10-Q 1 e10-q.txt LITEGLOW INDUSTRIES, INC 10-Q DATED 06/30/00 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-QSB QUARTERLY REPORT ISSUED UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the six month period ending June 30, 2000 LITEGLOW INDUSTRIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Utah 65-05164035 0-27087 ---------------------------- ------------- --------------- (State or other jurisdiction (IRS Employer Commission File of Incorporation) Identification Number) Number 2301 N.W. 33rd Court, Unit 112, Pompano Beach, Florida 33069 ------------------------------------------------------------ (Address of principal executive offices) Registrant's telephone number, including area code: (954) 971-4569 Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE TO CORPORATE ISSUERS On August 18, 2000, the Registrant had outstanding 4,273,287 shares of common stock. 2 LITEGLOW INDUSTRIES, INC. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Item 2. Management's Discussion and Analysis or Plan of Operation PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holdings Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K -2- 3 LITEFLOW INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED)

See notes to Consolidated Financial Statements -3- 4 LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED -------------------------- JUNE 30, JUNE 30, 2000 1999 --------- --------- Revenues 2,107,835 2,334,768 Cost of sales 1,004,992 1,056,848 --------- --------- Gross profit 1,102,843 1,277,920 Selling, general and administrative expense 1,111,916 930,178 --------- --------- Income (loss) from operations (9,073) 347,742 Other income (expenses): Interest expense (40,023) (21,802) Sale of truck 14,349 0 --------- --------- Total other (expense) (25,674) (21,802) --------- --------- Income (loss) from operations before income taxes (34,747) 325,940 --------- --------- Provision for income taxes 0 0 --------- --------- Net income (loss) (34,747) 325,940 --------- --------- Net income per share-basic (0.01) 0.10 --------- --------- Weighted average common shares outstanding 4,273,287 3,156,087 ========= ========= See notes to Consolidated Financial Statements -4- 5 LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED -------------------------- JUNE 30, JUNE 30, 2000 1999 --------- --------- Revenues 1,185,640 1,280,406 Cost of sales 550,809 566,404 --------- --------- Gross profit 634,831 714,002 Selling, general and administrative expense 518,010 521,250 --------- --------- Income (loss) from operations 116,821 192,752 Other income (expenses): Interest expense (22,810) (14,151) Sale of truck 0 0 --------- --------- Total other (expense) (22,810) (14,151) --------- --------- Income (loss) from operations before income taxes 94,011 178,601 --------- --------- Provision for income taxes 0 0 --------- --------- Net income (loss) 94,011 178,601 --------- --------- Net income per share-basic 0.02 0.06 --------- --------- Weighted average common shares outstanding 4,273,287 3,156,087 ========= ========= See notes to Consolidated Financial Statements -5- 6 LITEGLOW INDUSTRIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See notes to Consolidated Financial Statements -6- 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL The following discussion and analysis should be read in conjunction with the Financial Statements appearing elsewhere in this Report on Form 10-QSB. RESULTS OF OPERATIONS Net sales for the six months ended June 30, 2000, were $2,107,835 compared to net sales of $2,334,768 for the comparable 1999 period. For these same periods costs of sales decreased to $1,004,992 from $1,056,848. Gross profit decreased from $1,277,920 for the six months ended June 30, 1999, to $1,102,843 for the six months ended June 30, 2000. The Company's selling, general and administrative expenses increased from $930,178 for the six months ended June 30, 1999, to $1,111,916 for the six months ended June 30, 2000. The Company had net income of $325,940 during the six months ended June 30, 1999, compared to a net loss of $34,747 during the six months ended June 30, 2000. During the quarter ended June 30, 2000, the Company's revenues decreased to $1,185,640 compared to revenues of $1,280,406 for the comparable 1999 period. Gross profit also decreased from $714,002 for the three months ended June 30, 1999, to $634,831 for the three months ended June 30, 2000. The Company had income from operations of $116,821 for the three months ended June 30, 2000, compared to income from operations of $192,752 for the comparable 1999 period. The Company had net income of $94,011 for the three months ended June 30, 2000, compared to operating net of $178,601 for the comparable 1999 period. The Company substantially increased its inventory during the first six months of 2000 compared to the comparable 1999 period in anticipation of new customers and new business from those customers and its existing customers. However, the Company believes that its sales were adversely affected by the general softness in the United States retail market and, in the first quarter, by unfavorable weather in major markets. As a consequence of these matters, while the Company substantially increased its inventory it was unable to sell a substantial portion of its additional inventory because of lack of demand from its retail accounts. Also during the threeand six-month periods ended June 30, 2000, the Company experienced increases in accounts receivable as its customers paid more slowly than in the comparable 1999 periods. -7- 8 LIQUIDITY AND CAPITAL RESOURCES Total current assets increased from $1,952,799 for the six months ended June 30, 1999, to $2,128,019 for the six months ended June 30, 2000, primarily as a result of substantial increases in accounts receivable and inventory. The Company's total assets increased from $1,952,799 at June 30, 1999, to $2,128,019 at June 30, 2000, primarily as a result of increased current assets. The Company's accounts payable increased substantially from $249,663 at June 30, 1999, to $553,633 at June 30, 2000, as the Company had difficulty paying its accounts on a current basis. The Company's total current liabilities increased from $784,335 at June 30, 1999, to $2,128,019 at June 30, 2000, primarily as a result of the increase of its short-term borrowings and accounts payable. The Company had net cash used by operating activities of $249,773 for the six months ended June 30, 1999, compared to $113,404 for the six months ended June 31, 2000, and its cash balance decreased from $111,142 at June 30, 1999, to $17,937 at June 30, 2000. While the Company decreased its negative cash flow from operations in the first six months of 2000 compared to the comparable 1999 period, the Company's substantial increase in inventory and accounts receivable in 2000 compared to 1999 created a material cash shortage. The Company has borrowed the maximum amount permitted by its line of credit arrangement and has had to turn to a principal shareholder for loans to meet its continuing obligations. The Company is exploring additional and increased line of credit arrangements and other financing operations to meet its ongoing cash requirements. -8- 9 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits. Exhibit 27 Financial Data Schedule B. REPORTS ON FORM 8-K None. -9- 10 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized. LITEGLOW INDUSTRIES, INC. (Registrant) Dated: August 18, 2000 By: /s/ SPENCER KRUMHOLZ ---------------------------------- Spencer Krumholz, President -10-

LITEGLOW INDUSTRIES INC 10-Q