U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the quarterly period ended September 30, 1999
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the transition period from _______ to _______
COMMISSION FILE NUMBER: 001-14973
BEAUTYMERCHANT.COM, INC.
------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 13-3422912
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
4614 North University Drive, Ft. Lauderdale, Florida 33351
(Address of principal executive offices)
(954) 572-8348
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section13
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 |_|
Number of shares of common stock outstanding as of November 12, 1999: 12,816,604
Page 1
<PAGE>
CONSOLIDATED BALANCE SHEETS
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
As of September 30, 1999 & December 31, 1998
ASSETS (Unaudited)
September 30, 1999 December 31, 1998
CURRENT ASSETS
Cash $ 28,772 $ 4,164
Recoverable income taxes -- 400
Accounts receivable 5,385 500
Interest receivable 17,197 --
Prepaid rent 1,781 --
Prepaid opening expenses 7,375 --
-------- --------
TOTAL CURRENT ASSETS 60,510 5,064
PROPERTY AND EQUIPMENT
Furniture 6,520 4,215
Leasehold improvements 2,000 2,000
Equipment 30,620 23,631
Accumulated depreciation (27,768) (25,694)
-------- --------
NET PROPERTY AND EQUIPMENT 11,372 4,152
OTHER ASSETS
Deposits 2,700 1,700
Deferred taxes 11,135 --
-------- --------
TOTAL OTHER ASSETS 13,835 1,700
TOTAL ASSETS $ 85,717 $ 10,916
======== ========
See Accompanying Notes to Consolidated Financial Statements
Page 2
<PAGE>
CONSOLIDATED BALANCE SHEETS (CONTINUED)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
(Unaudited)
September 30, 1999 December 31, 1998
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 4,930 $ 11,990
Excess of outstanding checks over
bank balance -- 11,366
Shareholder loans payable 1,748 41,235
Current portion of capitalized
lease obligation 2,242 2,482
--------- ---------
TOTAL CURRENT LIABILITIES 8,920 67,073
--------- ---------
LONG-TERM DEBT
Capitalized lease obligation 5,570 7,205
STOCKHOLDERS' EQUITY(DEFICIT)
Common stock 9,344 3,183
($.001, par value,100,000,000
authorized- 9,343,399 issued
and outstanding)
Common stock subscribed($.001,
par value, 3,473,205 subscribed
at $.22 per share) 3,473 --
Preferred stock (50 million
authorized- zero issued and
outstanding) -- --
Common stock subscriptions
receivable (764,105) --
Additional Paid-in-Capital 947,566 --
Retained deficit (125,050) (66,545)
--------- ---------
TOTAL STOCKHOLDERS'EQUITY(DEFICIT) 71,228 (63,362)
--------- ---------
$ 85,717 $ 10,916
========= =========
See Accompanying Notes to Consolidated Financial Statements
Page 3
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For the Three and Nine Months Ended September 30, 1999 & 1998
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
<S> <C> <C> <C> <C>
REVENUE
Sales $ 96,586 $ 97,200 $ 329,062 $ 320,567
Cost of Labor (54,740) (56,930) (184,554) (190,586)
------------ ------------ ------------ ------------
GROSS PROFIT 41,846 40,270 144,508 129,981
EXPENSES
Advertising $ 29,503 $ 11,990 $ 71,457 $ 42,881
Auto Expenses 1,272 1,592 2,544 3,086
Contract Labor -- 425 -- 2,723
Depreciation 775 325 2,075 1,625
Dues & Fees 565 1,010 2,665 2,260
Employee Benefits 3,748 3,096 5,321 7,402
Employee Leasing 22,292 14,922 52,744 44,071
Equipment Leasing 531 -- 1,973 1,276
Interest Expense 260 280 881 860
Miscellaneous Expense -- 95 234 212
Office Expenses 5,748 1,960 15,844 4,727
Professional Fees 7,179 -- 27,703 --
Public Trading 975 2,124 8,775 3,324
Rent 8,353 4,521 19,299 12,927
Supplies 2,502 280 7,534 747
Taxes & Licenses -- 60 195 274
Telephone 999 1,499 6,872 6,128
Training 3,385 -- 3,385 --
Utilities 850 187 1,444 518
------------ ------------ ------------ ------------
TOTAL EXPENSES 88,937 44,366 230,945 135,041
------------ ------------ ------------ ------------
OPERATING LOSS 47,091 4,096 86,437 5,060
Interest Income -- -- 17,197 --
Deferred Tax Benefit 7,064 600 10,735 1,000
------------ ------------ ------------ ------------
NET LOSS $ (40,027) $ (3,496) $ (58,505) $ (4,060)
Net Loss Per Share-
Basic and fully diluted $ ** N/A $ ** N/A
============ ============ ============ ============
Weighted Average Shares 12,816,604 N/A 12,116,985 N/A
============ ============ ============ ============
</TABLE>
** Less than $ 0.01
See Accompanying Notes to Consolidated Financial Statements
Page 4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For the Nine Months Ended September 30, 1999 & 1998
September 30, September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (58,505) $ (4,060)
Adjustments to reconcile net loss
to net cash provided by (used in) operating
activities:
Depreciation 2,075 1,625
Deferred income taxes (10,735) 1,000
(Increase) decrease in operating assets:
Accounts receivable (4,885) 590
Interest receivable (17,197) --
Prepaid rent (1,782) --
Prepaid opening expenses (7,375) --
Increase (decrease) in operating liabilities:
Accounts payable & accrued expenses (7,060) 2,040
--------- ---------
NET CASH PROVIDED BY(USED IN)
OPERATING ACTIVITIES (105,464) 1,195
--------- ---------
CASH FLOWS FROM INVESTING ACIVITIES:
Equipment Purchases (6,989) --
Deposits Paid Under Lease (1,000) --
Furniture Purchases (2,306) --
--------- ---------
NET CASH USED IN
INVESTING ACTIVITIES (10,295) --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issuances 193,095 --
Common stock adjustment -- (317)
Principal repayments under capital lease (1,875) (1,191)
Shareholder loans receipts (repayments) (39,487) 1,900
Excess of outstanding checks over
bank balance (11,366) (1,150)
--------- ---------
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES 140,367 (758)
--------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 24,608 $ 437
See Accompanying Notes to Consolidated Financial Statements
Page 5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For the Nine Months Ended September 30, 1999 & 1998
September 30, September 30,
1999 1998
Cash and cash equivalents,
beginning of period $ 4,164 $ 801
------- -------
CASH AND CASH EQUIVALENTS
END OF PERIOD $28,772 $ 1,238
======= =======
Supplementary cash flow disclosure:
Cash paid for interest $ 881 $ 860
======= =======
--The rest of this page is left intentionally blank--
See Accompanying Notes to Consolidated Financial Statements
Page 6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
September 30, 1999 (UNAUDITED)
ITEM 1.
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments consisting only of normal recurring accruals
considered necessary to present fairly the Company's financial position at
September 30, 1999, the results of operations for the three and nine month
periods ended September 30,1999 and 1998, and cash flows for the nine months
ended September 30, 1999 and 1998. The results for the period ended September
30, 1999, are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1999.
NOTE 2 - EARNINGS (LOSS) PER SHARE
The following represents the calculation of earnings (loss) per share:
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
BASIC & FULLY DILUTED* Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
- ---------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Loss $ (40,027) $ (3,496) $ (58,505) $ (4,060)
Less- preferred stock
dividends -- -- -- --
------------ ------------- -------------- ------------
Net Loss $ (40,027) $ (3,496) $ (58,505) $ (4,060)
Weighted average number
Of common shares 12,816,604 N/A 12,116,985 N/A
------------ ------------- -------------- ------------
Basic & Fully Diluted
loss per share $ ** N/A $ ** N/A
============ ============= ============== ============
</TABLE>
* The Company had no common stock equivalents during the periods presented
** Less than $0.01
Page 7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
With the exception of historical facts stated herein, the matters discussed in
this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
revenues and earnings from operations of the Company. Readers of this report are
cautioned not to put undue reliance on "forward looking" statements which are,
by their nature, uncertain as reliable indicators of future performance. The
Company disclaims any intent or obligation to publicly update these "forward
looking" statements, whether as a result of new information, future events, or
otherwise.
General
The Company operates Cleaning Express USA, Inc, a wholly owned subsidiary, which
offers residential cleaning services, carpet cleaning and other related
services. Third quarter plans for Cleaning Express USA, Inc. had included the
opening of a new location in the city of Miami, Florida to reach a much greater
share of the South Florida cleaning market. This expansion into Miami has been
temporarily delayed so that the company can focus on launching its e-commerce
superstore. The development of Cleaning Express-Miami will resume early in the
Year 2000.
During the third quarter of 1999, the Company continued construction of
BeautyMerchant.Com, a virtual online superstore for cosmetics and related beauty
products. BeautyMerchant.Com is planned to open in December of 1999 and will
offer thousands of varieties of designer brand cosmetics. The company plans to
launch an online advertising campaign to promote the new site during the fourth
quarter. The Company has prepaid rent and prepaid opening expenses of $1,781 and
$7,375, respectively, relating to the BeautyMerchant.Com project as of September
30, 1999. The Company will continue to build for the future by re-directing
resources to the development of BeautyMerchant.Com. Based on current research,
management feels the greatest growth potential lies within its e-commerce
operations. Management believes a delay in launching BeautyMerchant.Com could
only occur if the Company fails to collect full proceeds from common stock
subscriptions on a timely basis. During the third quarter, the Company opened
the BeautyMerchant.Com corporate headquarters in Ft. Lauderdale, Florida.
Corporate Name Change
During the third quarter, the Company effected a change in its corporate name
from "ATR INDUSTRIES, INC." to "BEAUTYMERCHANT.COM, INC." to reflect its
emphasis on the e-commerce operations. The Company remains a Nevada corporation.
Page 8
<PAGE>
Results of Operations
Revenues were $96,586 for the three months ended September 30, 1999 versus
$97,200 for the three months ended September 30, 1998, a decrease of less than
1%. This decrease is primarily attributable to seasonal fluctuations in demand
within the South Florida cleaning market. The Company incurred a net pre-tax
loss from operations of $47,091 for the three months ended September 30,1999
versus a net pre-tax loss from operations of $4,096 for the same period ended
September 30, 1998. The increase in the net loss was attributable to additional
personnel expense, professional fees, and advertising expenses, which increased
$7,370, $7,179, and $17,513, respectively. The increase in advertising and
personnel expenses was primarily due to new marketing planning and hiring
additional employees relating to the Company's preparation and development of
BeautyMerchant.Com. The increase in professional fees was due to the Company
regaining active trading status on the OTC Bulletin Board. Average selling
prices and gross margins remained fairly constant.
Liquidity and Capital Resources
On September 30, 1999, the Company had cash of $28,772 and working capital of
$51,590. This compares with cash of $1,238 and working capital deficit of
$10,807 at September 30, 1998. The increase in working capital was due to a
decrease in accounts and shareholder loans payable, offset by an increase in
interest receivable and an increase in cash from proceeds of common stock. Net
cash used in operating activities was $105,464 for the nine month ended
September 30, 1999 as compared with cash provided by operating activities of
$2,040 for the same period ended September 30, 1998. Cash used in investing
activities was $10,295 for the nine months ended September 30, 1999 versus $0
cash used for the same period ended September 30, 1998. The increase in net cash
used in investing activities was attributable to the opening of the new
corporate office location in Ft. Lauderdale, Florida. Cash provided by financing
activities totaled $140,367 for the nine months ended September 30, 1999 as
compared with cash used in financing activities of $758 for the nine months
ended September 30, 1998. The increase in cash provided by financing activities
was primarily due to the issuance of the Company's common stock during the first
six months of 1999, as described below.
The Company received $193,095 from the issuance of 877,705 shares of common
stock which it intends to use to fund the new Miami office opening of Cleaning
Express USA, Inc. and for expenses relating to the grand opening of the
BeautyMerchant.Com online cosmetic superstore. Based on current levels of
operations, the Company is able to satisfy its cash requirements for the next
twelve months. The Company has subscribed to issue 3,473,205 additional shares
of common stock during the fourth quarter for $764,105.
Page 9
<PAGE>
The subscription agreement for additional shares was made with an unrelated,
external source of investment bankers. The subscription agreement provides for
the additional shares to be purchased at $.22 and is secured by promissory notes
which bear annual interest rates of 8%. Partial proceeds of cash from this
additional stock issuance will be used during the construction and advertising
of BeautyMerchant.Com. Construction and advertising cost are estimated at
$25,500 and $31,000, respectively for the year ending December 31, 1999.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's, or
its suppliers' and customers' computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations causing
disruptions of operations including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
The Company upgraded a few personal computer systems during the third quarter at
a cost of $4,689. The Company has not yet identified any other Year 2000 problem
but will continue to monitor the issue.
The Company has initiated formal communications with significant suppliers to
determine the extent to which those third parties' failure to remedy their own
Year 2000 Issues would materially effect the Company and its subsidiaries. In
the event that the Company receives indications from its suppliers that the Year
2000 Issue may materially effect their ability to conduct business, the Company
will seek contingency plans such as finding other vendors that are Year 2000
compliant or increase its inventory of supplies or parts in an attempt to ensure
smooth operations until such vendor can remedy the problem. The Company has not
received any indication from its suppliers that the Year 2000 Issue may
materially effect their ability to conduct business.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Page 10
<PAGE>
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held a shareholder meeting to vote on a corporate name change from
"ATR INDUSTRIES, INC." (a Nevada corporation) to "BEAUTYMERCHANT.COM, INC." (a
Nevada corporation). After shareholder majority consent, the name was changed to
"BEAUTYMERCHANT.COM, INC." (a Nevada corporation) during the third quarter.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The Company filed one Form 8-K during the third quarter to disclose the
shareholders' decision (see Item 4) to change the corporate name from "ATR
INDUSTRIES, INC." to " BEAUTYMERCHANT.COM, INC."
27.1 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEAUTYMERCHANT.COM, INC.
(Registrant)
Date: November 12, 1999 /s/ Edward A. Roth
-------------------------------
Edward A. Roth, President
(Acting Chief Financial
Officer)
Page 11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<CASH> 28,772
<SECURITIES> 0
<RECEIVABLES> 22,582
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 60,510
<PP&E> 39,140
<DEPRECIATION> 27,768
<TOTAL-ASSETS> 85,717
<CURRENT-LIABILITIES> 8,920
<BONDS> 0
0
0
<COMMON> 12,817
<OTHER-SE> 58,411
<TOTAL-LIABILITY-AND-EQUITY> 85,717
<SALES> 96,586
<TOTAL-REVENUES> 96,586
<CGS> 54,740
<TOTAL-COSTS> 54,740
<OTHER-EXPENSES> 88,937
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 260
<INCOME-PRETAX> (47,091)
<INCOME-TAX> 7,064
<INCOME-CONTINUING> (40,027)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,027)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
