: The holders of A preferred shall have
no voting rights.
(4) Conversion Rights: The holders of A preferred shall
have the right to convert their shares of A preferred into shares
of the Company's common stock on the basis of three shares of
common stock for every share of A preferred delivered to the
Company for conversion. The procedure for delivering the
certificates of A preferred to the Company and issuing common
shares therefore shall be as designated by the Company's board of
directors.
The holders of shares of the Company's common stock shall
have one vote on each matter submitted to shareholders for vote,
including the election of directors. There are no cumulative
voting rights for shares of common stock and therefore, the
holders of a majority of the Company's outstanding shares of
common stock, represented by Stacy and Cathy Kaufman, will be
able to elect the entire board of directors. The board of
directors of the Company has the authority to designate the
management of the Company and therefore control the Company.
PART II
Item 1. Market for Common Equity and Related Stockholder Matters
- - ----------------------------------------------------------------
The Company's common stock is traded over-the-counter in
what is referred to as the "NASDAQ Bulletin Board". As of
November 30, 1999, there were 7 markets makers in the Company's
stock. The following information with respect to the high and low
market prices was obtained from the Company's records. The
Company's shares on May 12, 1999 had a 1 for 6 reverse split, and
the table below reflects such information.
<TABLE>
<S> <C> <C>
Bid Prices Bid Prices
1997 High Low
Quarter Ending June 30 $ 4 1/2 $ 3
Quarter Ending Sept. 30 $ 5 1/4 $ 2 1/4
Quarter Ending Dec. 31 $ 3 3/8 $ 3
1998 High Low
Quarter Ending March 31 $ 4 1/8 $ 2 3/4
Quarter Ending June 30 $ 3 3/4 $ 2
Quarter Ending Sept. 30 $ 3 3/8 $ 2 5/8
Quarter Ending Dec. 31 $ 1 1/2 $ 5/16
1999 High Low
Quarter Ending March 31 $ 4 1/4 $ 3/16
Quarter Ending June 30 $ 4 1/4 $ 3/16
Quarter Ending Sept. 31 $ 2 3/8 $ 1 1/32
Period Ending Nov. 30 $ 1 7/16 $ 3/16
</TABLE>
The Company is filing this Form 10-SB/12g/A for the
purpose of registering as a reporting company under the
Securities Exchange Act of 1934 (the "Exchange Act"), and thereby
enabling the Company to reapply to NASDAQ for the purpose of
having its shares again trade on the NASDAQ Bulletin Board.
Effective Octboer 7, 1999, the shares ceased to trade on the
NAASDAQ:OTC bulletin board, because the Company was not reporting
under the Exchange Act. The Company intends to apply upon the
effective date of this registration statement to apply to have
its shares again trade on the NASDAQ:OTC:Bulletin Board. As of
November 30, 1999, there were 150 holders of the Company's common
stock. The Company has never paid a dividend and does not
anticipate that any dividends will be paid in the near future.
Item 2. Legal Proceedings
- - -------------------------
The Company is not a party to any litigation that is
material. The Company is a defendant in an action pending in the
Circuit Court in and for Broward County, Florida. The action
alleges a claim for $15,000, which is the minimum amount
necessary for jurisdictional purposes in order to commence an
action in such court. The claim of the plaintiff, a model,
alleges that the Company used plaintiff's image without a
consent. The Company does not believe that the action, if
adjudicated against the Company, will not have a material adverse
impact upon the Company or its financial condition. Further, the
Company believes that it will be able to settle this action
through negotiations with the plaintiff, at terms satisfactory to
the Company, which it does not believe will exceed $5,000.
Item 3. Changes in and Disagreement with Accountants on Accounting
- - -----------------------------------------------------------------
None. The Company's independent accountant, Grassano
Accounting, P.A., is the successor independent accounting firm to
the prior independent accountants, Grassano and Associates.
During the past two years, the Registrant's financial statements
have been audited by the accounting firms of Grassano Accounting
P.A. and its predecessor firm, Grassano and Company. P.A. The
predecessor accounting firm, Grassano and Company P.A., did not
resign, decline to stand for re-election nor was it dismissed.
Rather, it was reorganized as Grassano Accounting P.A. The
principal accountant's report on the financial statements for
either of the past two years did not contain an adverse opinion
or disclaimer of opinion, nor was any report modified as to
uncertainty, audit scope, or accounting principles. The decision
to change accounting firms was recommended and approved by the
board of directors. There were no disagreements with the former
(predecessor) accountant, whether or not resolved, on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which if not resolved
to the former accountant's satisfaction, would have caused it to
make reference to the subject matter of the disagreement(s) in
connection with its report.
Item 4. Recent Sales of Unregistered Securities
- - -----------------------------------------------
The Company sold the following unregistered shares as set forth
below during the past three years. In connection with the
transactions, no commissions were paid to any person or entity,
and no underwriter was involved, nor was any officer, director or
affiliate of the Company paid or given any consideration.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class of Title and Nature and
Date persons/purchasers Amount Amount
(1) of Securities of Consideration
- - -------------------------------------------------------------------------
11/10/98 private 164,667 common Cash $82,333.50
investors shares
11/11/98 consultant 208,333 common Services valued at
shares $104,166.50
03/31/99 private 1,034,933 Cash
investors common shares $541,666.50
07/06/99 private 1,034,933 $517,466.50 in
investors common shares promissory
note, of which
$242,095 is due
in cash payable
to the Company
and the remainder in
other consideration
and securities
</TABLE>
(1) Each of the transactions was based upon a share value of
$.50 per share. The shares sold to private investors, all of whom
were sophisticated investors, were sold pursuant to a private
offering exemption and the shares bear an appropriate restrictive
legend. The shares issued to the consultant were issued for
services in connection with the merger of the PBI into the
Company, at a value of $.50 per share.
Item 5. Indemnification of Directors and Officers
- - -------------------------------------------------
The Company's Certificate of Incorporation provides that
the Company indemnify all persons whom it may indemnify to the
fullest extent allowed by the General Corporation Law of
Delaware.
PART F/S
Financial Statements
The financial statements for the fiscal years ended
December 31, 1998 and 1997, and for the nine-month periods ended
September 30, 1999 and 1998 (unaudited), are attached hereto. The
financial statements attached hereto do not reflect any oral
comments from the SEC. Such financial statements will be amended
following receipt of written comments from the SEC with respect
to this Form 10-SB/12g/A.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINICAL STATEMENTS
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 22
Consolidated Balance Sheets 25-26
Consolidated Statements of Operations 27-28
Consolidated Statements of Stockholders' Equity (Deficit) 29-30
Consolidated Statements of Cash Flows 31-32
Notes to Consolidated Financial Statements 33-39
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Board of Directors and Stockholders of
Skintek Labs, Inc. (formerly Biologistics, Inc.)
Plantation, Florida
We have audited the accompanying consolidated balance sheets of
Skintek Labs, Inc. (formerly Biologistics, Inc.) and Subsidiary
(the Company) as of June 30, 1999 and December 31, 1998, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for the six months ended June 30, 1999 and
for the years ended December 31, 1998 and 1997, respectively.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The
consolidated financial statements give retroactive effect to the
merger of Skintek Labs, Inc. and Performance Brands, Inc. (the
Subsidiary), which has been accounted for as a reverse purchase
as described in Note A of the accompanying notes to consolidated
financial statements. We did not audit the financial statements
of Skintek Labs, Inc. (formerly Biologistics, Inc.) for the nine
months ended September 30, 1998 and for the year ended December
31, 1997, and we did not audit the financial statements of
Performance Brands, Inc., the Company's wholly owned subsidiary,
for the years ended December 31, 1998 and 1997, respectively.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Skintek Labs, Inc. (formerly Biologistics, Inc.) and
Subsidiary at June 30, 1999 and December 31, 1998, and the
results of its operations and its cash flows for the six months
ended June 30, 1999 and for the years ended December 31, 1999 and
1998, respectively, in conformity with generally accepted
accounting principles.
We have compiled the accompanying consolidated statement of
operations of Skintek Labs, Inc. (formerly Biologistics, Inc.)
and Subsidiary for the six months ended June 30, 1998 and the
related consolidated statement of cash flows for the six months
then ended in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute
of Certified Public Accountants. The consolidated financial
statements give retroactive effect to the merger of Skintek Labs,
Inc. and Performance Brands, Inc. A compilation is limited to
presenting in the form of financial statements information that
is the representation of management. We have not audited or
reviewed the consolidated financial statements mentioned in this
paragraph and, accordingly, do not express an opinion or any
other form of assurance on them.
/s/ Grassano Accounting, P.A.
Boca Raton, Florida
August 16, 1999
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Biologistics, Inc.
Hollywood, FL 33020
Members of the Board:
We have audited the accompanying balance sheets of Biologistics,
Inc. as of September 30, 1998 and December 31, 1997 and 1996 and
the related statements of operations and stockholders' equity
(deficit) and statements of cash flows for the nine months ended
September 30, 1998, the year ended December 31, 1997 and the
period from July 16, 1996 through December 31, 1996. These
financial statements are the responsibility of the Company's
owner and management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits 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 financial statements referred to above
present fairly, in all material respects, the financial position
of Biologistics, Inc. as of September 30, 1998 and December 31,
1997 and 1996, and the results of its operations and its cash
flows for the periods then ended in conformity with generally
accepted accounting principles.
/s/ Grassano & Company, P.A.
Boca Raton, Florida
October 2, 1998
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Performance Brands, Inc.
1750 NW 65th Avenue
Plantation, FL 33313
Members of the Board:
We have audited the accompanying balance sheets of Performance
Brands, Inc. as of December 31, 1998 and 1997 and the related
statements of operations and retained earnings and cash flows for
the years then ended. These financial statements are the
responsibility of Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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 financial statements referred to above
present fairly, in all material respects, the financial position
of Performance Brands, Inc. as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 6 to the financial statements, the Company has suffered a
significant loss from operations during the year with a drop of
sales and a marked increase in the cost of sales and selling
expenses and has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern.
/s/ Grassano & Company, P.A.
Boca Raton, Florida
April 9, 1999
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Sep 30, Dec. 31,
1999 1998
CURRENT ASSETS
Cash $ 44,249 $ -
Accounts Receivable 132,363 24,722
Inventory 138,216 24,748
Stock Subscriptions Receivable 392,286
Due from Stockholders 99,362 137,457
------- -------
806,476 186,927
------- -------
PROPERTY AND EQUIPMENT
Machinery and Equipment 37,782 21,658
Furniture and Fixtures 9,451 5,052
------ ------
47,233 26,710
------ ------
Less: Accumulated Depreciation 27,344 24,094
------ ------
NET PROPERTY AND EQUIPMENT 19,889 2,616
------ ------
OTHER ASSETS
Security Deposits 6,745 4,885
Intangible Assets (Less: Accumulated
Amortization of $2,458 in 1999
and $1,823 in 1998) 23,555 22,475
Goodwill (Less Accumulated
Amortization
of $10,615 in 1999 and $0 in 1998) 125,300 18,000
------- ------
TOTAL OTHER ASSETS 155,600 45,360
------- ------
TOTAL ASSETS $981,965 $234,903
======= =======
</TABLE>
The financial information presented herein has been prepared by
management without audit by independent certified public
accountants.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT
<TABLE>
<S> <C> <C>
Sep 30, 1999 Dec. 31,1998
CURRENT LIABILITIES
Accounts Payable $163,069 $237,945
Payroll Taxes Payable 3,964 8,330
Income Taxes Payable 1,576 47,604
Notes Payable 11,654 78,154
------- -------
TOTAL CURRENT LIABILITIES 180,263 372,033
------- -------
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $0.001 Par Value,
50,000,000 Shares
Authorized, 5,921,271 Shares
Issued & Outstanding
in 1999 and 3,430,000 Shares
Issued & Outstanding
in 1998 5,921 3,430
Preferred Stock, $0.001 Par Value,
Non-Voting,
1,000,000 Shares Authorized,
0 Shares Issued & Outstanding - -
Additional Paid in Capital 1,160,145 19,670
Retained Earnings (Acc. Deficit) (364,364) (160,230)
------- -------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 801,702 (137,130)
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY (DEFICIT) $981,965 $234,903
======== ========
</TABLE>
The financial information presented herein has been prepared by
management without audit by independent certified public
accountants.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
<S> <C> <C> <C> <C>
Sept. 30, Sept. 30, 1998 Sept. 30, Sept. 30, 1998
1999 1999
(Unaudited) (Unaudited) (Unaudited)(Unaudited)
SALES $305,561 $125,045 $848,396 $347,349
COST OF SALES 207,658 93,372 465,106 263,038
------- ------- ------- -------
GROSS PROFIT 97,903 31,673 383,290 84,311
------- ------- ------- -------
OPERATING EXPENSES
Selling 73,007 46,947 188,470 233,339
General 37,190 20,675 96,406 51,988
Administrative 94,411 58,632 223,358 118,719
------- ------- ------- -------
TOTAL OPERATING EXPENSES 204,608 126,254 508,234 394,046
------- ------- ------- -------
INCOME (LOSS) FROM
OPERATIONS (106,705) (94,581) (124,944) (309,735)
------- ------- ------- -------
OTHER INCOME AND EXPENSE
Miscellaneous Income 20,513 8,029 36,926 8,029
Interest Income 1,061 - 2,738 -
Interest Expense - - (383) (14)
------ ----- ------ ------
TOTAL OTHER INCOME(Expenses) 21,574 8,029 39,281 8,015
------ ----- ------ ------
NET INCOME (LOSS) BEFORE
PROVISION FOR (BENEFIT
PROVISION FOR INCOME TAXES (85,131) (86,552) (85,663) (301,720)
Provision for Income TAXES 0 0 0 0
------ ------ ------ -------
NET INCOME (LOSS) (85,131) (86,552) (85,663) $60,323
RETAINED EARNINGS
(ACCUMULATED DEFICIT),
BEGINNING OF PERIOD (279,233) (73,678) (278,701) 141,490
------- ------ ------- -------
RETAINED EARNINGS
(ACCUMULATED DEFICIT),
END OF PERIOD $(364,364) $(160,230) $(365,364) $(160,230)
======= ======= ======= =======
NET INCOME (LOSS)
COMMON SHARE
Basic $(.01) $(.03) $(.02) $(.09)
Diluted $(.01) $(.03) $(.02) $(.09)
====== ====== ====== ======
SHARES USED IN COMPUTING
NET INCOME (LOSS) PER
COMMON SHARE
Basic 5,853,775 3,430,000 4,851,248 3,430,000
========= ========= ========= =========
Diluted 5,853,775 3,430,000 4,851,248 3,430,000
========= ========= ========= =========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Retained Total
Number of Number of Common Preferred Additional Earnings Stockholders's
Shares Shares Stock Stock Paid In Accumulated Equity
common Preferred Capital Deficit (Deficit)
Balance at Dec. 31, 3,250,000 360,000 $3,250 $360 $19,490 $81,167 $104,267
1996
May 13, 1997
converted
360,000 preferred
into
180,000 common Shares 180,000 (360,000) 180 (360) 180 - -
Net Income - - - - - 60,323 60,323
-----------------------------------------------------------------------------
Balance at Dec. 31, 3,430,000 0 3,430 0 19,670 141,490 164,590
1997
November 13, 1998
converted $82,333
of
merger consultant's
note
into 164,667 shares
of
common stock and
issued an
additional 208,333
of
Sec. 144 common Shares 373,000 - 373 - 81,960 - 82,333
Net Loss - - - - - (420,191) (420,191)
------------------------------------------------------------------------------
Balance at Dec. 31, 3,803,000 0 $3,803 $- $101,630 $(278,701) $(173,268)
1998
March 31, 1999
converted
$541,667 of merger
consultant's note
into
1,083,338 shares of
common stock 1,083,338 - 1,083 - 540,584 - 541,667
July 6, 1999 sold
1,034,933
shares of common
stock
to merger
consultant
for $.50 per share 1,034,933 - 1,035 - 517,931 - 518,966
Net Loss - - - - - (85,663) (85,663)
------------------------------------------------------------------------------
Balance at June 30, 5,921,271 0 $5,921 $0 $1,160,145 $(364,364) $801,702
1999 ==============================================================================
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
For the For the Nine Months Ended
Three
Months
Ended
Sept. Sept. 30, Sept. 30, Sept.
30, 1999 1998 1999 30, 1998
(Unaudited) (Unaudited) (Unaudited ) (Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss) $(85,131) $(86,552) $(85,663) $(301,720)
Adjustments to Reconcile
Net Income
(Loss) to Net Cash
Provided by
(Used in) Operating
Activities
Depreciat. and Amort. 5,123 501 11,254 805
Decrease ( Increase) Increase
in Accounts Receivable 95,099 (115,474)
Increase in Inventory 60,789 (55,117)
Decrease (Increase) in Income
Taxes Receivable 28,948
Increase in Security Deposits (1,360) (1,860) (2,150)
Increase (Decrease) in
Accounts Payable (137,542) 49,704 (102,199) 222,386
Increase(Decrease)in Payroll
Taxes Payable (769) 4,050 (1,648) 7,251
Increase(Decrease)in Income
Taxes Payable (5,000) (7,424) (15,103)
------- ----- ----- ------
NET CASH PROVIDED
BY (USED IN) OPERATING
ACTIVITIES (63,791) (37,297) (329,183) (88,531)
------- ------ ------- ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Loan Repayments from
(Advances to)
Stockholders (Net) (61,212) (7,327) (38,595) 24,388
Purchases of Machinery (3,688) (2,965) (20,024) (2,965)
and Equipment
Purchases of Intangible (1,714)
Assets
Purchases of Goodwill (11,643)
------ ----- ------ -----
NET CASH USED IN
INVESTING ACTIVITIES (64,900) (10,292) (71,976) 21,423
------ ------ ------ ------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Sale of 125,180 41,500 125,180
Common Stock
Proceeds from Note 326,643 66,500
Payable
Reduction of Note Payable (6,415) (6,415)
------- ------ ------- ------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 118,765 41,500 445,408 66,500
------- ------ ------- ------
NET INCREASE(DECREASE)IN CASH (9,926) (6,089) 44,249 (608)
CASH, BEGINNING OF PERIOD 54,175 6,089 0 608
------- ------ ------- ------
CASH, END OF PERIOD $44,249 $0 $44,249 $0
======= ====== ======= ======
SUPPLEMENTAL DISCLOSURES OF
CASH
FLOW INFORMATION
Cash paid during the period for:
Interest $0 $0 $383 $14
======= ====== ====== ======
Income Taxes $0 $0 $7,424 $0
======= ====== ====== ======
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
SKINTEK LABS, INC.
(FORMERLY BIOLOGISTICS, INC)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
SUPPLEMENTARY DISCLOSURE OF NON-CASH OPERATING ACTIVITIES
On November 13, 1998, $82,333 of merger consultant's note was
converted into 164,667 shares of common stock. 208,333 shares of
Rule 144 common stock were also issued.
On March 31, 1999, $541,667 of merger consultant's note was
converted into 1,083,338 shares of common stock.
On July 6, 1999, 1,034,933 shares of common stock were sold to
the merger consultant for $.50 per share, resulting in stock
subscriptions receivables of $392,286 at September 30, 1999 after
the quarter's payments by consultants.
The financial information presented herein has been prepared by
management without audit by independent certified public
accountants.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ---------------------------------------------------
Organization
On December 13, 1994, Skintek Labs, Inc. (the "Company")
under the name of Biologistics, Inc. was incorporated under the
laws of Colorado, to engage in the business of clinical
consulting, contract packaging and labeling services for clinical
studies. The Company issued stock but never had any operations.
On April 22, 1997, the Company became a Delaware corporation when
it merged itself into its subsidiary, Biologistics, Inc.,
incorporated under the laws of Delaware on March 19, 1997.
Performance Brands, Inc. (the "Subsidiary") was
incorporated September 21, 1995 under the laws of the State of
Florida. The Company is engaged in the wholesale and retail
distribution and sale of various products in the skin-care
market. Currently, these products are being manufactured, to the
Company's specifications, in South Florida by several independent
fillers and by the Company.
On March 31, 1999, the Company incorporated a wholly-
owned subsidiary PBI Acquisition Corp. On the same day
Performance Brands, Inc. merged with PBI Acquisition Corp. when
the sole stockholder exchanged his stock in Performance Brands,
Inc. for 18,500,000 shares of Skintek Labs, Inc. Then PBI
Acquisition Corp. was dissolved, leaving Performance Brands, Inc.
as the surviving subsidiary of Skintek Labs, Inc. This stock-for-
stock transfer was accounted for as a reverse purchase.
Basis of Presentation and Consolidation
The consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and
include the accounts of Skintek Labs, Inc. and its wholly-owned
subsidiary Performance Brands, Inc. All material intercompany
transactions and balances have been eliminated in consolidation.
As described in Organization above, effective March 31,
1999, the Company acquired all of the common stock of Performance
Brands, Inc. The business combination was accounted for as a
purchase and accordingly, the Company's financial statements have
been presented to include the results of Performance Brands, Inc.
as though the business combination occurred as of January 1,
1997.
Inventory
Inventory is stated at the lower of cost or market, using
the first-in, first-out (FIFO) method and consists of bottles of
product, empty bottles, displays, and boxes. The raw materials
are expensed as purchased because their inventoried value would
be immaterial.
Property, Equipment and Depreciation
Property additions, major renewals and betterments are
included in the assets accounts at cost. Maintenance, repairs
and minor renewals are charged to earnings when incurred.
Depreciation is computed using the modified accelerated
cost recovery system and the straight-line method over the
estimated useful lives of the assets. The Company has elected to
expense, rather than depreciate, the cost of certain depreciable
personal property under Section 179 of the Internal Revenue Code.
Although, these methods are not generally accepted accounting
principles, the difference between them and any other acceptable
method is immaterial to the current financial statements.
Intangible Assets
On October 1, 1995, the Company purchased the customer
list and trademarks and certain fixed assets from an affiliated
company. The total purchase price for the assets was $25,000.
The property and equipment were recorded at net book value in the
amount of $702. The customer list and trademarks, which are
intangible assets, were recorded in the amount of $24,298 and are
being amortized over forty years. Goodwill is being amortized
over fifteen years. During the six months ending on June 30,
1999, the Company paid $1,715 in patent fees, which are being
amortized over seventeen years.
Long-Lived Assets
The Company periodically reviews the values assigned to
long-lived assets, such as property and equipment and acquired
customer bases, to determine whether any impairments are other
than temporary. Management believes that the long-lived assets
in the accompanying balance sheets are appropriately valued.
Revenue Recognition
Revenue from sales is recognized in the period in which
the products are shipped and invoiced to the customer. The
customers are generally the fifty independent distributors
throughout the world and an additional approximately eighteen
hundred wholesale accounts, principally in the U.S.A. and several
large American retail chains.
Advertising
Costs associated with advertising are expensed in the
year incurred. Advertising expenses, which are comprised
primarily of print media, were $52,415 and $22,628 for the three
months ending on September 30, 1999 and 1998, respectively; and
$96,178 and $182,542 for the nine months ending on September 30,
1999 and 1998, respectively.
Income Taxes
Since inception, the Company has maintained a fiscal year
ending on each 31st day of December. Provisions for income taxes
have not been presented as there is no taxable income after
consideration of net operating losses, and there are no timing
differences.
Earnings Per Common Share
The Company adopted Statement of Financial Accounting
Standard No. 128 ("FAS 128"), Earnings Per Share for the period
of these financial statements. Basic earning per common share is
computed using the weighted average number of common shares
outstanding. There was no dilution in the periods reported.
Recent Accounting Pronouncements
In 1999, the Company was subject to the provisions of
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income" and Statement of Financial
Accounting Standards No. 131 ("SFAS 131"), "Disclosures about
Segments of an Enterprise and Related Information." Neither
statement had any impact on the Company's financial statements as
the Company does not have any "comprehensive income" type
earnings (losses) and its financial statements reflect how the
"key operating decisions maker" views the business. The Company
will continue to review these statements over time, in particular
SFAS 131, to determine if any additional disclosures are
necessary based on evolving circumstances.
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.
Fair Value of Financial Instruments
The carrying amounts of financial instruments including
cash, accounts receivable, accounts payable and accrued expenses
approximated fair value because of the immediate or short-term
maturity of these instruments.
NOTE 2 - DUE FROM STOCKHOLDERS
- - ------------------------------
As of December 31, 1997, the Company had advanced the
stockholders $157,440. These advances were evidenced by an
unsecured promissory note at an interest rate of 6%, principal
and accrued interest due on demand or on December 31, 1998.
Interest of $7,835 was accrued as of December 31, 1997 and added
to the balance, resulting in a due from stockholders of $165,275.
During the year ended December 31, 1998, the stockholders
had repaid $130,000 and borrowed an additional $25,492. Interest
of $2,317 was accrued as of December 31, 1998, resulting in a
balance of $60,767 and evidenced by an unsecured promissory note
at an interest rate of 6%, principal and accrued interest due on
demand or on December 31, 1999.
During the three months ending on September 30, 1999,
interest of $1,061 was accrued, and the stockholders received
advances of $60,151 resulting in a balance of $99,362.
NOTE 3 - NOTES PAYABLE
- - ----------------------
On September 1, 1999, the Company purchased a forklift
for $12,954, financing $11,654 of the balance owed with a note
secured by the forklift at an interest rate of 12%. The monthly
installments are $338 through December 1, 1999. No payments have
ever been made; consequently, the note is in default, although no
demands for payment have ever been made.
During 1998 and 1999, a merger consultant advanced the
Subsidiary $757,095 and paid an additional $117,915 in merger
expenses for the Company. As of September 30, 1999, the Company
had converted all of the consultant's advances into common stock
and had issued additional common stock to the consultant
resulting in stock subscriptions receivable of $392,286.
NOTE 4 - STOCK TRANSACTIONS AND OPTIONS
- - ---------------------------------------
Common Stock
The Company initially authorized 50,000 shares of $0.001 par
value common stock. On April 22, 1997 the Company re-
incorporated in Delaware through a merger with its wholly owned
Delaware subsidiary. The Company changed its authorized capital
to 30,000,000 shares of $0.001 par value. As of December 31,
1998, the Company had issued 4,318,000 shares of common stock.
On March 31, 1999, 18,500,000 shares were issued to
effect the merger with Performance Brands, Inc. and 6,500,000
shares were issued for various items including the settlement of
$541,667 of debt. On May 12, 1999, the Company declared a 6 to 1
reverse stock split, leaving par at $.001, and changing the
number of shares authorized to 50,000,000. On July 6, 1999, the
Company issued an additional 1,034,933 shares of its common stock
for $.50 per share. As of September 30, 1999, the Company had
issued 5,921,271 shares of its common stock.
Preferred Stock
The Company has authorized 1,000,000 preferred shares
$0.001 par value, non-voting, the rights and preferences of which
to be determined by the Board of Directors at the time of
issuance. Currently, there are no preferred shares outstanding.
The Company has declared no dividends through June 30, 1999.
Stock Options
On March 30, 1999, the Company signed a convertible
promissory note agreement with the aforementioned merger
consultant (See Note 3.) in which all of the funds advanced to
the Company and its Subsidiary are convertible into shares of the
Company's common stock: 2 shares of stock for every $1 advanced.
As of September 30, 1999, 2,282,933 shares of common stock had
been issued for $757,095 of advances.
On March 30, 1999, the Company entered into an employment
agreement with the president and majority stockholder, in which
was included an incentive compensation stock option plan. This
plan allows the president to purchase up to 2,500,000 shares of
common stock by March 29, 2009 when certain annual revenue levels
are reached beginning at December 31, 1999. These shares were
not included in the diluted shares for the earnings per share
calculation.
NOTE 5 - PROVISION FOR INCOME TAXES
- - -----------------------------------
No provisions for income taxes were required because of the net
losses realized in all periods.
As of September 30, 1999, the Company has a Federal NOL
carryover of approximately $253,350 and a State NOL carryover of
approximately $450,837, both expiring in the year 2013, resulting
from carrying forward the Subsidiary's remaining net operating
loss from 1998.
NOTE 6 - COMMITMENTS
- - --------------------
The Company presently rents office and warehouse space
under a monthly lease. On August 25, 1999, the Company signed a
new thirty-six-month office lease, commencing on December 1, 1999
with monthly payments starting at $1,858. The amounts due under
this lease are as follows for the years ending December 31:
1999 $ 1,858
2000 22,400
2001 23,712
2002 22,838
---- ------
$ 70,808
======
The Company is obligated for an automobile lease which is
properly treated as a non-cancelable operating lease. The term
of the lease is 36 months with monthly payments of $466. The
amounts due under this operating lease are as follows for the
years ending December 31:
1999 $ 1,398
2000 2,329
$ 3,727
NOTE 7 - LITIGATION
- - -------------------
During the six months ending June 30, 1999, a model for a
Subsidiary promotion sued the Subsidiary for back royalties from
the product line advertised. Since the product line produced
approximately $3,000 in profits, the management of the Subsidiary
believes that there will be a nominal liability from this suit.
As of October 27, 1999, there had been no resolution.
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
Exhibit No. Document Description
3.1 Articles of Incorporation (to be filed by amendment)
3.2 Bylaws (to be filed by amendment)
10(iii) Material Contracts-Including Employment Agreement,
and Stock Option Plans (to be filed by amendment)
23 Consents of Independent Public Accountants
SIGNATURES
In accordance with Section 12 of the Securities Exchange
Act of 1934, the registrant caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
SKINTEK LABORATORIES, INC.
Date: December 1, 1999 By: /s/ Stacy
Kaufman, President
