10QSB 1 0001.txt CTC COSMETICS HOLDINGS COMPANY, INC. UNITED STATES 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 quarterly period ended May 31, 2000 ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1939 for the transition period ____ to______ COMMISSION FILE NUMBER 0-22749 ------- CTC COSMETICS HOLDINGS COMPANY, INC. ----------------------------------- (Exact name of registrant as specified in its charter) Delaware 87-0415594 ---------------------------------- -------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 129 Front St., Penthouse Suite, Hamilton HM12 Bermuda 441 296 4545 -------------------------------------------------------------------------------- (Address of Principal Executive Offices, including Registrant's zip code and telephone number) Westwind Group, Inc. 1745 Westwood Blvd. Los Angeles, Ca. 90024 ----------------------------------------------------------------- Former name, former address and former fiscal year, if changed Indicate by check mark whether the registrant (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 post 90 days. Yes [X] No [ ] The number of shares of the registrant's common stock issued as of May 31, 2000: 261,680 shares. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] TABLE OF CONTENTS PAGE ----------------- ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (a) Balance Sheet 2 (b) Statement of Operations 3 (c) Statement of Changes in Financial Position 4 (d) Statement of Shareholders' Equity 5 (e) Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION 8 Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults On Senior Securities Item 4. Submission of Items to a Vote Item 5. Other Information Item 6 (a) Exhibits (b) Reports on Form 8K SIGNATURES 9 FINANCIAL DATA SCHEDULE 10 1 CTC COSMETICS HOLDINGS COMPANY, INC. BALANCE SHEET AS OF MAY 31, 2000 AND AUGUST 31,1999 (UNAUDITED)
May 31, August 31, 2000 1999 ------------ ------------ ASSETS Cash and cash equivalents $ 0 $ 0 Account receivable from CTC Cosmetics Holdings (BVI) Co. Ltd. 500,000 500,000 Reserve for doubtful account (500,000) (500,000) ------------ ------------ Investment in CTC Cosmetics Holdings (BVI) Co. Ltd. 900,000 900,000 Reserve for loss on investment (900,000) (900,000) Total assets $ 0 $ 0 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 31,589 $ 24,642 Accrued interest on debentures 51,076 48,132 Loans from shareholders 16,432 1,979 Shareholders' equity Preferred stock, $.01 par value 10,000,000 shares authorized, no shares issued and outstanding Common stock (par value $.004) 50,000,000 shares authorized; August 31, 1999 and May 31, 2000-261,680 shares issued and outstanding 128,510 128,510 Paid in capital 1,739,045 1,739,045 Retained earnings (1,966,652) (1,942,308) ------------ ------------ Total shareholders' equity (99,097) (74,753) Total liabilities and shareholders' equity $ 0 $ 0 ============ ============ The accompanying notes are an integral of part of these financial statements. 2
CTC COSMETICS HOLDINGS COMPANY, INC. STATEMENT OF OPERATIONS FOR THE NINE MONTHS AND QUARTER ENDED MAY 31, 2000 AND 1999 (UNAUDITED)
Nine Nine Quarter Quarter months months ended May ended May ended May ended May 31, 2000 31, 1999 31, 2000 31, 1999 ------------ ------------ ------------ ------------ Expenses Professional fees $ 21,400 $ - $ 17,336 $ - Interest 2,944 9,328 1,000 938 ------------ ------------ ------------ ------------ Total expenses 24,344 9,328 18,336 938 Loss from operations before income taxes (24,344) (9,328) (18,336) (938) Income tax - - - - ------------ ------------ ------------ ------------ Net (loss) $ (24,344) $ (9,328) $ (18,336) $ (938) ============ ============ ============ ============ The accompanying notes are an integral of part of these financial statements. 3
CTC COSMETICS HOLDINGS COMPANY, INC. STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE NINE MONTHS AND QUARTER ENDED MAY 31, 2000 AND 1999 (UNAUDITED)
Nine months Nine months Quarter Quarter ended May 31, ended May ended May ended May 2000 31, 1999 31, 2000 31, 1999 ------------- ------------- ------------- ------------- Funds provided from (used for) operations Net (loss) $ (24,344) $ (9,328) $ (18,336) $ (938) Funds provided by (used for) working capital Accrued interest 2,944 (9,328) 1,000 938 Accounts payable 6,947 7,336 Funds provided from (used for) financing activities Loans from shareholders 14,453 10,000 - Debentures 8% converted to stock 500,000 - Reduction of debentures payable (500,000) - ------------- ------------- ------------- ------------- Net funds provided from (used for) all activities 0 0 0 0 Cash balance at beginning of year 0 0 0 0 Cash balance at end of period $ 0 $ 0 $ 0 $ 0 ============= ============= ============= ============= The accompanying notes are an integral of part of these financial statements. 4
CTC COSMETICS HOLDINGS COMPANY, INC. STATEMENT OF SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MAY 31, 2000 AND 1999 (UNAUDITED)
Common Stock Addition Paid- Retained In Capital Earnings ----------------------------- ------------- ------------- Shares Amount ------------- ------------- Balance at September 1, 1998 10,168,654 $ 64,510 $ 1,303,045 $ (1,928,622) Conversion of debentures to common stock 16,000,000 64,000 436,000 Net (loss) (9,328) ------------- ------------- ------------- ------------- Balance May 31, 1999 26,168,654 $ 128,510 $ 1,739,045 $ (1,937,950) ============= ============= ============= ============= Common Stock Addition Paid- Retained In Capital Earnings ----------------------------- ------------- ------------- Shares Amount ------------- ------------- Balance at September 1, 1999 26,168,654 $ 128,510 $ 1,739,045 $ (1,942,308) May 12, 2000 100-for-1 reverse stock split (25,906,974) Net (loss) (24,344) ------------- ------------- ------------- ------------- Balance May 31, 2000 26,168,654 $ 128,510 $ 1,739,045 $ (1,966,652) ============= ============= ============= ============= The accompanying notes are an integral of part of these financial statements. 5
CTC COSMETICS HOLDINGS COMPANY, INC. NOTES TO FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MAY 31, 2000 AND 1999 (UNAUDITED) 1. GENERAL CTC Cosmetics Holdings Company, Inc. (the "Company") is incorporated in the State of Delaware and was engaged in the business of producing and distributing motion pictures and television movies until March 21, 1997. The Company's Board of Directors considered alternative business opportunities and on March 21, 1997 signed an Agreement and Plan of Reorganization (the "Agreement") whereby the Registrant acquired all of the issued and outstanding shares of CTC Cosmetics Holdings (BVI) Co., Ltd., a British Virgin Islands corporation ("CTC Cosmetics") in exchange for the issuance by the Registrant of 9,000,000 post-split shares of restricted common stock to CTC Cosmetics shareholders pursuant to the Agreement dated March 21, 1997, by and between the Registrant and CTC Cosmetics. Under the relevant terms of the Agreement, the Registrant undertook a reverse split of its common stock, whereby 1 share of common stock was issued in exchange for 12.93 shares of common stock. Immediately prior to the share exchange, there were approximately 500,000 post-reverse split shares of the Registrant's common stock issued and outstanding. Pursuant to the terms of the Agreement for Divisive Reorganization, which was also executed at the Closing, the Registrant's two existing subsidiaries were spun off from the Company to its majority shareholders in exchange for such majority shareholders' cancellation of a total of 960,912 pre-split shares of common stock of the Registrant. As a result of the acquisition, there were approximately 9,500,000 shares of Common Stock issued and outstanding. Upon the Closing the Registrant had one wholly owned subsidiaries which was CTC Cosmetics Holding (BVI) Co. Ltd. CTC Cosmetics Holdings (BVI) Co. Ltd. held an investment in Cao Tain Cosmetic Holdings Limited (the "Operating subsidiary") that developed, manufactured and marketed skin and hair care products, cosmetics, and cosmetic related chemical ingredients primarily for sale in the People's Republic of China. The Company's headquarters were moved to Shanghai, China. The members of the Board of Directors were based with the Company in Shanghai. Subsequent to the signing of the Agreement and exchange of shares for CTC Cosmetics Holding (BVI) Co. Ltd. the Board of Directors of the Company breached their fiduciary duty to the shareholders of the Company by failing to provide current financial information of the Company, failure to respond to shareholders' inquiries and failure to comply with the disclosure requirements of the Exchange act of 1934 by non-filing of the required periodic and annual reports. Concurrent with the March 21, 1997, Agreement and Plan of Reorganization, CTC Cosmetics Holdings Company, Inc. sold $500,000 of 8% convertible debentures due March 31, 1998 to Voyager Select IPO Fund, Ltd. ("Voyager"). The principal amount of the debentures were convertible at any time, at the option of Voyager, at a conversion price equal to the lower of 50% of the average closing bid price of common stock for 5 business days immediately preceding the conversion date or $2.50 per share. Voyager received warrants to purchase 50,000 shares of common stock at the date of exercise. The warrants could be exercised at any time. 6 2. INVESTMENT IN AND ACCOUNT RECEIVABLE FROM CTC COSMETICS HOLDINGS (BVI) CO. LTD. The Company has concluded that the amounts invested in and due from CTC Cosmetics Holdings (BVI) Co. Ltd. are worthless and un-collectable because the assets are held in China and it is difficult to initiate legal proceedings in China. 3. STOCK ISSUED As discussed in Note 1 above the Company received all of the issued and outstanding shares of CTC Cosmetics Holdings (BVI) Co. Ltd. (50,000 shares) as of March 21, 1997, in exchange for 9,000,000 shares of the Company. The Company valued such shares based on the average of the closing bid and ask prices of the Company's common stock ($0.10) as reflected on NASD OTC Bulletin Board on March 31, 1997. The valuation of the 600,000 shares of common stock, issued in connection with advisory corporate and financial consulting services, was based on the average of the closing bid and ask prices of the common stock ($0.10) as reflected on NASD OTC Bulletin Board on March 31, 1997. The valuation of the 55,600 shares of common stock, issued in connection with corporate consulting services, was based on the average bid and ask prices of the common stock ($4.5625) as reflected on NASD OTC Bulletin Board on April 21, 1997. In September 1998 Voyager Select IPO Fund, Ltd. converted the debentures outstanding of $500,000 acquiring 16,000,000 shares of common stock based on the average bid and ask prices of common stock ($.03125) as reflected on NASD OTC Bulletin Board on August 31, 1998. Voyager holds 61.3% of outstanding common stock of the Company. On January 21, 2000 Voyager held 61.3% of outstanding common stock of the Company and filed Schedule 14C with the Securities and Exchange Commission notifying the Chinese directors would be removed and new directors appointed by Voyager. On February 22, 2000 the Chinese Board of Directors were removed and replaced by new Directors appointed by Voyager. As of May 12, 2000 the Company effected a 100-for-1 reverse stock split. 4. INCOME TAXES The Company has not recorded any income tax benefits that may arise from losses incurred because there is no assurance of recovery. The Company has a loss carry-forward of approximately $974,186. 5. SUBSEQUENT EVENTS Voyager has agreed to pay all expenses of the Company until such time as normal operations can be restored. 7 PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This analysis contains forward-looking COMMENTS, WHICH are based on current information. Actual results in the future may differ materially. As discussed in the notes to financial statements the Company at present has no activity. Current management is working to establish a new direction. PART II. OTHER INFORMATION Item 1. Legal Proceedings NONE Item 2. Changes in Securities and Use of Proceeds NONE Item 3. Defaults On Senior Securities NONE Item 4. Submission of Items to a Vote As of May 12, 2000, the majority shareholder of the Company (61.3%) took a corporate action by a written consent without a meeting by which the majority shareholders effected a 100-for-1 reverse stock split of the presently issued and outstanding shares of Common Stock of the Company (the "Reverse Stock Split"). The amendment to the Company's Certificate of Incorporation became effective upon filing of the amendment to the Company's Certificate of Incorporation with the Delaware Secretary of State Information Statement on Schedule 14C of such action was sent of the Company's shareholders. Item 5. Other Information NONE Item 6 (a) Exhibits NONE (b) Reports on Form 8K NONE 8 SIGNATURES In accordance with the requirements of the Securities and Exchange Act Of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CTC Cosmetics Holdings Company, Inc. Dated: July 23, 2000 By: /s/ Riccardo W. Cannaviello --------------------------- Riccardo W. Cannaviello President Dated: July 23, 2000 By: /s/ Andrew K. Proctor --------------------------- Andrew K. Proctor Chief Financial Officer 9