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, 2001
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___ 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
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Buy It Cheap.com, Inc.
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(Name of Small Business Issuer in Its Charter)
Delaware 22-2497491
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1800 Bloomsbury Ave., Ocean, N.J. 07712
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(Address of Principal Executive Offices) (Zip Code)
732-922-3609
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name Of Each Exchange
Title Of Each Class On Which Registered
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock; $.001 par value per share
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(Title of Class)
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(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 S-B 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 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $0
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State the aggregate market value of the voting and non-voting common equity
held by non-affiliates 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 12b-2 of the Exchange Act.).
As of August 28, 2001, 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 $500,000. 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, 2001, 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 non-affiliates on the basis
of reasonable assumptions, if the assumptions are stated.
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, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (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).
Notice on Forward-Looking Statements
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, and
the Annual Report to Shareholders, 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 Report 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.
PART I
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.
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 that it was no longer
interested in pursuing the joint venture. The Chinese have 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 market for lower priced specialty
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
specialty 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.
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 branded merchandise over
the Internet. While the website is partially 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. The Company does not intend to inventory any merchandise, however 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 plans to keep overhead low and will seek
additional funding to expand the business. The rate at which the Company can
secure additional financing will be a determing factor in how fast the Company
will grow.
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 branded merchandise obtained from
closeouts, surplus goods, odd lots, etc. 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.
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 currently relies on an outside organization to maintain this website
infrastructure. In the near term future, the Company anticipates that it will
perform these functions itself.
Employees
The Company currently has no paid employees. Certain officers and directors
of the Company have agreed to temporarily work without pay but may be reimbursed
for out-of-pocket expenditures.
Item 2. Description of Property.
The Company leases office space in Clifton, N.J. and maintains its
principal office at 1800 Bloomsbury Ave., Ocean, N.J. 07712 at no cost to the
Company. As the business expands, the Company will need to procure additional
space.
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 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.
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. (judgement 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, 2001.
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
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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
2001 September 30, 2000 .625 1.00
December 31, 2000 .1563 .75
March 31, 2001 .1563 .1875
June 30, 2001 .10 .1563
The number of record holders of the Company's Common Stock as of June 30,
2001 was 386, 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 an entity separate from the Company by two of its directors. The new entity
was able to raise limited start-up capital for an Internet retailing business.
The new entity then merged with the Company. For accounting purposes, the
combination of the two companies was treated as an acquistion of the Company by
this new entity. Subsequent to the completion of this acquisition the Company
changed its name to Buy It Cheap.com, Inc. and commenced an Internet retailing
operation under the website "Buyitcheap.com." The Company must still arrange
settlement of its liabilities and raise substantial new investment capital in
order to develop this business.
Financial and operating plan for the next 12 months
The Company plans to operate over the next 12 months with little overhead.
The Company plans to consume operating cash only to the extent that it has
available cash on hand, or that it has investor commitments for. This may limit
the rate at which the Company will grow. 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 any significant fixed overhead.
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
in the future.
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 ...............................................F-1
Balance Sheet at June 30, 2001..............................................F-2
Statement of Income for the period July 19, 1999 to June 30, 2001...........F-3
Statement of Stockholders' Equity for period July 19, 1999 to June 30, 2001.F-4
Statement of Cash Flows for the period July 19, 1999 to June 30, 2001.......F-5
Notes to Financial Statements ........................................F-6 - F-11
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
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 and Anthony Consi became a director on September 26, 2000.
Mr. Edwards and Mr. Consi were elected to fill seats left vacant by previous
directors' resignations.
On August 16, 2001, Mr. Edwards was elected Chairman of the Board and Mr.
Consi was elected President and CEO. The former President, Stephen Roman was
elected Vice President, Secretary and CFO. 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.
Name Age Present Position Director of the
Comany since
Robert Edwards (1) 81 Chairman of the Board 1999
Anthony J. Consi (2) 79 President, CEO and Director 2000
Stephen E. Roman, Jr. (3) 53 Director and Vice President 1994
Jennifer Lo (4) 48 Director 1996
Michael Hsu (5) 61 Director 1996
David Chow (6) 41 Director 1993
Chin-Sung (Joe) Chen (7) 51 Director 1996
Notes
(1) Robert Edwards is the original founder of the Company in 1984. He had not
been associated with the Company from 1992 to 1999. Mr. Edwards has been
involved in retailing for the past five years with the Rumson China and Glass
Shop, Inc., a family owned private corporation.
(2) Mr. Consi has served for the past five years as President and General
Partner of Sunrise Realty Associates and Brinkley Associates, major shopping
center operators. He is also Vice President and Director of risk management for
Arc Properties, Inc. a retail developer and President of Ol' Americ Associates,
Inc., a risk management consulting firm.
(3) Stephen E. Roman, Jr. served as Vice President and Chief Financial Officer
of the Company for the period from April 1984 to June 1994 and from August 2001
to present. He has also served as Secretary since 1994. From June 1994 to
January 1996, and from May 1999 to August 2001, 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. Mr. Consi
succeeded Mr. Roman as President in August 2001. 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.
(4) 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.
(5) 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.
(6) 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.
(7) Chin-Sung (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.
The Board of Directors does not presently have an audit, compensation or
nominating committee. There was one meeting of the Board of Directors during the
fiscal year ended June 30, 2001.
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 Compliance
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, 2000 to the present, the Company believes the following to be
accurate and correct:
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
Anthony J. Consi Form 3 Elected a director October 2000 Filed, but not timely
Stephen E. Roman, Jr. Form 5 Gifts of stock February 2001 Filed, but not timely
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, 1999, 2000 or 2001.
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, 2001, 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.
Name and Address of Beneficial Owner Amount and Nature of Percent
Beneficial Ownership of Class
Majestic International Inc. 633,400 7.21
No 3 14th Floor
No 535
Cheng-Kuo
Third Road
Kaohszung, Taiwan ROC
Verchi Holdings Limited 550,000 6.26
Room 312, Entrance 3, Bldg. 14
Compound 3, Jingouhe Road
Wukesong-Haidian 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 Service Company 450,000 5.12
No. 37 Zhong Gong Bei Street
Tiexi District
Shenyang, People's Republic of China
Anthony J. Consi (officer and director) 100,000 (5) 1.14
52 Buttel Drive
Clifton, NJ 07013
Stephen E. Roman, Jr. (officer and director) 208,153 (3) 2.37
25 Hillside Road
Shark River Hills, NJ 07753
David Chow (director) 15,000 -
4F No. 20, Lane 34
Sec 2, Pa Te Road, Taipei, Taiwan
Name and Address of Beneficial Owner Amount and Nature of Percent
Beneficial Ownership of Class
Jennifer Lo (officer and director) 421,405 (1) 4.79
258-01 Pembroke Ave.
Great Neck, NY 11021
Michael Hsu (director) 0 (4) 0
136-21 Roosevelt Ave
Flushing, NY 11354
Chin-Sung (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)
47 Brun Road
Ocean, NJ 07712
Current Executive Officers
and Directors as a Group 1,564,558 17.80
(6 persons)
Notes
(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. Also excludes 100,000 shares issuable to Mr. Roman for
reimbursement of expenses.
(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.
(5) Excludes 250,000 shares issuable to Mr. Consi for reimbursement of
expenses.
The Company is not aware of any arrangements which may result in a change
of control of the Company.
Item 12. Certain Relationships and Related Transactions.
Mr. Roman, formerly the Company's President, Secretary and Director and
currently Vice President, CFO, Secretary and Director and Mr. Edwards, Chairman
of the Board and 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)
3.1 Amendments to the Certificate of Incorporation dated April, 1987
and October, 1996.
3.2 By-laws of the Company (1) (3)
4.1 Certificate of Designations, Preferences and Rights of Series C
8% Convertible Preferred Stock of Celcor, Inc.
10.1 Promissory Notes between the Company and Buy It Cheap.com, Inc.
10.2 Joint Venture Contract between China Northeast Pharmaceutical
Company and U.S. Lyncroft Company (translated from the Chinese)
creating United Vitatech.
10.3 Contract of Shenyang United Vitatech Pharmaceutical Ltd.
(translated from the Chinese)
10.4 Regulations of Shenyang United Vitatech Pharmaceutical Ltd.
(translated from the Chinese)
10.5 Agreement dated December 26, 1993 between Mannion Consultants Ltd
and Northeast (USA) Corp.
Notes
(1) Incorporated by reference to the Company's Registration Statement
on Form S-1, No. 294663.
(2) Incorporated by reference to the Company's Form 10-K for the year
ended June 30, 1986. ( File No. 000-13337).
(3) Incorporated by reference to the Company's 1986 Proxy Statement
dated November 7, 1986. (File No. 000-13337).
(4) Incorporated by reference to the Company's Registration Statement
on Form S-1, No. 3312084.
(5) Incorporated by reference to the Company's Form 10-K for the year
ended June 30, 1995. (File No. 000-13337)
(b) There were no reports on Form 8-K filed during the fiscal year ended June
30, 2001.
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. - Principal Financial Officer
Title: Vice President, CFO and Director Date: September 27, 2001
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, 2001
By /s/Jennifer Lo
Jennifer Lo
Title: Director Date: September 27, 2001
By /s/Michael Hsu
Michael Hsu
Title: Director Date: September 27, 2001
By /s/Anthony J. Consi
Anthony J. Consi, President and Director, Principal Executive Officer
Title: Director Date: September 27, 2001
Buy It Cheap.com, Inc.
(A Development Stage Company)
Financial Statements
June 30, 2001 and 2000
Buy It Cheap.com, Inc.
(A Development Stage Company)
Index to the Financial Statements
June 30, 2001 and 2000
Page
Independent Auditors' Report ..............................................F-1
Balance Sheets.............................................................F-2
Statements of Operations...................................................F-3
Statement of Stockholders' Equity..........................................F-4
Statements of Cash Flows...................................................F-5
Notes to Financial Statements.........................................F-6 - F-11
Independent Auditors' Report
To the Board of Directors of
Buy It Cheap.com, Inc.
We have audited the accompanying balance sheets of Buy It Cheap.com, Inc. (A
Development Stage Company) as of June 30, 2001 and 2000 and the related
statements of operations, stockholders' equity, and cash flows for the year
ended June 30, 2001, the period July 19, 1999 (date of inception) to June 30,
2000 and the period July 19, 1999 (date of inception) to June 30, 2001. 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 audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide 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, 2001 and 2000, and the results of its
operations and its cash flows for the year ended June 30, 2001, the period July
19, 1999 (date of inception) to June 30, 2000 and the period July 19, 1999 (date
of inception) to June 30, 2001 in conformity with accounting principles
generally accepted in the United States of America.
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, 2001. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding those matters are also described in
the notes to the financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
July 30, 2001
F-1
Buy It Cheap.com, Inc.
(A Development Stage Company)
Balance Sheets
June 30,
2001 2000
Current Assets
Cash $ 12,452 $ 44,424
Due from officers and directors 28,790 28,790
Other current assets 1,000 2,080
Total Current Assets 42,242 75,294
Property and equipment, net of accumulated
depreciation of $17,950 and 20,325 32,292
$5,983 as of June 30, 2001 and 2000, respectively
Investment in joint venture 620,535 620,535
Reserve against investment in joint venture (620,535) (620,535)
Total assets 62,567 107,586
========= ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 164,009 154,686
Due to officers and directors 5,559 5,559
Convertible note payable 16,198 -
Total Current Liabilities 185,766 160,245
- 16,198
Convertible note payable
Total Liabilities 185,766 176,443
Contingencies - -
Stockholders' Equity
Preferred stock - $.001 par value, 10 10
Authorized 2,000,000 shares
Issued and Outstanding - 10,000 shares
Common stock - $.001 par 8,790 8,740
Authorized - 20,000,000 shares
Issued 8,790,802 and outstanding 8,640,582 (2001)
Issued 8,740,802 and outstanding 8,590,582 (2000)
Paid in capital 767,540 742,590
Treasury stock, 150,220 common shares at cost (751,100) (751,100)
Retained deficit, accumulated during
the development stage (148,439) (69,097)
Total Stockholders' Equity (123,199) (68,857)
Total Liabilities and Stockholders' Equity $ 62,567 $ 107,586
See notes to the financial statements.
F-2
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statements of Operations
Year Ended Period From Period From
July 19, July 19,
1999 (Date 1999 (Date
of of
Inception) to Inception) to
June 30, 2001 June 30, 2000 June 30, 2001
$ - $ - $ -
Revenues
Direct Operating Costs (11,101) (6,755) (17,856)
General and Administrative Expenses (68,241) (62,342) (130,583)
Net Loss $ (79,342) $ (69,097) $ (148,439)
=========== ========== ===========
Weighted average number of shares outstanding 8,786,150 5,924,717 7,541,385
=========== ========= ===========
$ (0.01) $ (0.01) $ (0.02)
Loss Per Common Share
Loss Per Common Share - Assuming dilution $ (0.01) $ (0.01) $ (0.02)
=========== ========== ===========
See notes to the financial statements.
F-3
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
June 30, 2001
Preferred Stock Common Stock Paid in Treasury Stock Retained Deficit Total
Capital Accumulated During
the Development Stage
------------------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount
Balance at July 19, 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 - - 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 Period
July 19, 1999 (date
of inception)
to June 30, 2000 - - - - - - - (69,097) (69,097)
Balance at June 30, 2000 10,000 $10 8,740,802 8,740 $ 742,590 (150,220) (751,100) $ (69,097) $ (68,857)
Issuance of Stock for Cash - - 50,000 50 24,950 - - - 25,000
Net loss for the Year
Ended June 30, 2001 - - - - - - - (79,342) (79,342)
Balance at June 30, 2001 10,000 $10 8,790,802 8,790 $ 767,540 (150,220) (751,100) $ (148,439) $ (123,199)
====== === ========= ===== ========= ========= ========= =========== ===========
See notes to the financial statements.
F-4
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
Year Ended Period From Period From
June 30, 2001 July 19, 1999 July 19, 1999
(date of (date of
inception) to inception) to
June 30, 2000 June 30, 2001
Cash Flows From Operating Activities
Net Loss $ (79,342) $ (69,097) $ (148,439)
Adjustments to Reconcile Net Loss to Net Cash used by
Operating Activities
Depreciation and amortization 11,967 5,983 17,950
Changes in Assets and Liabilities
Decrease (Increase) in other current assets 1,080 (2,080) (1,000)
Decrease in accounts payable and accrued expenses 9,323 (244) 9,079
------- -------- -------
(56,972) (65,438) (122,410)
Net Cash Used by Operating Activities
Cash Flows From Investing Activities
Purchases of property and equipment - (23,275) (23,275)
(Increase) in due from officers/directors - (28,790) (28,790)
Cash acquired - 1,927 1,927
Net Cash Provided by Investing Activities - (50,138) (50,138)
Cash Flows From Financing Activities
Proceeds from sale of common stock 25,000 160,000 185,000
25,000 160,000 185,000
Net Cash Provided by Financing Activities (31,972) 44,424 12,452
Net (Decrease) Increase in Cash
Cash at beginning of period 44,424 - -
Cash at end of period $ 12,452 $ 44,424 $ 12,452
========= ======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Liabilities assumed in the acquisition of Northeast
(USA) Corp. for common stock $ (190,957) $ (190,957)
Accounts payable satisfied by issuance of common
stock and convertible note payable 32,395 32,395
Software costs financed by issuance of common stock 15,000 15,000
$ (143,562) $ (143,562)
=========== ===========
See notes to the financial statements.
F-5
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, 2001. 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 $2,231 for the year ended June 30, 2001,
$2,625, for the period July 19, 1999 (date of inception) to June 30, 2000
and $4,856 for the period July 19, 1999 (date of inception) to June 30,
2001.
F-6
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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.
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:
June 30,
2001 2000
Equipment $ 5,935 $ 5,935
Software 32,340 32,340
Subtotal 38,275 38,275
Less accumulated depreciation and amortization 17,950 5,983
-------- --------
Total $ 20,325 $ 32,292
======== ========
Depreciation expense charged to operations was $11,967 for the year ended June
30, 2001, $5,983 for the period July 19, 1999 (date of inception) to June 30,
2000 and $17,950 for the period July 19, 1999 (date of inception) to June 30,
2001.
F-7
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
OPERATING LEASE COMMITMENTS
The Company leases office space on a month to month basis. Rent expense was
$450 for the year ended June 30, 2001, $0 for the period July 19, 1999
(date of inception) to June 30, 2000, and $450 for the period July 19, 1999
(date of inception) to June 30, 2001.
INCOME TAXES
The Company's deferred tax asset is comprised of the
following temporary differences:
June 30,
2001 2000
Net operating losses $ 572,117 $ 480,073
Differences between basis of
reporting for book and tax 620,500 620,500
Total $ 1,192,617 $ 1,100,573
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:
June 30,
2001 2000
Tax (benefit) at the U.S. Federal Statutory rate (34%) (34%)
Valuation allowance - change 34% 34%
State income tax - net of federal tax benefit - -
Provision for income taxes - -
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.
[Continued on next page]
F-8
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:
June 30,
2001 2000
Deferred tax asset, noncurrent $ 179,000 $ 168,000
Total valuation allowance recognized for deferred tax assets (179,000) (168,000)
Net deferred tax assets $ - $ -
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:
FEDERAL STATE
Available Through
2004 $ - $ 191,664
2005 - 181,950
2006 - 50,064
2007 - 69,097
2008 - 69,342
2017 191,664 -
2018 181,950 -
2019 50,064 -
2020 69,097 -
2021 79,342 -
$ 572,117 $ 562,117
========== ==========
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 8,786,150 for the year ended June 30, 2001,
5,924,717 for the period from July 19, 1999 (date of inception) to June 30,
2000, and 7,541,385 for the period from July 19, 1999 (date of inception)
to June 30, 2001.
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.
[Continued on next page]
F-9
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.
For the Year For the Period For the Period
Ended June 30, July 19, 1999 July 19, 1999
2001 (date of (date of
inception) to inception) to
June 30, 2000 June 30, 2001
Net Loss $ (79,342) $ (69,097) $ (148,439)
Less: Dividends on Preferred Stock net of tax benefit (2,040) (2,040) (4,080)
Loss Applicable to common shareholders - basic (81,382) (71,137) (152,519)
Loss Applicable to Common Shareholders - Assuming $ (81,382) $ (71,137) (152,519)
dilution
Weighted Average Shares Outstanding 8,786,150 5,924,717 7,541,385
========= ========= ==========
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
F-10
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
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 $106,390 of
dividend arrearages at June 30, 2001.
CONVERTIBLE NOTE PAYABLE
During the period ended June 30, 2000 the Company entered into an
agreement with one of its creditors whereby the amount of the
creditor's claim ($32,395) was settled through the issuance of 32,395
of the Company's common shares and a 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-11