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, 2002
[ ] 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
Buy It Cheap.com, Inc.
_____________________________________________
(Name of Small Business Issuer in Its Charter)
Delaware 22-2497491
__________________________________________________________________________
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1800 Bloomsbury Ave., Ocean, N.J. 07712
_______________________________________ ___________
(Address of Principal Executive Offices) (Zip Code)
732-922-3609
______________________________________________
(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
________________________________________
(Title of Class)
________________________________________
(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
______
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 $400,000. 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, 2002, the
Registrant had 9,040,582 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. 9,040,582 shares of Common
Stock, par value $.001 per share, at August 28, 2002.
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 intends to operate a virtual store under the web address of
"Buyitcheap.com" and will offer for sale various types of branded merchandise
over the Internet. While the website has been partially functional, the
Company has not yet promoted it and sales thus far have been negligible.
Initial merchandise lines will 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 will post
merchandise from various vendors on its website, takes orders and collect 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 have
been reimbursed for some 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, 2002.
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 Pink
Sheets LLC's "OTC Market Report." 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
___________________________________________________________________
2001 September 30, 2000 $ .625 $ 1.00
December 31, 2000 .1563 .75
March 31, 2001 .1563 .1875
June 30, 2001 .10 .1563
2002 September 30, 2001 .10 .10
December 31, 2001 .10 .11
March 31, 2002 .06 .11
June 30, 2002 .06 .06
The number of record holders of the Company's Common Stock as of August
31, 2002 was approximately 400, 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
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 comittments 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,
will be handled automatically over the Internet requiring little labor or
office space requirements. The Company currently plans to be fully operational
for the 2002 holiday season and believes it can become a viable business by
the end of calendar year 2002 (subject to the outcome of previously described
legal proceedings) if it is able to raise additional 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, 2002 and 2001 F-2
Statement of Income for the fiscal year ended
June 30, 2002 and 2001 and the period
July 19, 1999 to June 30, 2002 F-3
Statement of Stockholders' Equity for period
July 19, 1999 to June 30, 2002 F-4
Statement of Cash Flows for the fiscal years
ended June 30, 2002 and 2001 and for the
period July 19, 1999 to June 30, 2002 F-5
Notes to Financial Statements F-6 - F-11
Item 8. Changes in and Disagreements With Accountants or 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.
Director of
Present the Company
Name Age Position since
________________________________________________________________________
Robert Edwards (1) 82 Chairman of 1999
the Board
Anthony J. Consi (2) 80 President, CEO 2000
and Director
Stephen E. Roman, Jr. (3) 54 Director and 1994
President
Jennifer Lo (4) 49 Director and 1996
Vice President
Michael Hsu (5) 62 Director 1996
David Chow (6) 42 Director 1993
Chin-Sung (Joe) Chen (7) 52 Director 1996
(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 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, 2002.
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
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:
Reason Date on which
Person or entity Form filing filing was Status of
required to file required required required filing
_____________________________________________________________________________
Robert Edwards Form 3 Elected a director September, 1999 Filed, but
not timely
Anthony Consi Form 3 Elected a director October 2000 Filed but
not timely
Stephen Roman Form 4 Gifts of stock December 2000 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, 2001 and 2002.
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 Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
_________________________________________________________________
Majestic International Inc. 633,400 6.89
No 3 14th Floor
No 535
Cheng-Kuo
Third Road
Kaohszung, Taiwan ROC
Verchi Holdings Limited 550,000 5.98
Room 312, Entrance 3, Bldg. 14
Compound 3, Jingouhe Road
Wukesong-Haidian District
Beijing, People's Republic
of China
Anthony J. Consi 350,000 3.81
52 Buttel Drive
Clifton, NJ 07013
Stephen E. Roman, Jr.
(officer and director) 308,153 (3) 3.35
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
Jennifer Lo
(officer and director) 421,405 (1) 4.59
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 4.57
7th Floor
No 571
Ming Shui Road
Taipei, Taiwan
Robert Edwards (director) 400,000 (2) 4.35 (2)
256 Clearbrook Court
Little Silver, N.J. 07739
Current Executive Officers
and Directors as a Group
(6 persons) 1,914,558 20.83
(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.
(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.
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.
Footnotes
(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, 2002.
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 _________________________________________________________
Stephen E. Roman, Jr. - Principal financial officer
Title: Vice President, CFO and Director Date: _____________
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__________________________________________________________
Robert Edwards
Title: Director Date:_________
By __________________________________________________________
Jennifer Lo
Title: Director Date:_________
By __________________________________________________________
Michael Hsu
Title: Director Date:_________
By ________________________________________________________________________
Anthony J. Consi, President and Director, Principal Executive Officer
Title: Director Date:_________
******************************************************
CERTIFICATION FOR 10-K
I, Anthony J. Consi, certify that:
1. I have reviewed this annual report on Form 10-K of Buy It Cheap.com, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: September 25, 2002
/s/ Anthony J. Consi
______________________
President - CEO
***********************************************************
CERTIFICATION FOR 10-K
I, Stephen E. Roman Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Buy It Cheap.com, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: September 25, 2002
/s/ Stephen E. Roman, Jr.
_________________________
Vice President - CFO
Buy It Cheap.com, Inc.
(A Development Stage Company)
Index to the Financial Statements
June 30, 2002 and 2001
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 the 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, 2002 and 2001 and the related
statements of operations, stockholders' equity, and cash flows for the years
ended June 30, 2002, 2001, and the period July 19, 1999 (date of inception)
to June 30, 2002. 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 audits.
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 audits 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, 2002 and 2001, and the results of its
operations and its cash flows for the years ended June 30, 2002, 2001, and
the period July 19, 1999 (date of inception) to June 30, 2002 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, 2002.
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.
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
July 26, 2002
F-1
Buy It Cheap.com, Inc.
(A Development Stage Company)
Balance Sheets
June 30,
2002 2001
---------------------------
Assets
Current Assets
Cash $ 6,371 $ 12,452
Due from officers and directors - 28,790
Other current assets 1,000 1,000
-------- --------
Total Current Assets 7,371 42,242
-------- --------
Property and equipment, net of accumulated
depreciation of $29,917 and $17,950,
respectively 8,358 20,325
Investment in joint venture 620,535 620,535
Reserve against investment in joint venture (620,535) (620,535)
-------- --------
Total assets $ 15,729 $ 62,567
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses $ 154,945 $ 164,009
Due to officers and directors 5,559 5,559
Convertible note payable 16,198 16,198
-------- --------
Total Current Liabilities 176,702 185,766
-------- --------
Commitments and Contingencies - -
Stockholders' Equity
Preferred stock - $.001 par value,
Authorized 2,000,000 shares
Issued and Outstanding - 10,000 shares 10 10
Common stock - $.001 par
Authorized - 20,000,000 shares, Issued
9,190,802 and outstanding 9,040,582 (2002)
Issued 8,790,802 and outstanding
8,640,582 (2001) 9,190 8,790
Paid in capital 787,140 767,540
Treasury stock, 150,220 common shares at cost (751,100) (751,100)
Retained deficit, accumulated during the
development stage (206,213) (148,439)
-------- --------
Total Stockholders' Equity (160,973) (123,199)
-------- --------
Total Liabilities and Stockholders' Equity $ 15,729 $ 62,567
======== ========
See notes to the financial statements.
F-2
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statements of Operations
Period
From July
19, 1999
(Date of)
Year Ended Year Ended Inception to
June 30, 2002 June 30, 2001 June 30, 2002
-------------------------------------------
Revenues $ - $ - $ -
Direct Operating Costs (2,700) (11,101) (20,556)
General and Administrative Expenses (55,074) (68,241) (185,657)
----------------------------------------
Net Loss $ (57,774) $ (79,342) $ (206,213)
========================================
Weighted average number of shares
outstanding 8,990,016 8,786,150 7,948,088
=======================================
Loss Per Common Share $ (0.01) $ (0.01) $ (0.03)
=======================================
Loss Per Common Share -
Assuming dilution $ (0.01) $ (0.01) $ (0.03)
=======================================
See notes to the financial statements.
F-3
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
June 30, 2002
Retained
Deficit
Accumulated
Preferred Stock Common Stock Treasury Stock During the
--------------- ------------------- Paid in ---------------- Development
Shares Amount Shares Amount Capital Shares Amount Stage Total
-------------------------------------------------------------------------------------------------------------------------
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 obligation - - 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)
Issuance of stock for
release of accounts
payable obligation - - 400,000 400 19,600 - - - 20,000
Net loss for the year
ended June 30, 2002 - - - - - - - (57,774) (57,774)
------------------------------------------------------------------------------------------------------------------------
10,000 $ 10 9,190,802 $ 9,190 $787,140 (150,220) $(751,100) $(206,213) $ (160,973)
========================================================================================================================
See notes to the financial statements.
F-4
Buy It Cheap.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
Period
From July
19, 1999
(Date of)
Year Ended Year Ended Inception to
June 30, 2002 June 30, 2001 June 30, 2002
-------------------------------------------
Cash Flows From Operating
Activities:
Net Loss $ (57,774) $ (79,342) $(206,213)
Adjustments to Reconcile Net
Loss to Net Cash Used by
Operating Activities
Depreciation and amortization 11,967 11,967 29,917
Changes in Assets and Liabilities
Decrease (Increase) in other
current assets - 1,080 (1,000)
Increase in accounts payable and
accrued expenses 10,936 9,323 20,015
-------------------------------------
Net Cash Used by Operating
Activities (34,871) (56,972) (157,281)
-------------------------------------
Cash Flows From Investing Activities:
Purchases of property and equipment - - (23,275)
Decrease in due from officers/
directors 28,790 - -
Cash acquired - - 1,927
-------------------------------------
Net Cash Provided (Used) by
Investing Activities 28,790 - (21,348)
-------------------------------------
Cash Flows From Financing Activities:
Proceeds from sale of common stock - 25,000 185,000
-------------------------------------
Net Cash Provided by Financing
Activities - 25,000 185,000
-------------------------------------
Net (Decrease) Increase in Cash (6,081) (31,972) 6,371
Cash at beginning of period 12,452 44,424 -
-------------------------------------
Cash at end of period $ 6,371 $ 12,452 $ 6,371
=====================================
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Liabilities assumed in the
acquisition of Northeast (USA)
Corp. for common stock $ - $ - $(190,957)
Accounts payable satisfied by
issuance of common stock and
convertible note payable 20,000 - 32,395
Software costs financed by
issuance of common stock - - 15,000
-------------------------------------
$20,000 $ - $(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 have
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, 2002. 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 $1,360 for the year ended June 30, 2002, $2,231, for
the year ended June 30, 2001 and $6,216 for the period July 19, 1999 (date of
inception) to June 30, 2002.
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.
F-6
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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,
2002 2001
-------------------------
Equipment $ 5,935 $ 5,935
Software 32,340 32,340
------- --------
Subtotal 38,275 38,275
Less accumulated depreciation and
amortization 29,917 17,950
------- --------
Total $ 8,358 $ 20,325
======= ========
Depreciation expense charged to operations was $11,967 for each year ended
June 30, 2002 and 2001, and $29,917 for the period July 19, 1999 (date of
inception) to June 30, 2002.
OPERATING LEASE COMMITMENTS
The Company leases office space on a month to month basis. Rent expense was
$1,800 for the year ended June 30, 2002, $450 for the year ended June 30, 2001,
and $2,250 for the period July 19,1999 (date of inception) to June 30, 2002.
F-7
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
INCOME TAXES
The Company's deferred tax asset is comprised of the following temporary
differences:
June 30,
2002 2001
-----------------------
Net operating losses $ 627,191 $ 572,117
Differences between basis of reporting
for book and tax 620,500 620,500
--------- ---------
Total $1,247,691 $1,192,617
========= =========
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,
2002 2001
-----------------------
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.
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,
2002 2001
---------------------
Deferred tax asset, noncurrent $ 214,000 $ 179,000
Total valuation allowance recognized
for deferred tax assets (214,000) (179,000)
-------- --------
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 - 79,342
2009 - 57,774
2017 191,664 -
2018 181,950 -
2019 50,064 -
2020 69,097 -
2021 79,342 -
2022 57,774 -
-------- --------
$ 629,891 $ 629,891
======== =======
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 8,990,016 for the year ended June 30, 2002,
8,786,150 for the year ended June 30, 2001, and 7,948,088 for the period
from July 19, 1999 (date of inception) to June 30, 2002.
The effect of assuming the conversion of the Series C convertible preferred
stock as a common stock equivalent would be antidilutive, and was therefore
not considered in the computation of diluted earnings per share.
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.
Period
From July
19, 1999
(Date of)
Year Ended Year Ended Inception to
June 30, 2002 June 30, 2001 June 30, 2002
-------------------------------------------
Net Loss $ (57,774) $ (79,342) $ (206,213)
Less: Dividends on Preferred Stock
net of tax benefit (2,400) (2,400) (7,200)
Loss Applicable to common -------------------------------------
shareholders - basic (60,174) (81,742) (213,413)
=====================================
Loss Applicable to Common Shareholders-
Assuming dilution $ (60,174) $ (81,742) $ (213,413)
=====================================
Weighted Average Shares
Outstanding 8,990,016 8,786,150 7,948,088
=======================================
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 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 $108,790 of dividend arrearages at June 30, 2002.
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 was non-interest bearing
and was due on December 31, 2001. The note was extended through December
31, 2002 and bears interest at 8% per annum. The note may be converted at
the creditor's option, into 32,395 shares of the Company's common stock prior
to that date.
F-10
Buy It Cheap.com, Inc.
(A Development Stage Company)
Notes to the Financial Statements
COMMITMENTS AND 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.