The accompanying interim condensed financial
statements are unaudited, but in the opinion of management of Cell-nique Corporation (the "Company"), contain all adjustments,
which include normal recurring adjustments necessary to present fairly the financial position at June 30, 2011 and the results
of operations and cash flows for the six months ended June 30, 2011 and 2010. The balance sheet as of December 31, 2010 is derived
from the Company's audited financial statements.
Restatement: The Company completed the merger
of Hibix Corporation assets on December 31, 2010 and Cherrybrook Kitchen, LLC on May 31, 2011. The Company determined that the
purchase accounting estimates associated with this the Company's balance sheet, consolidated statements of operations for the three
and six months ended June 30, 2011 and cash flow statement resulted in corrections for the three and six month periods ended June
30, 2011 herein.
Certain information and footnote disclosures
normally included in financial statements that have been prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management
of the Company believes that the disclosures contained in these condensed financial statements are adequate to make the information
presented herein not misleading. For further information, refer to the financial statements and the notes thereto included in the
Company's annual report Form 10K, as filed with the Securities and Exchange Commission on April 15, 2011.
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, disclosures of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates.
The results of operations for the six months
ended June 30, 2011 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending
December 31, 2011.
Recently Issued Accounting Pronouncements
Not Yet Effective
In December 2010, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-28, "Intangibles-Goodwill
and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying
Amounts (a consensus of the FASB Emerging Issues Task Force)," which provides updated authoritative guidance related to performing
Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an
entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.
The qualitative factors that an entity should consider when evaluating whether it is more likely than not that a goodwill impairment
exists are consistent with the existing guidance for determining whether an impairment exists between annual tests. This update
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption,
which for the Company is our fiscal year beginning July 1, 2011. We do not expect this standard to have a material impact on our
consolidated financial statements.
In December 2010, the FASB issued ASU No.
2010-29, "Disclosure of Supplementary Pro Forma Information for Business Combinations." The amendments in this standard
specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the
combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of
the comparable prior annual reporting period only. This standard also expands the supplemental pro forma disclosures under ASC
805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to
the business combination included in the reported pro forma revenue and earnings. The amendments in this ASU are effective prospectively
for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2010, with early adoption permitted. This standard is therefore effective for the Company for acquisitions
made after the beginning of fiscal 2012. We do not expect the pro forma disclosure requirements under this standard to have a material
impact on our consolidated financial statements.
Income (Loss) per Common Share
Basic earnings (loss) per share is computed
by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders
by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding
if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded
from the computation when their effect is anti-dilutive.
For the six months ended June 30, 2011 and
2010 the calculations of basic and diluted loss per share are the same because potential no dilutive securities would have an anti-dilutive
The Company's cash balances on deposit with
banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company may be exposed to risk for the amounts
of funds held in one bank in excess of the insurance limit. In assessing the risk, the Company's policy is to maintain cash balances
with high quality financial institutions. The Company had cash balances in excess of the guarantee during the six months ended
June 30, 2011.
During the six months ended June 30, 2011
and 2010, the Company had three customers, which accounted for approximately 41%, 24% and 17% of sales in 2011, and 72% and 6%
of sales in 2010, respectively. As of June 30, 2011 and December 31, 2010, the Company had approximately $192,889 (82%) and $22,708
(64%), respectively, of accounts receivable from these customers.
Fair Value of Financial Instruments
The Company uses various inputs in determining
the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the
consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value.
Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated
with the inputs to fair valuation of these financial assets:
Level 1-Quoted prices in active markets for
identical assets or liabilities.
Level 2-Inputs, other than the quoted prices
in active markets, that are observable either directly or indirectly.
Level 3-Unobservable inputs based on the Company's
The Company has no fair value items required to be disclosed.