This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company's actual results could differ
materially from those set forth on the forward looking statements as a result of
the risks set forth in the Company's filings with the Securities and Exchange
Commission, general economic conditions, and changes in the assumptions used in
making such forward looking statements.
In the six months ended June 30, 2014, top line revenue was similar to the same
six months in 2013. We are hopeful that as the economy strengthens, we see more
companies increase marketing and promotional spending.
RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2014
Our quarter ended on June 30, 2014. Any reference to the end of the fiscal
quarter refers to the end of the second quarter for the period discussed herein.
Revenue. Revenue for the three months ended June 30, 2014 was $16,380 compared
to $12,056 for the three months ended June 30, 2013. Revenue for the six months
ended June 30, 2014 was $28,207 compared to $28,426 for the six month periods
ended June 30, 2013. Revenue was even with the same six months of the prior
Cost of Sales. Cost of sales was $620 (or 4% of revenue) for the three months
ended June 30, 2014 compared to $2,272 (or 19% of revenue) for the same period
in 2013. Cost of sales was $2,445 (or 9% of revenue) for the six months ended
June 30, 2014 compared to $7,759 (or 27% of revenue) for the same period in
2013. The large decrease in cost of sales as a percent of sales is due to
product mix as sales were geared toward higher margin products.
Operating Expense. Operating expenses, exclusive of depreciation expense of
$3,842 and $4,042, were $23,963 and $34,458 for the three month periods ended
June 30, 2014 and 2013, respectively. The decrease in expenses was due to a
reduction in professional fees of approximately $8,000 operating expenses,
exclusive of depreciation expense of $7,683 and $8,490, were $46,412 and $62,211
for the six month periods ended June 30, 2014 and 2013, respectively. The
decrease in expenses was due to a reduction in professional fees of
approximately $12,000 and fees and other expenses of $3,000.
Net Loss. Net Loss for the thre months ended June 30, 2014 and 2013 was $12,043
versus $28,700, respectively. The main driver behind the decrease in the net
loss was the increase of online competition as discussed above. Net Loss for the
six months ended June 30, 2014 and 2013 was $28,325 versus $49,992,
respectively. The main driver behind the decrease in the net loss was the
decrease in expenses as discussed above.
LIQUIDITY AND CAPITAL RESOURCES.
In addition to the preceding, the Company plans for liquidity needs on a short
term and long term basis as follows:
Short Term Liquidity:
The Company relies on one primary funding source for short term liquidity needs:
advances from the major shareholder / President of the Company. The President
has advanced the Company $49,643 as of June 30, 2014 and December 31, 2013 for
working capital. No interest is paid on this advance. This is also disclosed in
Long Term Liquidity:
The long term liquidity needs of the Company are projected to be met primarily
through the cash flow provided by operations. Cash flow from operations for the
six months ended June 30, 2014
was negative $12,158
. The Company is continually
seeking new opportunities to spur sales and increase top line revenue.
Going Concern: Our independent auditors included a going concern explanatory
paragraph in their report included in our annual report on Form 10-K for the
year ended December 31, 2013
, which raises substantial doubt about our ability
to continue as a going concern. See Note 7.
We do not expect any significant change to our equity or debt structure and do
not anticipate entering into any off-balance sheet arrangements.
Material Changes in Financial Conditions
Working Capital: Working Capital decreased by approximately $20,534
since December 31, 2013
. This decrease is due to the reduction in cash
, an increase in accounts receivable of $87
and an increase in current
liabilities of $8,463
Shareholders' Equity: Shareholders' Equity decreased by $28,325
due to the net