SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter Ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-24362
NUTRICEUTICALS.COM CORPORATION
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(Exact name of small business issuer as specified in its
charter)
STATE OF NEVADA 34-1755390
----------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6950 BRYAN DAIRY ROAD, LARGO, FLORIDA 33777
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (727) 544-8866
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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. [X] Yes [ ] No
The number of shares outstanding of the Issuer's common stock at $.001 par value
as of August 6, 1999 was 5,353,414.
<PAGE>
NUTRICEUTICALS.COM CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 1999
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 14,599 $ 56,986
Accounts receivable, net.............................................. 19,038 9,278
Due from related party................................................ 5,570 5,171
Inventory, net of allowance........................................... 19,163 16,303
Prepaids and other current assets..................................... 25,000 --
--------- ---------
Total current assets........................................................ 83,370 87,738
--------- ---------
Computer software, net..................................................... 45,000 47,500
Deposits................................................................... 200 380
--------- ---------
TOTAL ASSETS............................................................... $ 128,570 $ 135,618
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................... $ 62,614 $ 80,186
Accrued expenses.................................................... 60,478 17,505
Related party notes payable......................................... 50,000 --
--------- ---------
Total current liabilities................................................. 173,092 97,691
========= =========
Shareholders' equity:
Common stock, at par value.......................................... 5,352 5,352
Additional paid-in capital.......................................... 137,050 137,050
Accumulated deficit................................................. (104,475) --
Net loss.......................................... ................. (82,449) (104,475)
--------- ---------
Net shareholders' equity.................................................. (44,522) 37,927
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................ $ 128,570 $ 135,618
========= =========
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE>
NUTRICEUTICALS.COM CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JUNE 30, 1999
-------------
<S> <C>
Net revenues ............................................................... $ 33,899
Cost of revenues ........................................................... 14,786
-----------
Gross profit ........................................................ 19,113
Selling, general and administrative expenses ............................... 101,308
-----------
Operating loss before other income and expense ............................. (82,195)
Other income (expense):
Interest income ..................................................... 335
Other income and expenses, net ...................................... --
Interest expense .................................................... (589)
-----------
Total other income (expense) ............................................... (254)
-----------
NET LOSS ................................................................... $ (82,449)
===========
Basic and diluted loss per share ........................................... $ (0.02)
===========
Basic and diluted weighted number of common shares outstanding ............. 5,351,028
===========
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE>
NUTRICEUTICALS.COM CORPORATION AND SUBSIDIARY
STATEMENT OF CHANGES IN NET DEFICIENCY IN LIQUIDATION
FOR THE THREE MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JUNE 30, 1998
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<S> <C>
Increase in net assets in liquidation:
Sales ........................................................ $ --
Decreases in net assets in liquidation:
Professional fees ............................................ 3,375
Office expense ............................................... 20
---------
Decrease in net assets in liquidation ................... (3,395)
Beginning net liabilities in liquidation ........................... (8,663)
---------
Ending net liabilities in liquidation .............................. $ (12,058)
=========
Loss per share:
Loss attributable to common stockholders ..................... $ (3,395)
=========
Basic and diluted loss per share ............................. $ (0.01)
=========
Basic and diluted weighted number of common shares outstanding 351,028
=========
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE>
NUTRICEUTICALS.COM CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1999
--------------
<S> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss ............................................................... $(82,449)
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 2,500
Changes in operating assets and liabilities:
Accounts receivable .......................................... (9,760)
Inventory .................................................... (2,860)
Prepaid expenses and other current assets .................... (25,399)
Accounts payable ............................................. (17,572)
Accrued expenses ............................................. 42,973
--------
NET CASH USED IN OPERATING ACTIVITIES ........................................ (92,567)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits ............................................................... 180
--------
NET CASH PROVIDED BY INVESTING ACTIVITIES .................................... 180
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party obligation ................................. 50,000
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES .................................... 50,000
--------
NET INCREASE (DECREASE) IN CASH .............................................. (42,387)
CASH AT BEGINNING OF PERIOD .................................................. 56,986
--------
CASH AT END OF PERIOD ........................................................ $ 14,599
========
Supplemental cash flow information:
Cash paid during the period for interest ............................... $ --
========
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE>
Nutriceuticals.com Corporation and Subsidiary
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1999
NOTE A-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 with the instruction to Form 10-QSB and
Article 10 of Regulation S-X. 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, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month periods
ended June 30, 1999 and 1998 are not necessarily indicative of the results that
may be expected for the year ending March 31, 2000. For further information,
refer to the consolidated financial statements and footnotes included in the
Company's Form 10-KSB for the year ended March 31, 1999.
NOTE B-PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include the
accounts of Nutriceuticals.com Corporation and its subsidiary, Healthseek.com
Corp. (collectively the "Company"). All intercompany balances and transactions
have been eliminated.
NOTE C-STOCKHOLDERS' EQUITY
The Company has adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 128, "Earnings Per Share". Basic
earnings per common share is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share gives effect to convertible preferred
shares which are considered to be dilutive common stock equivalents.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Company derives its revenues from online retail sales of natural
products. Revenues are billed and recognized when product is shipped to the
customer, net of discounts, allowances, returns and credits. Cost of goods sold
is comprised of direct product costs. Selling, general and administrative costs
include administrative, sales and marketing and other indirect operating costs.
RESULTS OF OPERATIONS
Three Months ended June 30, 1999 and June 30, 1998
In March 1997, the Company adopted a plan of liquidation by which it sold
its major product line and subsequently disposed of all of its operating assets
by March 31, 1998. In March 1999, the Company acquired all of the outstanding
common stock of Nutriceuticals.com Corporation ("Nutriceuticals"), a Florida
corporation, which was organized in September 1998. The Company then merged with
Nutriceuticals and changed its name to Nutriceuticals.com Corporation. For the
three months ended June 30, 1998 and prior to the acquisition of Nutriceuticals
on September 8, 1998, the Company was accounted for on the liquidation basis of
accounting.
The Company had revenues of $33,899 for the three months ended June 30,
1999. Gross profit was 56.4% for the period. Selling, general and administrative
expenses were $101,308 for the period ended June 30, 1999.
The Company has no income tax provision for the period presented due to
its net operating losses. These net operating losses may be carried forward for
up to 15 years to offset future taxable income.
Management believes that there was no material effect on operations or the
financial condition of the Company as a result of inflation for the three months
ended June 30, 1999. Management also believes that its business is not seasonal;
however, significant promotional activities can have a direct impact on sales
volume in any given quarter.
Interest expense, net of interest income, was $254 for the three months
ended June 30, 1999, and was a result of increased borrowings for financing of
additional working capital needs.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations through loans from within the
Company. The Company had a working capital deficit of $89,722 at June 30, 1999.
The Company estimates that it will need the proceeds from its secondary offering
for on-going Web site development, marketing, promotions, and for general
working capital purposes over the next nine months, including the Company's
plans to hire additional full-time management personnel and acquire new office
space.
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<PAGE>
Net cash used in operating activities was ($92,567) for the three months
ended June 30, 1999. The usage of cash is primarily attributable to the net
operating loss as well as an increase in accounts receivable ($9,760), as a
result of increased sales by the Company during such period, and an increase in
inventory ($2,860), an increase in prepaid expenses and other current assets
($25,399), and a decrease in accounts payable ($17,572), partially offset by an
increase in accrued expenses $42,973.
Net cash provided by investing activities was $180 representing a
decrease in deposits.
Net cash provided by financing activities was $50,000 representing
proceeds from a related party obligation.
In May 1999, 21st Century Healthcare Fund, LLC, an affiliate of the
Company's Chairman, Jugal K. Taneja, loaned $50,000 to the Company for the
purpose of assisting the Company with its working capital needs. The principal
sum, together with interest on the unpaid principal balance at an annual rate
equal to prime plus one percent, is due and payable on demand at any time
following the earlier to occur of either (i) a public offering of the Company's
common stock pursuant to a registration statement filed with the Securities and
Exchange Commission, or (ii) December 31, 1999.
The Company will need additional capital in the future. In order to
satisfy its cash requirements in the next nine months, the Company estimates
that it will need approximately $5 million to fund its operations and its
marketing strategies designed to build its customer base through increased
recognition of the Company's brand names and increased traffic to its Web sites.
The Company also anticipates expending approximately $500,000 for development of
its Web site infrastructures, $1 million for the employment of current and
additional personnel (up to 15 additional persons), and $100,000 for the
acquisition of office and warehouse facilities. There can be no assurances that
future capital will become available when needed, or at all. In the event that
the Company is not able to obtain the needed funds in the future, it may not be
able to continue operations or put its business plan into full effect.
The Company has filed a pending registration statement with the Securities
and Exchange Commission however there can be no assurance as to the completion
of the secondary offering. Future equity investments in the Company may have a
dilutive effect on the percentage ownership of the Company's present
shareholders.
YEAR 2000 STATEMENT
The Year 2000 issue encompasses the required recognition of computer
hardware and software systems and computer controlled devices, including
equipment, used in the Company's distribution and manufacturing operations to
properly acknowledge the change from Year 1999 to Year 2000. The failure of any
hardware and software systems or equipment to timely and accurately recognize
such change could result in partial or complete systems failure. In the normal
course of business, the Company relies on products and services from critical
vendors, customers and other third parties whose computer systems must also be
Year 2000 compliant in order for the Company to realize the uninterrupted flow
of its business operations. The Company is actively taking steps to ensure that
its systems and equipment will be Year 2000 compliant, including assessing the
scope of work, prioritizing, certifying compliance, and testing compliance.
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<PAGE>
The Company has identified those systems and equipment in its operations
that are considered to be critical to the Company's day to day operations. All
of the Company's systems and equipment utilized in the its operations was tested
for Year 2000 compliance during February and March 1999, with approximately 95%
of such systems and equipment being certified as Year 2000 compliant as of June
30, 1999. The Company is in the process of obtaining written assurances from its
third-party software providers that the software used by the Company is Year
2000 compliant. In addition, the Company is actively seeking assurances of Year
2000 compliance from each of its key suppliers, customers and other third
parties with whom the Company conducts business. A lack of response or
inadequate or inaccurate information from such third parties could materially
affect the Company's assessment for Year 2000 readiness. Until assessments are
completed, which is expected to occur during 1999, the Company cannot predict
whether the failure of any such third party to be Year 2000 compliant will have
a material adverse effect on the Company's business.
To date, the costs incurred by the Company to address Year 2000 issues
have been immaterial, and the Company expects that the costs to complete Year
2000 compliance certification, testing and verifications will also be
immaterial. Where appropriate, the Company will develop contingency plans in
areas it determines that Year 2000 readiness is insufficient. However, no
assurances can be given that the Company's Year 2000 efforts are appropriate,
adequate, or complete. In addition, the Company is unable to fully determine the
effect of a failure of its own systems or those of any third party with whom it
conducts business, but any significant failures could have a material adverse
effect on the Company's financial condition, results of operations and cash
flows.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company may become involved in litigation arising
in the ordinary course of its business. The Company is not presently subject to
any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. - NOT APPLICABLE.
ITEM 4. - NOT APPLICABLE.
ITEM 5. OTHER INFORMATION.
On April 14, 1999 the Company effected a stock split, in the form of a
stock dividend, whereby one additional share of common stock was issued for each
outstanding share of common stock. As a result, there was issued and outstanding
5,353,414 shares of common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
The following exhibits are filed with this report:
10.1 Employment Agreement by and between Nutriceuticals.com
Corporation and Stephen M. Watters, dated as of April 1,
1999. (1)
10.2 Employment Agreement by and between Nutriceuticals.com
Corporation and Jugal K. Taneja, dated as of April 1,
1999. (1)
10.3 Strategic Alliance Agreement by and between
IndigoCity.com, Inc. and Nutriceuticals.com Corporation,
dated as of April 13, 1999. (1)
27.1 Financial Data Schedule (for SEC use only).
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2, filed June 29, 1999, file number 0-24362, filed in Washington,
D.C.
(b) REPORTS ON FORM 8-K.
During the three months ended June 30, 1999, the Company filed no reports
on Form 8-K.
- 10 -
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NUTRICEUTICALS.COM CORPORATION
Date: August 6, 1999 By: /s/ JUGAL K. TANEJA
---------------------------------
Jugal K. Taneja
Chief Executive Officer, Chief
Accounting Officer, and Director
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,599
<SECURITIES> 0
<RECEIVABLES> 19,038
<ALLOWANCES> 0
<INVENTORY> 19,163
<CURRENT-ASSETS> 83,370
<PP&E> 50,000
<DEPRECIATION> 5,000
<TOTAL-ASSETS> 128,570
<CURRENT-LIABILITIES> 173,092
<BONDS> 0
0
0
<COMMON> 5,352
<OTHER-SE> (49,874)
<TOTAL-LIABILITY-AND-EQUITY> 128,570
<SALES> 33,899
<TOTAL-REVENUES> 33,899
<CGS> 14,786
<TOTAL-COSTS> 14,786
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 589
<INCOME-PRETAX> (82,449)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,499)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,449)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
