SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
/ X / QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number 000-27615
CREATIVE PRODUCTS INTERNATIONAL
(Name of small business issuer in its charter)
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DELAWARE 52-2158936
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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3317 3RD AVE S, SEATTLE, WASHINGTON 98134
(principle executive offices)
(206) 264-1005
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(issuer's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
Warrants to purchase common stock
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports). And (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEEDING FIVE YEARS
Not applicable
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable. As of June 30, 2000, the Registrant had
1,912,204 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (check one) Yes No X
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<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
FORM 10-QSB
FOR THE 3 AND 6 MONTHS PERIOD ENDED JUNE 30, 2000
INDEX PAGE NUMBER
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PART I: FINANCIAL INFORMATION
Item 1 Balance Sheet at June 30, 2000 3
(unaudited)
Statement of Operations for the period
ended June 30, 2000 (unaudited) 4
Statement of Stockholders Equity 5
Statement of Cash Flows for the period
ended June 30, 2000 (unaudited) 6
Item 2 Notes to Financial Statements 7
Item 3 Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
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<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
ASSETS JUNE 30
2000
(UNAUDITED)
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<S> <C>
Current Assets
Cash $ 132,146
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Total current assets 132,146
Other assets:
Intangible assets, net 146,979
Technological assets, net 220,383
Equipment, net 25,262
Prepaid expenses 15,000
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Total other assets 407,624
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TOTAL ASSETS $ 539,770
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 117,838
Accrued liabilities - officer salary 43,750
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Total current liabilities 161,588
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Stockholders' equity
Common stock 19,122
Additional paid-in capital 515,730
Accumulated deficit (156,670)
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Total stockholders' equity 378,182
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 539,770
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<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME
JUNE 30, 2000
TOTAL
ACCUMULATED
DURING THE
3 MONTH 6 MONTH 3 MONTH 6 MONTH DEVELOPMENT
PERIOD PERIOD PERIOD PERIOD STAGE
1-APR-00 1-JAN-00 1-APR-99 25-MAR-99 25-MAR-99
TO TO TO TO TOTAL
30-JUN-00 30-JUN-00 30-JUN-99 30-JUN-99 30-JUN-00
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<S> <C> <C> <C> <C> <C>
Operating expenses
Amortization and depreciation $ 17,171 $ 25,888 $ - $ - $ 35,227
Marketing & Advertising 42,841 49,156 - - 47,806
Administration 38,709 44,959 - - 71,309
Professional fees 2,969 9,650 - - 9,650
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Total operating expenses 101,690 129,653 - - 163,992
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Net Loss from operations (101,690) (129,653) - - (163,992)
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Other income (expense)
Interest income 2,389 6,122 - - 7,322
Total other income 2,389 6,122 - - 7,322
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Net loss $ (99,301) $ (123,531) $ - $ - $ (156,670)
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Weighted average common shares outstanding 1,912,204 1,912,204 1,912,204 1,912,204 1,912,204
============= =========== ========== ========== ===========
Net loss per common share $ (0.05) $ (0.06) $ - $ - $ (0.08)
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<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS EQUITY
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
DATE OF NUMBER PAID-IN DEVELOPMENT
TRANSACTION OF SHARES PAR VALUE CAPITAL STAGE TOTAL
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<S> <C> <C> <C> <C> <C> <C>
Shares issued to parent for cash 25-Mar-99 1 $ - $ 50,000 $ - $ 50,000
Intangible assets contributed by 30-Jun-99 $ - $ 165,652 $ - $ 165,652
parent at historical cost
Shares issued to parent for cash 27-Sep-99 1,528,204 $ 15,282 $ 284,718 $ - $ 300,000
Shares issued to officer for cash Oct 4,1999 384,000 $ 3,840 $ 15,360 $ - $ 19,200
Net Loss Six Months Ended June 30, 2000 - $ - $ - $(123,531) $(123,531)
Net Loss Inception through Dec 31,1999 - $ - $ - $ (33,139) $ (33,139)
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Balance June 30, 2000 1,912,204 $ 19,122 $ 515,730 $(156,670) $ 378,182
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<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
JUNE 30, 2000
TOTAL
ACCUMULATED
DURING THE
3 MONTH 6 MONTH 3 MONTH 6 MONTH DEVELOPMENT
PERIOD PERIOD PERIOD PERIOD STAGE
1-APR-00 1-JAN-00 1-APR-99 25-MAR-99 25-MAR-99
TO TO TO TO TOTAL
30-JUN-00 30-JUN-00 30-JUN-99 30-JUN-99 30-JUN-00
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<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (99,301) $ (123,531) $ - $ - $(156,670)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization and depreciation 17,173 25,890 35,229
Changes in operating assets and liabilities
Prepaid expenses 4,800 (15,000) (15,000)
Accounts payable 109,572 117,839 117,838
Accrued salaries payable 12,500 18,750 43,750
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Net cash used in operating activities 44,744 23,948 - - 25,147
Cash flows from financing activities
Additional paid in capital 300,000
Proceeds from issuance of common stock to parent - - 350,000 350,000
Proceeds from issuance of common stock to officer - - - 19,200
------------- ----------- ----------- ------------ ----------
Net cash provided by financing activities - - 300,000 350,000 369,200
Cash flows from investing activities
Equipment (27,219) (27,219) - - (27,219)
Purchase of web technology (137,782) (234,982) - - (234,982)
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Net cash provided by investing activities (165,001) (262,202) - - (262,201)
Increase/(Decrease) in Cash $ (120,257) $ (238,254) $ 300,000 $ 350,000 $ 132,146
Cash at beginning of period 252,403 370,400 50,000 - -
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Cash at end of period $ 132,146 $ 132,146 $ 350,000 $ 350,000 $ 132,146
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CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2000
ITEM 2 NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Creative Products International Inc, ("the Company") which was incorporated on
March 25, 1999, is in the development stage. The Company's objective is to
commercialize certain Internet-based coupon, promotion and coupon redemption
merchandising services to consumer product manufacturers as well as other
multi-media based consume products
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim period financial statements contained herein have been prepared by
the Registrant pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These interim period statements should be read together with the
audited financial statements and accompanying notes included in the Registrants
latest annual report on Form 10-K for the year ended December 31, 1999. In the
opinion of the Registrant, the unaudited financial statements contained herein
contain all adjustments necessary in order to present a fair statement of the
results for the interim periods presented.
ITEM 3: MANAGEMENTS DISCUSSION AND ANALYSIS OF CREATIVE PRODUCTS OPERATION
The following analysis of the results of operations and financial condition of
the Company should be read in conjunction with financial statements, including
the notes thereto, of the Company contained elsewhere in this form 10-QSB.
OVERVIEW
Creative Products is a development stage company organized to commercialize
certain educational and internet-based businesses. The Company's first internet
businesses, developed under the names Coupons4Everything.com and ePromo Networks
intends to offer fully integrated manufacturers coupons and rebate distribution
and process services for client consumer product manufacturers. C4e seeks to be
the largest source for brand name coupons and rebates for home consumers to use
for both off-line and on-line purchases. Income will be generated by coupon and
ad listing fees paid by manufacturers to C4e and by referral fees of product
purchases paid by on on-line retailer which accepts manufacturers coupons.
Epromo Networks is developing coupon redemption processing services for on-line
transactions processing data for all online coupons.
RESULTS OF OPERATIONS
Since inception, there has been limited activity in terms of revenue and expense
generation. The Company has generated $2,389 in interest income for the quarter
ended June 30, 2000, and $7,322 total during the development stage which covers
the period from March 25, 1999 to June 30, 2000. Revenues from the sale of
internet-related advertising are not expected until after the Company launches
its web site during the fourth quarter of the current fiscal year. There is no
assurance that the Company will be able to generate sufficient revenues to
offset its liabilities.
As the Company is in the developmental stage, there was no activity in the
quarter ended June 30, 1999 for management to prepare a comparison of operating
results. No expenses were incurred in the comparing quarter ended June 30,
1999.
Total operating expenses during the development stage was $163,992, of which
$101,690 was for the quarter ended June 30, 2000. For the quarter, interest
income of $2,389 was offset by marketing and advertising expenses of $42,841, of
which $26,854 was salary expenses; administrative expenses of $38,709 of which
$12,500 was accrued salaries; and accounting fees of $2,827.
During the period, the Company incurred capitalized development costs of
$137,782 for its planned website, and $27,220 in equipment. The amount of
development costs spanning the development stage was $262,202. An amortization
expense was $17,171 for the quarter, and $35,226 since inception.
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As a result of the foregoing, the Company generated a net loss of $99,301 for
this quarter of its fiscal year. The net loss per share during the Company's
quarter was $.05. During the development stage, the Company's net loss was
$156,670, and the loss per share was $.08.
The Company's liquidity and capital resources at June 30, 2000 consisted of cash
of $132,146. The Company is seeking new sources of equity to continue its
development activities. There is no assurance that the Company will be able to
secure additional financing, through debt or equity, which is required to
complete development of its internet business, organize a financially viable
internet website, or ultimately implement its educational product
commercialization plan.
On April 14, 2000, the stock market experienced what many analysts refer to as a
correction, affecting primarily technology stocks. Many of these technology
stocks offer various web-related services, and may not be generating profits or
adequate cash flow to support their long-term business activity. This
correction may affect the Company's ability to raise capital for its intended
operations.
Further, the venture capital markets have reportedly become more selective in
investing in start-up businesses, taking more time to review proposed
transactions and asking for larger equity stakes to compensate for additional
perceived risk. These factors may affect the Company's ability to raise new
capital, which it must to continue development of its business and launch its
website, and the dilution to existing stockholders.
LOSS PER SHARE
SFAS 128 establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly held common stock or potential
common stock. In accordance with SFAS No 128, the computation of diluted EPS
shall not assume conversion, exercise or contingent issuance of securities that
would have antidilutive effect on earnings per share. SFAS No 128 also states
that although including those potential common shares in the other
diluted-per-share computations may be dilutive to their comparable basic
per-share amounts, no potential common shares shall be included in the
computation of any diluted per-share amount when a loss from continuing
operations exist, even if the entity reports net income.
Due to the net loss position of the Company, only the basic net loss per common
share is presented on the face of the statements of operations for the period
ended June 30, 2000.
FORWARD-LOOKING STATEMENTS
This Form 10-QSB and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, the
"Filings") contain or may contain forward-looking statements and information
that are based upon beliefs of, and information currently available to, the
Company's management, as well as estimates and assumptions made by the Company's
management.
When used in the Filings, the words "anticipate," "believe," "estimate,"
"expect," "future," "intend," "plan," and similar expressions, as they relate to
the Company or the Company's management, identify forward-looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations, competitive factors and pricing
pressures, shifts in market demand, the performance and needs of the industries
which constitute the customers of the Company, the costs of product development
and other risks and uncertainties, in addition to any uncertainties with respect
to management of growth, increases in sales, the competitive environment, hiring
and retention of employees, pricing, new product introductions, product
productivity, distribution channels, enforcement of intellectual property
rights, possible volatility of stock price and general industry growth and
economic conditions. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
expected, intended or planned.
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SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Seattle,
Washington, on August 11, 2000.
CREATIVE PRODUCTS INTERNATIONAL, INC
By: /s/ Susan A. Schreter
In accordance with the requirements of the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
Susan A Schreter Chairman and CEO August 11, 2000
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