SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[X[ Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended June 30, 2000
-------------
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from ____________ to _____________
Commission file number 000-13337
Buy It Cheap.com, Inc. (formerly Northeast (USA) Corp.)
________________________________________________________________________________
(Name of Small Business Issuer in Its Charter)
Delaware 22-2497491
________ ______________
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1800 Bloomsbury Ave., Ocean, N.J. 07712
________________________________________ _________________
(Address of Principal Executive Offices) (Zip Code)
732-922-3609
________________________________________________
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title Of Each Class Name Of Each Exchange
On Which Registered
____________________ _____________________
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock; $.001 par value per share
________________________________________________________________________________
(Title of Class)
________________________________________________________________________________
(Title of Class)
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 has been
subject to such filing requirements for the past 90 days.
Yes X No ___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10KSB
or any amendment to this Form 10-KSB.
<PAGE>
State issuer's revenues for its most recent fiscal year. $0
State the aggregate market value of the voting and nonvoting common equity
held by nonaffiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of a specified date within the past 60 days. (See definition of affiliate in
Rule 12b2 of the Exchange Act.).
As of August 28, 2000, the aggregate market value of the Registrant's
Common Stock (based on the closing bid price for the Common Stock as reported by
the National Quotation Bureau on such date held by non-affiliates of the
Registrant) was approximately $3,440,878. For the purposes of this report, it
has been assumed that all directors and officers of the Registrant are
affiliates of the Registrant. However, the statements made herein shall not be
construed as an admission for the purpose of determining the affiliate status of
any person. As of August 28, 2000, the Registrant had 8,790,802 shares of Common
Stock issued and outstanding.
Note. If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by nonaffiliates on the basis of reasonable
assumptions, if the assumptions are stated.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has 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 REGISTRANTS
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, par value $.001 per share, at August 28, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (check one): Yes ____ No X
<PAGE>
PART I
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 legislation. This Form
10-KSB, Form 10- QSB or Form 8-K of the Company or any other written or oral
statements made by or on behalf of the Company may include forward-looking
statements which reflect the Company's current views with respect to future
events and financial performance. The words "believe," "expect," "anticipate,"
"intends," "estimate," "forecast," "project," "should" and similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All forecasts and projections
in this Form 10-KSB are "forward-looking statements," and are based on
management's current expectations of the Company's near-term results, based on
current information available pertaining to the Company, including the risk
factors noted below.
The Company wishes to caution investors that any forward looking statements
made by or on behalf of the Company are subject to uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other risk factors include, but are not
limited to: changing economic and political conditions in the United States and
in other countries, changes in governmental spending and budgetary policies,
governmental laws and regulations surrounding various matters such as
environmental remediation, contract pricing and international trading
restrictions, customer product acceptance and continued access to capital
markets and foreign currency risks. The Company wishes to caution investors that
other factors may, in the future, prove to be important in affecting the
Company's results of operations. New factors emerge from time to time and it is
not possible for management to predict all such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
a combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.
Investors are further cautioned not to place undue reliance on such
forward-looking statements as they speak only to the Company's views as of the
date the statement is made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Item 1. Description of Business
General
Buy It Cheap.com, Inc. (the "Company") was incorporated in Delaware on
January 16, 1984 as Cellufone Corporation. From 1984 to 1991 the Company and/or
its subsidiaries, were involved in several different businesses, including the
reselling of cellular telephone service, radio paging (beeper) service, private
pay telephone manufacture and private network switching. The Company
subsequently changed its name to Celcor, Inc. Because growth and profitability
of these operations fell short of expectations, the Company had either ceased
operating or had sold off all its businesses by February, 1991.
Unable to obtain financing to repay debt or fund operations of any kind,
the Company, in April 1991, filed for protection under Chapter 11 of the United
States Bankruptcy Code. The Company was able to secure limited equity capital
from an investor and the Company emerged from bankruptcy in 1992 with virtually
no assets or liabilities.
<PAGE>
The Company (then known as Celcor, Inc.) had virtually no operations from
1991 to early 1995 when it executed an Agreement and Plan of Merger with
Northeast (USA) Corp., a New York corporation, ("Northeast NY"). Through this
merger, which became effective August 1, 1996, the Company changed its name from
Celcor, Inc. to Northeast (USA) Corp. and was the surviving entity in the
merger. The Company consummated the merger in order to bring the business of
Northeast NY into the Company. Northeast NY had a joint venture with the Chinese
government to manufacture and distribute vitamins and beauty products. While
limited production and sales were achieved, lack of funding caused cessation of
activities in early 1997. Because the necessary funding for this operation could
not be raised and because certain commitments by each party had not been met,
the Company, in June of 1999, notified the Chinese government that it was no
longer interested in pursuing the joint venture. The Chinese government has
responded that they were not against dissolving the joint venture, although no
formal liquidation has yet taken place. During the fiscal years ending June 30,
1996 through 1998 the Company, domestically, generated limited revenues from
retail sales of a beauty supply line. Lack of funding for promotional
activities, and subsequently for fixed overhead costs, caused cessation of this
activity during the latter part of fiscal 1998.
In April of 1999, Robert Edwards, the Company's initial founder and former
president approached the Company on the possibility of starting an Internet
retailing business. Pursuing this proposal, the Company's Board of Directors
approved the acquisition of Buy It Cheap.com, Inc., ("BUYC") a development stage
company organized under Delaware law by two directors of the Company. BUYC had
raised approximately $100,000 in start-up investment capital. The Company issued
1,400,000 shares of its common stock to shareholders of BUYC upon consummation
of the transaction (October 1999). Once the acquisition was consummated, the
Company operated a website "Buyitcheap.com" and changed its corporate name to
Buy It Cheap.com, Inc. For accounting purposes, the acquisition has been treated
as an acquisition of the Company by Buy It Cheap.com, Inc. and as a
recapitalization of Buy It Cheap.com, Inc.
The Company believes that there is a ready market for lower priced and
closeout merchandise on the Internet as strong competition for items new to the
market has left a void in the market for lower cost items. With lower cost and
closeout merchandise, the Company won't compete with the vast majority of
Internet retailers and will benefit from the greater profit margins that are
achievable with this type of merchandise. There is a developing trend, however,
for closeout merchandise to be auctioned off on Internet auction sites which
could impact the Company's business.
Current operating plan
Internet Retailing - Buyitcheap.com
The Company operates a virtual store under the web address of
"Buyitcheap.com" and offers for sale various types of merchandise over the
Internet. While the website is functional, the Company has not yet promoted it
and sales thus far have been insignificant. Initial merchandise lines consist of
specially priced items in consumer electronics, luggage and giftware. No
merchandise is currently bought or inventoried by the Company, however the
Company expects that it may do so in the future. The Company posts merchandise
from various vendors on its website, takes orders and collects the funds. The
order is routed to the applicable vendor for shipment to the customer. Upon
shipment, the Company remits its cost of the item to the vendor. In keeping with
the Company's website name, the theme of its merchandise offerings will be to
offer merchandise at the lowest possible price. The Company will keep initial
overhead low and is seeking additional funding to raise funds to expand the
business.
<PAGE>
Competition
The Internet retailing business is a highly competitive industry. The
Company, being a start-up in this business, faces competition from numerous
sources, including established Internet retailers with greater financial
resources and a longer operating history. However, the Company expects, in time,
to establish a niche as a retailer of quality merchandise obtained from
closeouts, surplus goods, and odd lots, offered at cheap prices, by which to
distinguish itself from other Internet retailers and thus, to effectively
compete in this industry. The Company's ability to successfully compete will be
dependent upon its future ability to raise substantial additional capital and
its ability to compete with Internet auction sites that provide a channel for
the distribution of closeout goods, surplus goods and odd lot goods.
Supply of merchandise and Internet Infrastructure
The Company, through existing relationships developed by the Company's
management, will display merchandise from various vendors. There is no charge
for displaying the merchandise on the Company's website. The Company marks up
the price charged to it by the vendor. There being no real risk to the
vendor/supplier, the Company believes it will not experience any difficulty in
obtaining merchandise for sale on its website.
While the Company owns its own hardware and software to generate its
website, it relies on an outside organization to maintain this website
infrastructure. While the Company relies on this outside organization's ability
to continue to provide this service, it has no assurance that such organization
it can continue to do so in the future. However, the Company believes that it
could find another provider of this service.
Employees
The Company currently has no paid employees. Certain officers and directors
of the Company have agreed to temporarily work without pay.
Item 2. Description of Property
The Company neither owns nor leases any property. The Company, due to its
limited resources, maintains an office at 1800 Bloomsbury Ave., Ocean, N.J.
07712 at no cost to the Company. As the business expands, the Company will find
new office space, or begin to pay rent for the space it occupies.
Item 3. Legal Proceedings
From its prior operations in selling beauty products (1995-1997) the
Company (then called Northeast (USA) Corp.) 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 judgment (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. Depending on its financial status, the
Company will attempt to settle these claims in the coming months.
<PAGE>
Details of these suits are as follows: Supreme Court of the State of New
York, County of Queens, filed July 15, 1997, plaintiff Laffon Design-Kree Plast
S.P.A., defendant Northeast (USA) Corp. (judgment entered); Supreme Court of the
State of New York, County of Queens, filed March 5, 1997, plaintiff R. P.
Scherer Corporation, defendant Northeast (USA) Corp. (pending).
If the Company is unable to resolve these claims, it may be unable to
proceed with its business plans.
Item 4. Submission of Matters to a Vote of Security Holders
None during the Company's fiscal year ended June 30, 2000.
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is traded on the OTC Bulletin Board, symbol
BYCC.
The following table shows the range of high and low bid or last trade
quotations for the Company's Common Stock as reported to the Company by the
National Quotation Bureau Incorporated. No review of the daily quotations as
provided by the OTC Bulletin Board has been undertaken by the Company. The
quotations reflect prices between dealers, without retail mark-ups, mark-downs
or commissions and may not necessarily represent actual transactions or be
indicative of prices at which the Company's Common Stock was traded.
Fiscal year Fiscal quarter ended Low bid High bid
----------- -------------------- ------- --------
1999 September 30, 1998 $ .0625 $ .125
December 31, 1998 .0625 .9375
March 31, 1999 .0625 .0625
June 30, 1999 .0625 .1875
2000 September 30, 1999 .1563 1.0313
December 31, 1999 .625 1.25
March 31, 2000 .8125 1.4688
June 30, 2000 .625 1.0625
The number of record holders of the Company's Common Stock as of August 31,
2000 was 400, however, the Company believes that there are substantially more
beneficial owners of the Common Stock.
--------------------------------------------------------------------------------
Dividend policy
The Company has never paid any dividends on its common stock. The Company
anticipates that in the foreseeable future, earnings, if any, will be retained
for use in the business or for other corporate purposes, and it is not
anticipated that cash dividends will ever be paid on its common stock.
Item 6. 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 acquisition 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.
<PAGE>
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. Since the end of its fiscal year, 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.
Certain of the information set forth above may constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those projected or implied. Such
statements may be identified by the use of forward-looking language such as
"believe," "plans," "may," "will," "should," "expect," "anticipate," "estimate,"
or "contrive" or the negatives or variations thereof or similar terminology
Item 7. Financial Statements
The financial statements of the Company, the notes thereto, and the Report
of the Independent Auditors thereon required by this Item 7 appear in this
report on the pages indicated in the following index.
Page
Independent Auditors' Report ................................................F1
Balance Sheet at June 30, 2000...............................................F2
Statement of Income for the period July 19, 1999 to June 30, 2000............F3
Statement of Stockholders' Equity for period July 19, 1999 to June 30, 2000..F4
Statement of Cash Flows for the period July 19, 1999 to June 30, 2000........F5
Notes to Financial Statements ...........................................F6 F10
Item 8. Changes in and Disagreements With Accountants or Accounting and
Financial Disclosure
None
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors are elected by the shareholders and serve until their successors
are elected and have qualified or until a director's earlier death, resignation
or removal. Directors were most recently elected on January 25, 1996 at the
special meeting of shareholders held at such time. Robert Edwards became a
director in May, 1999. The remaining directors elected Mr. Edwards to fill a
seat left vacant by a previous director's resignation.
Set forth below are the names and ages of the directors and executive
officers of the Company, their positions with the Company, and their business
experience, including their principal occupations at present and during the past
five years.
Director of
Present the Company
Name Age Position since
Stephen E. Roman, Jr. (1) 52 Director and 1994
President
Jennifer Lo (2) 47 Director and 1996
Vice President
Michael Hsu (3) 60 Director 1996
David Chow (4) 40 Director 1993
ChinSung (Joe) Chen (5) 50 Director 1996
Robert Edwards (6) 79 Director 1999
(1) Stephen E. Roman, Jr. served as Vice President and Chief Financial Officer
of the Company for the period from April, 1984 to June, 1994. He has also served
as Secretary since 1994. From June, 1994 to January, 1996, and from May, 1999 to
present, Mr. Roman has served as President of the Company. In January, 1996, Ms.
Lo succeeded Mr. Roman as President and Mr. Roman became Vice President and
Chief Financial Officer. In May, 1999, Ms. Lo resigned as President and was
succeeded by Mr. Roman. For the last five years, he has served on a part-time
basis. Mr. Roman is a certified public accountant and performs similar services
for other business entities.
(2) Jennifer Lo is a trained pharmacist and from February, 1993 until May 1999
served as chairman and president of the Company. Ms. Lo is the sole stockholder
of Lyncroft Corp., which owns 100,000 shares of the Company.
<PAGE>
(3) Michael W. Hsu served as Vice President Finance from June, 1994 to January,
1996 on a part-time basis. He served as Treasurer (part-time) from January, 1996
to May, 1999. He has been a self-employed certified public accountant for the
past ten years.
(4) David Chow is Managing Director of Center Laboratories, Taiwan, and has held
this position since 1980. He is also Managing Director of Center Pharmaceutical
Co., Ltd., People's Republic of China and has served in this capacity since
1992. Additionally, in 1993 Mr. Chow became Chairman of the Taiwan
Pharmaceutical Development Association and in 1995, Director of the GMP
Committee of the China Pharmaceutical Industrial Association.
(5) ChinSung (Joe) Chen is presently General Manager of Hyscios Pharmacy
International, Co., Ltd., a distributor of pharmaceutical and skin care products
based in Taipei, Taiwan, and has served in this capacity since 1994. Prior to
his association with Hyscios, Mr. Chen was employed for approximately 16 years
by Lederle, where he served in a variety of increasingly responsible positions.
From April, 1991 to November, 1993, Mr. Chen was national marketing manager of
Lederle, Taiwan.
(6) Robert Edwards is the original founder of the Company in 1984. He has not
been associated with the Company since 1992. Mr. Edwards was elected to the
Board in May, 1999 by the remaining directors and has been involved in retailing
for the past five years.
The Board of Directors does not presently have an audit, compensation or
nominating committee. There were two meetings of the Board of Directors during
the fiscal year ended June 30, 2000.
No officer or director of the Company is currently involved in any legal
proceeding, nor is any officer or director also an officer or director of any
other publicly held company.
Section 16 (a) Beneficial Ownership Reporting
Based solely upon a review of Forms 3 and 4 and amendments thereto, as well
as Form 5 and amendments thereto, furnished to the Company during the period
from July 1, 1999 to the present, the Company believes the following to be
accurate and correct:
<TABLE>
<S> <C> <C> <C> <C>
Person or entity Form Reason filing Date on which
required to file required required filing was required Status of filing
Robert Edwards Form 3 Elected a director September, 1999 Filed, but not timely
Joe Chen (1)
David Chow (1)
</TABLE>
(1) Person or entity is a foreign entity and is domiciled outside the United
States.
<PAGE>
Item 10. Executive Compensation
There was no compensation paid or accrued to any officer or director of the
Company for the fiscal years ended June 30, 1998, 1999 or 2000.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's $.001
par value common stock owned by each person who, as of August 28, 2000, owns of
record, or is known by the Company to own beneficially, more than 5% of the
Company's common stock, as well as the ownership of such shares by each director
and executive officer of the Company and the shares beneficially owned by all
officers and directors as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Majestic International Inc. 633,400 7.21
No 3 14th Floor
No 535
ChengKuo
Third Road
Kaohszung, Taiwan ROC
Verchi Holdings Limited 550,000 6.26
Room 312, Entrance 3, Bldg. 14
Compound 3, Jingouhe Road
WukesongHaidian District
Beijing, People's Republic
of China
Fowler Holdings, Inc. 450,000 5.12
c/o Zhi-Yun Gao
504 Lake Court
Middle Island, N.Y. 11953
Shenyang Tianfa Social 450,000 5.12
Service Company
No. 37 Zhong Gong Bei Street
Tiexi District
Shenyang, People's Republic
of China
Stephen E. Roman, Jr. (officer and director) 208,153 (3) 2.37
25 Hillside Road
Shark River Hills, NJ 07753
</TABLE>
<PAGE>
<TABLE>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
<S> <C>
David Chow (director) 15,000 -
4F No. 20, Lane 34
Sec 2, Pa Te Road, Taipei, Taiwan
Jennifer Lo (officer and director) 421,405 (1) 4.79
258-01 Pembroke Ave.
Great Neck, NY 11021
Michael Hsu (director) 0 (4) 0
13621 Roosevelt Ave
Flushing, NY 11354
ChinSung (Joe) Chen (director) 420,000 4.78
7th Floor
No 571
Ming Shui Road
Taipei, Taiwan
Robert Edwards (director) 400,000 (2) 4.55 (2)
256 Clearbrook Court
Little Silver, N.J. 07739
Current Executive Officers and
Directors as a Group (6 persons) 1,464,558 16.67
</TABLE>
______________________
1 Includes 100,000 shares owned by Lyncroft Corp., a corporation of which Ms.
Lo is the sole shareholder and 321,405 owned by Ms. Lo's son, J. Wu who
lives with her. Excludes 150,000 shares which may be purchasable by Ms. Lo
under a stock option plan. Such plan is subject to approval by the
Company's stockholders.
2 Excludes 200,000 shares held by Mr. Edwards' wife to which he disclaims
beneficial ownership. Also excludes 400,000 shares which may be purchasable
by Mr. Edwards under a stock option plan. Such plan is subject to approval
by the Company's stockholders.
3 Excludes 300,000 shares which may be purchasable by Mr. Roman under a stock
option plan. Such plan is subject to approval by the Company's
stockholders.
4 Excludes 150,000 shares which may be purchasable by Mr. Hsu under a stock
option plan. Such plan is subject to approval by the Company's
stockholders.
The Company is not aware of any arrangements which may result in a change of
control of the Company.
<PAGE>
Item 12. Certain Relationships and Related Transactions
Mr. Roman, the Company's President and a Director, and Mr. Edwards, a
Director, are the founders of Buy It Cheap.com, Inc., a corporation which merged
into the Company in October 1999. Mr. Roman and Mr. Edwards received 100,000 and
150,000 shares, respectively, of the Company's stock in the merger for which
they have paid a nominal price (see Item 1 - Description of Business).
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger among Celcor, Inc., Northeast (USA)
Corp., and the Stockholders of Northeast. (USA) Corp.(5)
3.1 Certificate of Incorporation, as amended, of the Company. (1) (2) (4)
3.2 Bylaws of the Company. (1) (3)
4.1 Certificate of Designations, Preferences and Rights of Series C 8%
Convertible Preferred Stock of Celcor, Inc. (5)
10.1 Promissory Notes between the Company and Buy It Cheap.com, Inc. (5)
10.2 Joint Venture Contract between China Northeast Pharmaceutical Company
and U.S. Lyncroft Company (translated from the Chinese) creating
United Vitatech. (6)
10.3 Contract of Shenyang United Vitatech Pharmaceutical Ltd. (translated
from the Chinese). (6)
10.4 Regulations of Shenyang United Vitatech Pharmaceutical Ltd.
(translated from the Chinese). (6)
10.5 Agreement dated December 26, 1993 between Mannion Consultants Ltd and
Northeast (USA) Corp. (6)
Footnotes
(1) Incorporated by reference to the identically numbered exhibits from
the Company's Registration Statement on Form S-1, No. 294663.
(2) Incorporated by reference to the identically numbered exhibits from
the Company's Form 10-K for the year ended June 30, 1986. (File No.
000-13337).
(3) Incorporated by reference to the identically numbered exhibits from
the Company's 1986 Proxy Statement dated November 7, 1986. (File No.
000-13337).
(4) Incorporated by reference to the identically numbered exhibits from
the Company's Registration Statement on Form S-1, No. 3312084.
(5) Incorporated by reference to the identically numbered exhibits from
the Company's Form 10-KSB for the year ended June 30, 1995. (File No.
000-13337).
(6) Incorporated by reference to the identically numbered exhibits from
the Company's Form 10-KSB for the year ended June 30, 1996. (File No.
000-13337).
(b) There were no reports on Form 8-K filed during the fiscal year ended June
30, 2000.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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.
________________________________________________________________________________
(Registrant)
By /s/ Stephen E. Roman, Jr.
______________________________
Stephen E. Roman, Jr.
Title: President and Director Date: September 27, 2000
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
By/s/ Robert Edwards
____________________________
Robert Edwards
Title: Director Date: September 27, 2000
By /s/ Jennifer Lo
________________________________
Jennifer Lo
Title: Director Date: September 27, 2000
By /s/Michael Hsu
________________________________
Michael Hsu
Title: Director Date: September 27, 2000
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Financial Statements
For the Period July 19, 1999 (Inception)
to June 30, 2000
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Index to the Financial Statements
For the Period July 19, 1999 (Inception)
to June 30, 2000
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .F-1
Balance Sheet........................................................... F-2
Statement of Income..................................................... F-3
Statement of Stockholders' Equity....................................... F-4
Statement of Cash Flows.................................................. F-5
Notes to Financial Statements...................................... F-6 - F-10
<PAGE>
Rosenberg Rich Baker Berman & COMPANY
(Letterhead)
Independent Auditors' Report
To the Board of Directors of
Buy It Cheap.com, Inc.
We have audited the accompanying balance sheet of Buy It Cheap.com, Inc. (A
Development Stage Company) as o f June 30, 2000 and the related statements of
income, stockholders' equity, and cash flows for the period July 19, 1999
(inception) to June 30, 2000. 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.
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 Buy It Cheap.com, Inc. (A
Development Stage Company) at June 30, 2000, and the results of its operations
and its cash flows for the period July 19, 1999 (inception) to June 30, 2000 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has incurred losses, has no current sources of
revenue or funds and has a working capital deficit as of June 30, 2000. These
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are also described in the
notes. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
July 19, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2000
Assets
<S> <C>
Current Assets
Cash $ 44,424
Due from officers and directors 28,790
Other current assets 2,080
---------------
Total Current Assets 75,294
Property and equipment, net of accumulated depreciation of $5,983 32,292
Investment in joint venture 620,535
Reserve against investment in joint venture (620,535)
---------------
Total assets 107,586
===============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 154,686
Due to officers and directors 5,559
---------------
Total Current Liabilities 160,245
Convertible note payable 16,198
---------------
Total Liabilities 176,443
---------------
Stockholders' Equity
Preferred stock - $.001 par value, 10
Authorized 2,000,000 shares
Issued and Outstanding - 10,000 shares
Common stock - $.001 par 8,740
Authorized - 20,000,000 shares
Issued 8,740,802 and outstanding 8,590,582
Paid in capital 742,590
Treasury stock, 150,220 common shares at cost (751,100)
Retained deficit, accumulated during the development stage (69,097)
---------------
Total Stockholders' Equity (68,857)
---------------
$ 107,586
Total Liabilities and Stockholders' Equity
===============
See notes to the financial statements.
</TABLE>
F-2
<PAGE>
<TABLE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statement of Income
For the Period July 19, 1999 (Inception)
to June 30, 2000
<S> <C>
Revenues $ -
Direct Operating Costs (6,755)
Direct and Administrative Expenses (62,342)
--------------
Net Loss $ (69,097)
==============
Weighted average number of shares outstanding 5,924,717
==============
Loss Per Common Share $ ( 0.01)
==============
Loss Per Common Share - Assuming dilution $ (0.01)
==============
</TABLE>
See notes to the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
F-3
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
For the Period July 19, 1999 (Inception) to June 30, 2000
Preferred Stock Common Stock Treasury Stock
---------------- --------------- --------------------------
Paid in Retained
Shares Amount Shares Amount Capital Shares Amount Deficit Total
------ ------ ------ ------ ------- ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1999 (Date of Inception) - $ - - $ - $ - - $ - $ - $ -
Issuance of stock in exchange for software - - 210,000 210 14,790 - - - 15,000
Issuance of stock for cash - - 1,190,000 1,190 83,810 - - - 85,000
Acquisition of Northeast (USA) Corp. 10,000 10 7,158,407 7,158 552,975 (150,220) (751,100) - (190,957)
Issuance of stock for release of
accounts payable obligation - - 32,395 32 16,165 - - - 16,197
Issuance of stock pursuant to
private placement offering - - 150,000 150 74,850 - - - 75,000
Net loss for the year ended
June 30, 2000 - - - - - - - (69,097) (69,097)
------- ---- --------- ------ -------- -------- -------- --------- --------
10,000 $10 8,740,802 $8,740 $742,590 (150,220) $(751,100) $(69,097) $(68,857)
Balance at June 30, 2000
======= ==== ========= ====== ======== ======== ========= ========= ========
</TABLE>
See notes to the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Period July 19, 1999 (Inception) to June 30, 2000
Cash Flows From Operating Activities
<S> <C>
Net Loss $ (69,097)
Adjustments to Reconcile Net Loss to Net Cash used by
Operating Activities
Depreciation and amortization 5,983
Changes in Assets and Liabilities
Increase in other current assets (2,080)
Decrease in accounts payable and accrued expenses (244)
---------------
Net Cash Used by Operating Activities (65,438)
---------------
Cash Flows From Investing Activities
Purchases of property and equipment (23,275)
(Increase) in due from officers/directors (28,790)
Cash acquired 1,927
---------------
Net Cash Provided by Investing Activities (50,138)
---------------
Cash Flows From Financing Activities
Proceeds from sale of common stock 160,000
---------------
Net Cash Provided by Financing Activities 160,000
---------------
Net Increase in Cash 44,424
Cash at beginning of period -
---------------
$ 44,424
Cash at end of period
===============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
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>
See notes to the financial statements.
F-5
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Buy It Cheap.com, Inc. (the "Company") is a Delaware corporation. On
November 3, 1999, Northeast (USA) Corp. purchased all of the common stock
of Buy It Cheap.com (a developmental stage company). For accounting
purposes, the acquisition has been treated as an acquisition of Northeast
(USA) Corp. by Buy It Cheap.com and as a recapitalization of Buy It
Cheap.com. The Company will operate in the internet retailing industry.
Since there has been no significant revenues generated from internet
retailing, the Company is considered a Developmental Stage Company for
financial reporting purposes.
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, has no current source of revenues or funds and has a
working capital deficit as of June 30, 2000. The Company's continued
existence is dependent upon its ability to secure adequate financing. The
Company plans to raise additional 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
Northeast (USA) Corp., 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. Northeast (USA) Corp. and
NEGPF were to have contributed certain assets to the joint venture.
Northeast (USA) Corp. 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, Northeast (USA) Corp. owned 56.52%
of the joint venture and NEGPF owned 43.48%. To date, Northeast (USA) Corp.
has contributed $1 million of cash and has contributed the technology.
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. Northeast
(USA) Corp. 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 the joint venture.
Advertising Costs
Advertising costs are charged to operations when incurred. Advertising
costs charged to expense were $2,625.
Depreciation and Amortization
The cost of property and equipment is depreciated for financial reporting
purposes on a straight-line basis over the estimated useful lives of the
assets: 5 years for machinery and equipment and 3 years for software.
Repairs and maintenance expenditures which do not extend the useful lives
of the related assets are expensed as incurred.
F-6
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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 and
liabilities are recovered or settled. Deferred taxes also are recognized
for operating losses that are available to offset future federal and state
income taxes.
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.
DUE TO/FROM OFFICERS AND DIRECTORS
Amounts due to/from Officers and Directors represent unsecured,
non-interest bearing loans, having no repayment terms.
PROPERTY AND EQUIPMENT
Property and equipment at cost, less accumulated depreciation and
amortization, consists of the following at June 30, 2000:
<TABLE>
<S> <C>
Equipment $ 5,935
Software 32,340
---------------
Subtotal 38,275
Less accumulated depreciation and amortization 5,983
---------------
Total $ 32,292
===============
Depreciation expense charged to operations was $5,983 for the period ended
June 30, 2000.
</TABLE>
F-7
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
INCOME TAXES
The Company's deferred tax asset is comprised of the following temporary
differences:
<TABLE>
<S> <C>
Net operating losses $ 480,073
Differences between basis of reporting for book and tax 620,500
---------------
Total $ 1,100,573
===============
</TABLE>
The reconciliation of reported income tax expense to the amount of income tax
expense that would result from applying domestic federal statutory tax rates to
pretax income is as follows:
<TABLE>
<S> <C>
Tax (benefit) at the U.S. Federal Statutory rate (34%)
Valuation allowance - change (34%)
State income tax - net of federal tax benefit -
Provision for income taxes -
</TABLE>
Deferred taxes are recognized for temporary differences between the bases of
assets and liabilities for financial statement and income tax purposes. The
differences relate primarily to the reserve against investment in Joint Venture
(expensed for financial statement purposes but not deductible for income tax
purposes).
The Company's provision for income taxes differs from applying the statutory
U.S. federal income tax rate to income before income taxes. The primary
difference results from providing for state income taxes and from deducting
certain expenses for financial statement purposes but not for federal income tax
purposes.
F-8
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
INCOME TAXES - Continued
Those amounts have been presented in the Company's financial statements as
follows:
<TABLE>
<S> <C>
Deferred tax asset, noncurrent $ 168,000
Total valuation allowance recognized for deferred tax assets (168,000)
--------------
Net deferred tax assets $ -
==============
</TABLE>
The Company has available net operating loss carry forwards which may be used to
reduce Federal and State taxable income and tax liabilities in future years as
follows:
<TABLE>
<CAPTION>
Federal State
------------ ----------
Available Through
<S> <C> <C> <C>
2004 $ - $ 191,664
2005 - 181,950
2006 - 50,064
2007 - 69,097
2017 191,664 -
2018 181,950 -
2019 50,064 -
2020 69,097 -
---------- ----------
$ 492,775 $ 492,775
========== ==========
</TABLE>
LOSS PER SHARE
In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share", basic earnings per share amounts are computed based on the
weighted average number of shares outstanding. The number of shares used in the
computations were 5,924,717.
The effects of assuming the conversion of the Series C convertible preferred
stock as a common stock equivalent would be antidilutive, and were therefore not
considered in the computation of diluted earnings per share.
F-9
<PAGE>
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
LOSS PER SHARE - Continued
The following is a reconciliation of net loss to net loss per share - basic
and diluted.
<TABLE>
<CAPTION>
<S> <C>
Net Loss $ (69,097)
Less: Dividends on Preferred Stock net of tax benefit (2,040)
----------------
Loss Applicable to common shareholders - basic (71,137)
----------------
Loss Applicable to Common Shareholders - Assuming dilution $ (71,137)
================
Weighted Average Shares Outstanding 5,924,717
================
</TABLE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, due to/from officers, other current assets,
accounts payable and accrued expenses and the convertible note payable
approximates fair value because of the short maturity of these instruments.
Limitations
Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instrument. These estimates
are subjective in nature and involve uncertainties and matters of
significant judgement and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
PREFERRED STOCK
In May 1994, Northeast (USA) Corp. sold 275,000 shares of its newly
designated Series C convertible stock, $.001 par value, for an aggregate
amount of $825,000 to a group of private investors. Except for $30,000
(representing 10,000 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 common stock in lieu of cash dividends. Those that did not
accept shares of common stock for dividends and those that did not convert
their preferred shares are owed a total of $103,990 of dividend arrearages
at June 30, 2000.
CONVERTIBLE NOTE PAYABLE
During the year 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
convertible note for $16,198. The note is non-interest bearing and is due
on December 31, 2001. The note may be converted at the creditor's option,
into 32,395 shares of the Company's common stock prior to that date.
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. Depending on its financial status, the Company will
attempt to settle these claims in the coming months.
If the Company is unable to resolve these claims, it may be unable to
proceed with its new business.
F-10
