9/0/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 September 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, INC.
(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
(issuer's telephone number, including area code)
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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 September 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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CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
FORM 10-QSB
FOR THE 3 AND 9 MONTHS PERIOD ENDED SEPTEMBER 30, 2000
INDEX PAGE NUMBER
PART I: FINANCIAL INFORMATION
Item 1 Balance Sheet at September 30, 2000. . . . . . . . . . . . . . . . . .3
(unaudited)
Statements of Operations for the three months and nine months
ended September 30, 2000 and 1999 (unaudited). . . . . . . . . . . 4
Statement of Stockholder's Equity (unaudited). . . . . . . . . . . . .5
Statements of Cash Flows for the three months and nine months
ended September 30, 2000 and 1999 (unaudited). . . . . . . . . . . 6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . .7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . . . . . 7
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CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS SEPTEMBER 30,
2000
(UNAUDITED)
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Current Assets
Cash $ 35,526
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Total current assets 35,526
Other assets
Intangible assets, net 28,275
Technological assets, net 602,504
Equipment, net 24,996
Prepaid expenses 15,000
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Total other assets 670,775
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TOTAL ASSETS $ 706,301
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LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 433,803
Note payable, stockholder 136,925
Accrued liabilities - officer salary 85,416
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Total current liabilities 656,144
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Stockholders' equity
Common stock 19,122
Additional paid-in capital 515,730
Accumulated deficit (484,695)
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Total stockholders' equity 50,157
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 706,301
==========
See accompanying notes to financial statements
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<TABLE>
<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
TOTAL
ACCUMULATED
DURING THE
3 MONTH 9 MONTH 3 MONTH 9 MONTH DEVELOPMENT
PERIOD PERIOD PERIOD PERIOD STAGE
1-JUL-2000 1-JAN-2000 1-JUL-1999 25-MAR-1999 25-MAR-1999
TO TO TO TO TO
30-SEP-2000 30-SEP-2000 30-SEP-1999 30-SEP-1999 30-SEP-2000
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Operating expenses
Amortization and depreciation $ 32,264 $ 58,154 $ - $ 4,671 $ 67,493
Marketing 81,537 131,071 - - 131,076
Administration 95,587 140,165 - - 165,161
Professional fees 2,661 12,311 - - 12,311
------------- ------------- ------------ ------------- -----------
Loss from operations before write off
of non web-site intangible assets (212,049) (341,700) - (4,671) (376,040)
------------- ------------- ------------ ------------- -----------
Write off of non-web site
intangible assets (114,038) (114,038) - - (114,038)
------------- ------------- ------------ ------------- -----------
Loss from operations (326,087) (455,738) - (4,671) (490,078)
------------- ------------- ------------ ------------- -----------
Other income (expense)
Interest income - 6,122 - - 7,322
Interest expense (1,938) (1,938) - - (1,938)
------------- ------------- ------------ ------------- -----------
Total other income (expense) (1,938) 4,184 - - 5,384
------------- ------------- ------------ ------------- -----------
Net loss $ (328,025) $ (451,555) $ - $ (4,671) $ (484,694)
============= ============= ============ ============= ===========
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 $ (0.17) $ (0.24) $ - $ (0.00) $ (0.25)
============= ============= ============ ============= ===========
</TABLE>
See accompanying notes to financial statements
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<TABLE>
<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDER'S EQUITY
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
DATE OF NUMBER PAID-IN DEVELOPMENT
TRANSACTION OF SHARES PAR VALUE CAPITAL STAGE TOTAL
----------- --------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares issued to former parent for cash 25-Mar-1999 1 $ - $ 50,000 $ - $ 50,000
Intangible assets contributed by 30-Jun-1999 - 165,652 - 165,652
former parent at historical cost
Shares issued to parent for cash 27-Sep-1999 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 Inception through Dec 31,1999 - - - (33,139) (33,139)
Net loss Nine-Months ended Sept 30, 2000 - - - (451,555) (451,555)
--------- ---------- ----------- ------------- ----------
Balance September 30, 2000 1,912,204 $ 19,122 $ 515,730 $ (484,694) $ 50,158
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</TABLE>
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<TABLE>
<CAPTION>
CREATIVE PRODUCTS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
TOTAL
ACCUMULATED
DURING THE
3 MONTH 9 MONTH 3 MONTH 9 MONTH DEVELOPMENT
PERIOD PERIOD PERIOD PERIOD STAGE
1-JUL-2000 1-JAN-2000 1-JUL-1999 25-MAR-1999 25-MAR-1999
TO TO TO TO TO
30-SEP-2000 30-SEP-2000 30-SEP-1999 30-SEP-1999 30-SEP-2000
------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (328,025) $ (451,555) $ - $ (4,671) $ (484,694)
Adjustments to reconcile net loss to net cash
provided by in operating activities
Amortization and depreciation 32,264 58,154 - 4,671 67,493
Write-off non web site intangible assets 114,038 114,038 - - 114,038
Changes in operating assets and liabilities
Prepaid expenses - (15,000) - - (15,000)
Accounts payable 315,965 433,803 - - 433,803
Expenses payable - officer 12,986 12,986 - - 12,986
Interest payable - officer 1,938 1,938 - - 1,938
Accrued salaries payable - officer 41,666 60,416 - - 85,416
------------- ------------- ------------ ------------- ------------
Net cash provided by operating activities 190,833 214,781 - - 215,980
Cash flows from financing activities
Additional paid in capital
Note payable - stockholder 122,000 122,000 - - $ 122,000
Proceeds from issuance of common stock
to parent - - - 500,370 515,730
Proceeds from issuance of common stock
to officer - - - 15,282 19,122
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Net cash provided by financing activities 122,000 122,000 - 515,652 656,852
Cash flows from investing activities
Equipment (1,690) (28,910) - - (194,562)
Site development & technology (407,762) (642,745) - (165,652) (642,745)
------------- ------------- ------------ ------------- ------------
Net cash provided by investing activities (409,453) (671,654) - (165,652) (837,306)
Increase/(Decrease) in Cash $ (96,620) $ (334,873) $ - $ 350,000 $ 35,526
Cash at beginning of period 132,146 370,400 350,000 - -
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Cash at end of period $ 35,526 $ 35,526 $ 350,000 $ 350,000 $ 35,526
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</TABLE>
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CREATIVE PRODUCTS INTERNATIONAL, INC
(A DEVELOPMENT STAGE COMPANY)
SEPTEMBER 30, 2000
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, promotion and coupon redemption
merchandising services to consumer product manufacturers as well as other
multi-media based consumer 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-KSB 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.
NOTE 3. POST PERIOD EVENT
The Company is marketing a private placement to qualified investors for
approximately 750,000 to 1 million units. Each unit consists of one share of
common stock and one Class A Warrant to purchase a share of common stock at
$1.50. The term of the warrant is two years from the date the Company's common
shares begin trading on the NASDAQ Small Caps market. Upon the close of the
private placement, the Company anticipates that it will change the name of the
Company to ePromo Networks, Inc.
The Company's continued operations and site development activities are dependent
upon the Company's securing additional sources of working capital through debt
or equity. Failure to obtain additional working capital may result in the
Company suspending operations. The Company continues to incur development
expenses and does not anticipate generating any revenue prior to launch of the
Company's first internet site, Coupons4Everything, to offset, in part only, the
Company's costs of operations. There is no assurance that the Company will be
successful in securing additional sources of working capital necessary to
complete development stage operations, launch the website, retain qualified
management and staff, and maintain business operations to such time as the
Company can achieve positive cash flow. Further adverse changes in general
economic conditions, the appetite of financial investors to invest in start up
internet businesses with an uncertain future, and manufacturers interest in
promoting products and services online to consumers.
ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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
business, developed under the names Coupons4Everything.com ("c4e") and ePromo
Networks intends to offer fully integrated manufacturers coupons and rebate
distribution and processing 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. Other services
offered by the site included market research, consumer database generation, free
sample distribution, and comparative product research. Income will primarily be
generated by placement listing fees paid by manufacturers to the Company. ePromo
Networks is developing coupon redemption processing services for on-line
consumer product purchases in which a manufacturers coupon is applied.
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RESULTS OF OPERATIONS
Since inception, there has been limited activity in terms of revenue generation.
The Company generated interest income of $7,322 during the development stage
period from March 25, 1999 to September 30, 2000. Revenues from the sale of
internet-related advertising are not expected until after the Company launches
the c4e website. There is no assurance that the Company will be able to
generate sufficient revenues to offset its liabilities nor launch the c4e on a
timely basis and generate sufficient consumer traffic to warrant advertising
support from leading consumer product manufacturers.
There was no activity in the quarter ended September 30, 1999 for management to
prepare a comparison of operating results to the quarter ended September 30,
2000.
For the period ended September, the Company wrote off $114,038 of non-internet
intellectual property that were allocated to the Company at the time of
corporate spin off. In the nine-month period ended September 30, 1999, the
Company generated $4,671 in amortization expense, compared to $58,154 of
amortization expense in the nine-month period ended September 30, 2000.
Total operating expenses during the development stage was $490,078, of which
$326,087 was incurred during the quarter ended September 30, 2000. For the
quarter ended 2000, marketing and salary expenses represented $81,537.
Administrative expenses were $95,587 of which $41,666 was accrued salary to an
officer. During the quarter the Company hired its first employees, with
emphasis on presenting the Company's service capabilities of c4e to larger
consumer product manufacturers.
During the three-month period, the Company incurred capitalized development
costs of $407,762 for its planned website, and $1,690 in equipment. Since
inception, the Company incurred site and technology expenses of $642,745.
As a result of the foregoing, the Company generated a net loss of $328,025 for
the quarter ended 9/30/00 and a net loss per share of $.17. During the
development stage, the Company's net loss was $484,694, and the net loss per
share was $.25.
The Company's liquidity and capital resources at September 30, 2000 consisted of
cash of $35,526. The Company is seeking new sources of equity to continue its
development and business commercialization 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 businesses, organize a
financially viable internet website, or ultimately implement its service
commercialization plans.
In the quarter ended September 30, 2000, the Company received loans totaling
$122,000 from the Company's Chief Executive Officer. The CEO is entitled to
receive interest on her outstanding loans to the Company at 8% and based on the
outstanding loans at September 30, 2000 a five-year fully vested warrant to
purchase 54,000 shares of common stock of the Company at $1 per share. In the
quarter, the Company accrued $1,938 interest payable to the CEO. The Company
also accrued $12,986 in reimbursable travel and administration expenditures and
$41,666 in accrued salary payable to the C.E.O.
During the fiscal year there has been a significant change in the stock market's
assessment of value of certain technology and internet related businesses.
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 amount of 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 September 30, 2000.
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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.
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 November 17, 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 November 17, 2000
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