SECURITIES AND EXCHANGE CONINIISSION
WASHINGTON, DC 20549
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
TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _____________
Commission file number 000-13337
Buy It Cheap.com, Inc.
--------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 22-2497491
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1800 Bloomsbury Avenue., Ocean, NJ 07712
(Address of principal executive offices)
732-922-3609
(Issuer's telephone number)
__________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes_____ No_____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 8,790,802 shares of Common
Stock, $.001 par value per share, at April 21, 2000
Transitional Small Business Disclosure Format (check one) Yes ___ No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Buy It Cheap.com, Inc. (unaudited)
Balance Sheet as of September 30, 2000 and June 30, 2000.
Statements of Loss for the three months ended September 30, 2000 and for
the period July 21, 1999 to September 30, 1999
Statements of Cash Flows for the three months ended September 30, 2000 and
for the period July 21, 1999 to September 30, 1999
Notes to Financial Statements
2
<PAGE>
<TABLE>
BUY IT CHEAP.COM, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
As of
September 30, 2000 June 30, 2000
Assets
Current assets:
Cash $ 60,964 $44,424
<S> <C> <C>
Due from officers and directors 28,790 28,790
Other current assets 2,080 2,080
--------- ---------
Total current assets 91,834 75,294
--------- ---------
Investment in and net advances to joint venture 620,535 620,535
Reserve against investment in and net advances
to joint venture (620,535) (620,535)
Property and equipment, net of depreciation 29,300 32,292
--------- ---------
Total assets $ 121,134 $107,586
========= ========
Liabilities and Equity
Current liabilities:
Accounts payable $ 160,321 154,686
Due to officers and directors 5,559 5,559
---------- --------
Total current liabilities 165,880 160,245
---------- --------
Convertible note payable 16,198 16,198
----------- --------
Total liabilities 182,078 176,443
----------- --------
Stockholders' equity:
Preferred stock - Series C, $.001 par
Authorized - 2,000,000 shares
Issued and outstanding - 10,000 shares 10 10
Common stock - $.001 par
Authorized - 20,000,000 shares
Issued and outstanding - 8,790,802 shares 8,791 $ 8,740
Paid in capital 767,540 742,590
Treasury stock (751,100) (751,100)
Deficit accumulated during
the development stage (86,185) (69,097)
----------- --------
Total stockholders' equity (60,944) (68,857)
------------ --------
Total Liabilities and Equity $ 121,134 $ 107,586
============ ========
See Notes to Financial Statements
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BUY IT CHEAP.COM, INC.
(A Development Stage Company)
Statements of Loss
(Unaudited)
Cumulative
For the three from July 19,
Months ended From July 19 1999 to
September 30, to September 30, September 30,
2000 1999 2000
<S> <C> <C> <C>
Revenues $ - $ - $ -
--------- ----------- --------
Direct operating costs 845 - 7,600
General and administrative expenses (1) 16,243 183 78,585
---------- ----------- --------
Total expenses 17,088 183 86,185
---------- ----------- --------
Net loss $(17,088) $ (183) $(86,185)
========== =========== =========
Net loss per share $ - $ -
========== ===========
See Notes to Financial Statements
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BUY IT CHEAP.COM, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
Cumulative
For the three For the period from July19,
Months ended July 19, 1999 to 1999 to
September 30, September 30, September 30,
2000 1999 2000
Cash flows from operating activities:-
<S> <C> <C> <C>
Net loss $ (17,088) $ (183) $ (86,185)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation and amortization 2,992 - 8,975
Changes in assets and liabilities
Other current assets - - (2,080)
--------- --------- ---------
Net cash used by operating activities (8,460) (183) (73,898)
--------- --------- ---------
Cash flows from investing activities
Purchase of property and equipment - (16,500) (23,275)
Increase in due from officers/directors - - (28,790)
Cash acquired - - 1,927
---------- ---------- ---------
- (16,500) (50,138)
---------- ---------- ---------
Cash flows from financing activities:
Sale of Common stock 25,000 62,000 185,000
Advances made in conjunction with acquisition - (21,751) -
----------- ---------- ---------
25,000 40,249 185,000
----------- ---------- ---------
Net increase (decrease) in cash 16,540 23,566 60,964
Cash at beginning of period 44,424 - -
------------ ---------- ---------
Cash at end of period $ 60,964 $ 23,566 $ 60,964
============ ========= =========
</TABLE>
See Notes to Financial Statements
5
<TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
<S> <C>
Liabilities assumed in the acquisition of Northeast (USA) Corp. for common stock $ (190,957)
Accounts payable satisfied by issuance of common stock and convertible note payable 32,395
Software costs financed by issuance of common stock 15,000
--------
$ (143,562)
==========
</TABLE>
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Financial Statements
The Balance Sheets, Statements of Loss, and Statements of Cash Flows for all
periods reported herein have been prepared by Buy It Cheap.com, Inc. (the
"Company") without audit. The financial statements reflect all adjustments of a
normal recurring nature, which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented.
Nature of Business
The Company is a Delaware corporation. On November 3, 1999, Northeast (USA)
Corp. purchased all of the common stock of Buy It Cheap.com, Inc. (a development
stage company). For accounting purposes, the acquisition has been treated as an
acquisition of Northeast (USA) Corp. by Buy It Cheap.com, Inc. and as a
recapitalization of Buy It Cheap.com, Inc. The Company will operate in the
Internet retailing industry. Since there have been no significant revenues
generated from Internet retailing, the Company is considered a development stage
company for financial reporting purposes.
Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred losses
and has no current source of revenues or funds and has a working capital deficit
as of September 30, 2000. The Company's continued existence is dependent upon
its ability to secure adequate financing. The Company plans to raise capital in
the future; however, there are no assurances that such plan will be successful.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Joint Venture
The Company, in 1992 formed a joint venture agreement with the Northeast General
Pharmaceutical Factory ("NEGPF") a government owned pharmaceutical concern in
Shenyang, China, whereby both companies established a joint venture company in
China. Each of the Company and NEGPF were to have contributed certain assets to
the joint venture. The Company was to have contributed $2.1 million in cash and
$1.15 million in technology for a total capital contribution of $3.25 million.
NEGPF was to have contributed $750,000 in cash and a land-use right valued at
$1.75 million for a total contribution of $2.5 million. Based upon the amount of
contribution, the Company owned 56.52% of the joint venture and NEGPF owned
43.48%. To date, the Company has contributed $1 million of cash and has
contributed the technology.
6
<PAGE>
Notes to Financial Statements
NEGPF has contributed $750,000 of cash but has not contributed the land-use
right. The joint venture had only limited start-up operations and operations
effectively ceased in 1997 due to lack of funding. The Company has communicated
with NEGPF that it no longer has any interest in the joint venture. As such the
Company has reserved $620,535 against the investment in and net advances to the
joint venture.
Net Loss Per Common Share
The weighted average number of common shares outstanding used in computing net
loss per common share was 760,278 for the 1999 period included herein, and
8,773,547 for the 2000 period. The weighted average number of common shares used
in computing the net loss per common share does not include any shares issuable
upon the assumed conversion of the preferred stock (see Note on Preferred
Stock), since the effect would be anti-dilutive.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of assets and liabilities for
financial and income tax reporting. Deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets or liabilities are recovered or
settled. Deferred taxes also are recognized for operating losses that are
available to offset future federal and state income taxes. As of the last fiscal
year ended June 30, 2000, the Company had a net operating loss carryforward of
$492,775 that expires in years through 2020.
Use of 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.
Preferred Stock
In May 1994, the Company sold 275,000 shares of its newly designated Series C
convertible preferred stock, $.001 par value, for an aggregate amount of
$825,000 to a group of private investors. Except for $10,000 (representing
30,000 shares) of the preferred stock, all had been converted according to their
terms prior to July 1, 1998. The Company has the right to redeem the shares at
$4.50 per share. The shares carry a stated dividend rate of 8 % per annum.
Dividends are cumulative and are payable quarterly. No cash dividends have ever
been paid. Some former preferred shareholders (prior to or simultaneous with
their conversion) have accepted shares of the Company's stock in lieu of cash
dividends. Those that did not accept shares of stock for dividends and those
that did not covert their preferred shares are owed a total of $104,590 of
dividend arrearages at September 30, 2000.
7
<PAGE>
Convertible note payable
During the year ended June 30, 2000, the Company entered into an agreement with
one of its creditors whereby the amount of the creditor's claim ($32,395) was
settled through the issuance of 32,395 of the Company's common shares and a
non-interest bearing convertible note for $16,198. The note is due on December
31, 2001 and is convertible into 32,395 shares of the Company's common stock
prior to that date.
Stock option plan
On February 16, 2000, the Company's Board of Directors approved the adoption of
a stock option plan and granted options for the purchase 1 million of the
Company's shares at an exercise price of $1.3125 per share (fair market value at
date of grant). The adoption of the plan must be approved by a vote of
stockholders, and such action by the Board in relation to the stock option plan
is contingent upon such stockholder approval.
Contingencies
The Company is indebted to two suppliers who have filed suit against the
Company. These filed claims total approximately $89,000, of which $11,000 is
disputed by the Company. One of these creditors has obtained a judgement (with
interest) against the Company for approximately $60,000. The Company has
attempted to settle these claims with issuance of its common stock and
convertible notes. If the Company is unable to resolve these claims, it may be
unable to proceed with its business plans.
<PAGE>
Management's Discussion and Analysis or Plan of Operation
The Company entered the Internet retailing business through the formation
of a separate entity by two of its directors. The new entity was able to raise
limited start-up capital for an Internet retailing business. For accounting
purposes, the combination of the two companies was treated as an acquistion of
the Company by this new entity. Subsequent to the completion of this acquisition
the Company changed its name to Buy It Cheap.com, Inc. and commenced an Internet
retailing operation under the website "Buyitcheap.com." The Company must still
arrange settlement of its liabilities and raise substantial new investment
capital in order to develop this business.
Financial and operating plan for the next 12 months
The Company plans to operate over the next 12 months with little overhead.
Until there is positive cash flow from its Internet business, or the Company is
able to raise a substantial amount of new capital, there will be no paid
employees or rental expense (such being provided by certain officers and
directors without charge). The sales transactions, for the most part, are
handled automatically over the Internet requiring little labor or office space
requirements. The Company believes it can become a viable business within 12
months (subject to the outcome of previously described legal proceedings) if it
is able to raise additional capital. During the current fiscal quarter the
Company has raised an additional $25,000 and is in the process of obtaining
commitments for more capital. The objective of the Company will be to establish
the viability necessary to attract substantial new investment capital to expand
its business.
Disclosure Regarding Forward Looking Statements
This Quarterly Report on Form 10-QSB contains forward-looking statements
within the meaning of the Private Securities Litigation Act of 1995 and Section
21E of the Securities Exchange Act of 1934, as amended, that are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. The Company desires
to take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and is making this cautionary statement in
connection with such safe harbor provisions. When used in this Quarterly Report
on Form 10-QSB, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect," "plan," "predict," "may," "should," "will," the negative
thereof and similar expressions are intended to identify forward-looking
statements.
Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of which
might not even be anticipated. Future events and actual results, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements contained herein. Important factors that could
contribute to such differences include, but are not limited to, the fact that
the Company is in the early stages of developing its Internet retailing
business, the Company's dependence on growth of the Internet, rapid
technological changes in the market, the effect of substantial competition in
the Internet retail market, the effect of changes in governmental regulation of
the Internet and the effect of general economic and market conditions. Other
factors may be described from time to time in the Company's other filings with
the Securities and Exchange Commission, news releases and other communications.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company does not
undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
9
<PAGE>
Subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements set forth above and contained elsewhere in
this Quarterly Report on Form 10-QSB.
10
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Current Reports on Form 8-K filed during the quarter ended
September 30, 2000.
None.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BUY IT CHEAP.COM, INC.
/s/ Stephen E. Roman, Jr.
Date: November 14, 2000 Signature
Stephen E. Roman, Jr.
President
12
