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 March 31,
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 ____________
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)
4818 West Commercial Blvd., Ft. Lauderdale, Florida 33319
(Address of principal executive offices)
(954) 717-8680
(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
May 15, 2000: 13,278,044
<PAGE 1>
CONSOLIDATED BALANCE SHEETS
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
As of March 31, 2000 & December 31, 1999
ASSETS (Unaudited)
March 31, 2000 December 31, 1999
CURRENT ASSETS
Cash $ 169,499 111,428
Prepaid Expenses 279,353 391,121
Inventory 4,462 4,542
Shareholder Loan Receivable 7,892 7,892
Accounts receivable 385 5,385
--------------- -----------------
TOTAL CURRENT ASSETS 461,591 520,368
PROPERTY AND EQUIPMENT
Furniture 6,521 6,521
Leasehold improvements 2,000 2,000
Equipment 32,186 30,620
Accumulated depreciation (29,494) (28,544)
--------------- -----------------
NET PROPERTY AND EQUIPMENT 11,213 10,597
OTHER ASSETS
Deposits 3,700 3,700
--------------- -----------------
TOTAL OTHER ASSETS 3,700 3,700
--------------- -----------------
TOTAL ASSETS $ 476,504 534,665
================ ================
See Accompanying Notes to Consolidated Financial Statements
<PAGE 2>
CONSOLIDATED BALANCE SHEETS (CONTINUED)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
As of March 31, 2000 & December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
March 31, 2000 December 31, 1999
CURRENT LIABILITIES
Accounts payable and accrued expenses 4,530 4,930
Current portion of capitalized
lease obligation 2,102 2,182
------------- ---------
TOTAL CURRENT LIABILITIES 6,632 7,112
LONG-TERM DEBT
Capitalized lease obligation 4,400 4,945
STOCKHOLDERS' EQUITY
Common stock 10,705 9,706
($.001, par value,100,000,000
authorized- 10,705,044 and 9,706,000
issued and outstanding at March 31,
2000 & December 31, 1999, respectively)
Common stock subscribed($.001,
par value, 2,488,000 and 3,473,000
subscribed at March 31, 2000 & December
31, 1999, respectively at $.22 per share) 2,488 3,473
Convertible preferred stock ($.001
par value(50,000,000 authorized-
1,000,000 shares issued and outstanding) 1,000 1,000
Common stock subscriptions
receivable (547,397) (671,637)
Additional paid-in-capital 1,428,500 1,413,046
Retained deficit (429,824) (232,980)
------------ ----------
TOTAL STOCKHOLDERS'EQUITY 465,472 522,608
------------ ----------
$ 476,504 534,665
=========== ==========
See Accompanying Notes to Consolidated Financial Statements
<PAGE 3>
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For Three Months Ended March 31, 1999 & 2000
March 31, 1999 March 31, 2000
REVENUE
Sales $ 126,086 107,640
Cost of Labor (69,980) (64,480)
------------- -----------
GROSS PROFIT 56,106 43,160
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
Advertising 17,520 44,919
Auto Expenses -- 1,908
Banking Fees 168 282
Depreciation 650 950
Dues & Fees 2,000 --
Employee Benefits 1,040 --
Employee Leasing 6,928 8,694
Equipment Leasing 926 --
Insurance -- 6,545
Miscellaneous Expense 131 2,195
Office Expense 3,575 3,451
Professional Fees 12,124 40,066
Public Trading 2,320 1,605
Rent 6,304 9,553
Supplies 408 994
Salaries & Wages -- 93,118
Taxes & Licenses 125 498
Telephone 3,662 4,733
Utilities 439 342
Web Development -- 19,891
---------- --------
TOTAL EXPENSES 58,320 239,744
OPERATING LOSS (2,214) (196,584)
Interest Expense (361) (260)
Interest Income 17,197 --
Income Tax Provision (2,329) --
---------- --------
NET INCOME (LOSS) $ 12,293 (196,844)
See Accompanying Notes to Consolidated Financial Statements
<PAGE 4>
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)Cont.
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For Three Months Ended March 31, 1999 & 2000
NET INCOME (LOSS) $ 12,293 (196,844)
Retained Deficit,
January 1 (66,545) (232,980)
Retained Deficit,
March 31 $ (54,252) (429,824)
============= ===========
Net Income(Loss) Per Share-
Basic and fully diluted $ .001 $ (.033)
============= ===========
Weighted Average Shares 10,717,745 13,183,667
============= ===========
See Accompanying Notes to Consolidated Financial Statements
<PAGE 5>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For the Three Months Ended March 31, 1999 & 2000
March 31, 1999 March 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 12,293 (196,844)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 650 950
Recoverable income tax decrease 400 --
Prepaid compensation -- 111,768
Common stock issued for services -- 15,468
(Increase) decrease in operating assets:
Accounts receivable 160 5,000
Interest receivable (17,197) --
Inventory -- 80
Increase (decrease) in operating
liabilities:
Accounts payable & accrued expenses ( 3,010) (400)
Income taxes currently payable 1,929 --
----------- ----------
NET CASH USED IN OPERATING
ACTIVITIES (4,775) (63,978)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for equipment -- (1,566)
NET CASH USED IN INVESTING
ACTIVITIES -- (1,566)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issuances 97,375 124,240
Principal repayments under capital lease (625) (625)
Shareholder loans repayments (17,487) --
Excess of outstanding checks over
bank balance (11,366) --
----------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 67,897 123,615
NET INCREASE IN CASH ----------- ---------
AND CASH EQUIVALENTS $ 63,122 58,071
See Accompanying Notes to Consolidated Financial Statements
<PAGE 6>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)Cont.
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
For the Three Months Ended March 31, 1999 & 2000
Cash and cash equivalents,
beginning of period $ 4,164 111,428
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 67,286 169,499
============ ==========
Supplementary cash flow disclosure:
Income Taxes Paid $ -- $ --
Cash paid for interest 361 260
============ ==========
Non-Cash Financing Activities:
Common stock issued for Internet Consulting services
during March 2000 $ -- $ 15,468
============ ==========
See Accompanying Notes to Consolidated Financial Statements
<PAGE 7>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BEAUTYMERCHANT.COM, INC. & SUBSIDIARIES
MARCH 31, 2000 (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 March 31, 2000, the results of
operations for the three month periods ended March 31,1999 and
2000, and cash flows for the three months ended March 31, 1999 and
2000. The results for the period ended March 31, 2000, are not
necessarily indicative of the results to be expected for the entire
fiscal year ending December 31, 2000.
NOTE 2 - EARNINGS (LOSS) PER SHARE
The following represents the calculation of earnings (loss) per
share:
For the three months ended
BASIC & DILUTED* March 31, 1999 March 31, 2000
--------------- ------------------------------
Net income(loss) $ 12,293 $(196,844)
Less- preferred stock dividends --- ---
------------- ------------
Net income(loss) $ 12,293 $(196,844)
Weighted average number
Of common shares 10,717,745 13,183,667
------------- ------------
Basic earnings (loss) per share $ .001 $ (.033)
============= ============
*There were no common stock equivalents for either period
presented.
<PAGE 8>
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.
Description of Business
Cleaning Express USA. The Company's operations primarily involve
home cleaning services. Through its emphasis on budget pricing,
the Company has developed a market in the home cleaning industry.
The Company currently operates two offices and dispatches 40-50
workers in teams of two workers on a daily basis. The present
geographic area in which the Company operates includes the Dade,
Broward and South Palm Beach County areas of South Florida.
Marketing for the home cleaning services is accomplished through
print ads, television and radio commercials. Additionally, the
Company utilizes a referral program that rewards customers with
future discounts for referring a client.
The home cleaning industry is highly competitive with respect to
price, service, quality and location. There are numerous, well-
established, larger competitors in the home cleaning industry
possessing substantially greater financial, marketing, personnel
and other resources than the Company. There can be no assurance
that the Company will be able to respond to various competitive
factors affecting the business. The Company plans to gain a
competitive advantage over its competitors in the home cleaning
industry by offering quality service at a low price. The Company
has been successful in achieving this goal since 1996 and plans to
further expand in South Florida by continuing its current marketing
strategy.
The primary market for Cleaning Express USA is individual
households. No single customer makes up more than ten percent of
the total revenues of Cleaning Express USA. The Company does not
expect that this will change in the future.
<PAGE 9>
The Company has three full time employees and contracts with 40-50
workers that are each independently contracted with the Company to
service and provide home cleaning services to existing and new
customers.
Beautymerchant.com, Inc. During January 2000, the Company,
through its wholly owned subsidiary Beautymerchant.com, Inc., a
Florida corporation, developed a retail cosmetic and beauty product
e-commerce Internet site. Beautymerchant.com was developed under
the guidance of the CEO, Mr. Ed Roth, who has served as a
management consultant for beauty salons from 1978-1988. During this
time, he became familiar with retail cosmetics, hair products
through attending various trade shows and studying consumer trends
concerning retailing of hair and skin products. The site is
designed to create a marketing and distribution area for cosmetic,
hair, nail and skin care and general beauty lines on a discounted
basis. Beautymerchant.com sells and distributes popular cosmetic
and beauty products, primarily to females in the 18-40 age bracket.
Additionally, a department will be developed that focuses on the
cosmetic and beauty needs of individuals from a variety of ethnic
backgrounds and skin color. Products, development and resources in
this area will be focused on filling the needs of the African-
American community with further expansion to additional ethnic
groups planned for the future.
The Company will attempt to develop the Beautymerchant.com concept,
" We sell beauty for less", and will strive to provide the best
prices available. Initially, the Company is carrying a catalogue
format, offering over 2,000 brand name cosmetics and toiletries,
totaling over 8,000 products, with new product lines being added as
web traffic increases. The Company maintains a floating inventory
of Products through its distributors, which is stored at the
distributors location as product sourcing eliminates the need for a
costly extended inventory. All customer orders are implemented by
online credit card or cyber cash systems with a virtual shopping
cart. The Company offers a secure shopping environment, partnering
with Earthlink and Mercantec systems for secure credit card
transactions and easy to use ordering. Visitors to the online
store are able to shop 24 hours a day, regardless of location, and
are able to shop and order in English, Spanish, or French.
Beauty products are marketed over the World Wide Web via the
Internet. The Company has agreed to a marketing alliance with
GoTo.com and Yahoo! to advertise on their portals by means of
banner ads and site affiliations. Earthlink, Inc. will provide
links and banner impressions from the Earthlink shopping mall for
Beautymerchant.com. The Company also has entered an agreement with
the Earthlink Network to host the site. During the first quarter,
the Company also developed a 30 second T.V. spot. which is to be
<PAGE 10>
aired on several major networks including Dish T.V. and WSVN 7. In
addition, the Company plans to use in-house marketing and
advertising to promote its products. Advertising is expected to
increase leading into the summer of 2000.
During February 2000, the Company contracted with a local web
development firm to remodel the site and add several new features
to the `virtual store front.' The site now has a new `look and
feel' in order to better promote the Company's products.
Beautymerchant.co.uk in England is being planned and developed. At
this time, no opening date has been announced. Beautymerchant.de is
also being planned to open in Germany. However, no opening date has
been announced. The Company has obtained and registered exclusive
domain rights in the respective countries. The Company expects to
begin contracting and negotiating with European distributors during
the Year 2000. The company has established worldwide customer
service capabilities with toll free numbers that are converted into
E-mail on a daily basis for prompt response to customer issues.
The online beauty supply industry is highly competitive with
respect to price, service, quality and internet marketing. As a
result, the potential for failure in this industry is significant.
There are numerous, well-established, larger competitors in the
online beauty supply industry with comprehensive web sites,
possessing substantially greater financial, marketing, personnel
and other resources than the Company. There can be no assurance
that the Company will be able to respond to various competitive
factors affecting the business. The Company plans to gain a
competitive advantage over its competitors in online beauty
products industry by offering a variety of quality products at a
low price, directly to the consumer. This will be achieved by
working directly with wholesalers, enabling the Company to get and
pass on to the customer the best prices in the online market. The
Company also plans to gain an advantage over the competition by
providing access to the web site in English, French and Spanish.
The Company hopes that this will successfully increase its market
appeal and presence with a wide variety of cultures and
communities.
Business Strategy
The Company's objective is to become a leading e-commerce retailer
and to enhance and brand itself as an online shopping destination
for beauty products, fragrances and accessories. The company is
building a customer base and expanding its electronic commerce
expertise, while offering consumers considerable discounts on name-
brand beauty products and cosmetics.
<PAGE 11>
The Company believes that the sale of cosmetics, accessories and
hair care products will offer benefits to customers by providing
convenient, competitive pricing. In addition, customers entering
Beautymerchant.com may purchase gift certificates, browse and
search for favorite beauty and cosmetic products and participate in
special promotions. The Company expects to promote brand loyalty
and repeat purchases by providing a positive experience that
encourages customers to return frequently.
Browsing and Searching
Beautymerchant.com allows its customers to interactively search and
browse more than 8,000 name brand products. The Company has
created a "featured brands" section allowing customers to explore
the brand names we offer. Also, an extended category list allows
customers to search for their favorite products by category. New
products are expected to be added weekly.
Secure Credit Card Payment
Beautymerchant.com utilizes secure software through a third party
cybercash platform for e-commerce transactions, providing encrypted
personal information, including credit card numbers, names and
addresses.
Fulfillment and Availability
All of the Company's products are shipped within 24 hours from
distributor partners. Some products are available within 3-7 days.
Others are generally available within 4-6 weeks. Some back order
cosmetics and fragrances may not be available at all. The Company
uses e-mail to notify customers of order conditions. The Company
seeks to provide rapid and reliable fulfillment of customer orders.
Products and Geographic Expansion
The Company began retail operations in early 2000, and will attempt
to expand product sales on a continual basis.
Affiliate Program
The Company intends to increase market presence through its
affiliate program. A recent agreement was entered into with
Commission Junction of Santa Barbara, California to manage the
program.
<PAGE 12>
Customer Service
The Company believes its ability to establish long-term
relationships with its customers will encourage repeat sales. The
Company offers a toll free customer service telephone number, and
encourages e-mail inquiries for customer care 24 hours a day.
Additional Risk Factor
Beautymerchant.com, a Florida corporation, has a limited operating
history. Having just started its retailing operation in the year
2000, the Company has a short operating history upon which to
evaluate its business and prospects. As a new e-commerce company,
Beautymerchant.com faces intense competitors, and must manage
growth effectively. The Company may not succeed in addressing all
challenges and risks, including unpredictability of future
revenues. To be successful, Beautymerchant.com plans to implement
the following:
1. Retain existing customers.
2. Attract new customers.
3. Meet customer demands.
4. Fulfill all customer orders.
5. Acquire additional sources for merchandise at discounted
prices.
6. Maintain sufficient website traffic.
7. Increase our Internet exposure.
8. Monitor the competition.
(Competition in the Internet and online market will
intensify. This increased competition may reduce our profit
margins or market share.)
9. Limit service interruptions.
(Customer access to our website affects the volume of
orders. Excessive system interruptions make our e-commerce
store unavailable.
The principal suppliers to Beautymerchant.com are wholesale
distributors, who do not sell retail.
The Company does not expect that any single customer will account
for more than ten percent of its business. At the present time
there is no need for government approval, though this may change in
the future.
<PAGE 13>
The Beautymerchant.com in-house staff is projected to add 2-5 new
employees for the first 12 months of retail operations. These new
employees will be managed by the four employees that are presently
on staff.During the first quarter the company has retained an in-
house web developer and designer who will regularly update and
maintain the site.
Results of Operations
Net Income
The Company had a net loss of $196,844, or $(.033) per common
share, for the first three months of operations, versus a net loss
of $12,293, or $(.001) for the same period ended March 31, 1999.
The change in net income was primarily due to an increase in
administrative expenses relating to the commencing of the
BeautyMerchant.com online superstore.
Sales
Revenues decreased $18,446 or 14.5% to $107,640 as compared with
$126,086 for the three months ended March 31, 1999. The decrease
was primarily due to seasonal fluctuations in demand for the
Company's home cleaning services. Average selling prices and gross
margins remained fairly constant.
Expenses
Selling, General, and Administrative expenses increased $181,424 to
$239,744 for the period ending March 31, 2000. In comparison with
the period ended March 31, 1999, web development & professional
expenses increased $19,891 and $27,942 respectively due to the
Company's commencing and operating of the BeautyMerchant.com
virtual online superstore. Salaries increased $93,118 due to new
personnel contracts for managers of the BeautyMechant.com online
store.
Liquidity and Capital Resources
On March 31, 2000, the Company had cash of $169,499 and working
capital of $454,959. This compares with cash of $67,286 and working
capital of $42,764 at March 31, 1999. The increase in working
capital was due to a decrease in accounts payable, offset by an
increase in prepaid expenses and an increase in cash from proceeds
of common stock sales. Net cash used in operating activities was
$63,978 for the three month ended March 31, 2000 as compared with
cash used in operating activities of $4,775 for the period ended
March 31,
<PAGE 14>
1999. Cash provided by financing activities totaled $123,615 for
the three months ended March 31, 2000 as compared with cash
provided by financing activities of $67,897 for the three months
ended March 31, 1999. The increase in cash provided by financing
activities was primarily due to the collection of subscribed common
stock in the amount of $124,240, which the Company received from
the issuance of 564,727 common shares. The Company intends to use
the funds toward promoting the BeautyMerchant.com subsidiary.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On April 14, 2000, the Company's Board of Directors and a majority
of the shareholders held a meeting. During the course of the
meeting, it was resolved that Jack Mark resigns as a member of the
Board of Directors. Also by unanimous consent, Geoff Gazda and
Michael J. Bongiovanni were appointed new members of the Board of
Directors.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
27.1 Financial Data Schedule
- --SIGNATURE PAGE FOLLOWS--
<PAGE 15>
SIGNATURES
In accordance with 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.
/s/ Michael J. Bongiovanni
Date: May 12, 2000 ------------------------
Michael J. Bongiovanni
Chief Financial Officer
<PAGE 16>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet as of March 31, 2000, and the Statement of Operations for the Period
Ended March 31, 2000, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000821524
<NAME> BEAUTYMERCHANT.COM
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 169,499
<SECURITIES> 0
<RECEIVABLES> 385
<ALLOWANCES> 0
<INVENTORY> 4,462
<CURRENT-ASSETS> 461,591
<PP&E> 40,707
<DEPRECIATION> 29,494
<TOTAL-ASSETS> 476,504
<CURRENT-LIABILITIES> 6,632
<BONDS> 0
0
1,000
<COMMON> 13,193
<OTHER-SE> 451,279
<TOTAL-LIABILITY-AND-EQUITY> 476,504
<SALES> 107,640
<TOTAL-REVENUES> 107,640
<CGS> 64,480
<TOTAL-COSTS> 64,480
<OTHER-EXPENSES> 239,744
<LOSS-PROVISION> (196,584)
<INTEREST-EXPENSE> 260
<INCOME-PRETAX> (196,844)
<INCOME-TAX> 0
<INCOME-CONTINUING> (196,844)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (196,844)
<EPS-BASIC> (.033)
<EPS-DILUTED> (.033)
</TABLE>
