================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended
September 30, 2000 Commission File No. 000-26611
ENDLESS YOUTH PRODUCTS, INC.
(Exact name of Registrant as specified in its Charter)
Nevada 93-215736
(State or jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Stamford Financial Building, Stamford, NY 12167
-------------------------------------------- -----
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (607) 652-3311
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report: None
--------------------------------------------------------------------------------
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 a 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 [ ]
As of November 11, 2000, there were 3,304,028 shares of Common Stock
outstanding.
================================================================================
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
<TABLE>
<CAPTION>
ENDLESS YOUTH PRODUCTS, INC.
BALANCE SHEETS
September 30, June 30,
ASSETS 2000 2000
------------- -------------
CURRENT ASSETS
<S> <C> <C>
Cash $ 165 $ 165
------------- -------------
TOTAL CURRENT ASSETS 165 165
Property and Equipment
net of accumulated depreciation (Notes 1 & 2) - -
------------- -------------
NONCURRENT ASSETS
Net assets of discontinued operations (Note 3) - -
------------- -------------
TOTAL ASSETS $ 165 $ 165
============= =============
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 108,125 $ 117,388
------------- -------------
TOTAL LIABILITIES 108,125 117,388
SHAREHOLDERS' DEFICIT
Preferred stock, $.001 par value, authorized
1,000,000 shares; no shares issued and
outstanding at September 30, 2000 and June 30, 2000
Common stock, $.001 par value,
authorized 10,000,000 shares; issued
and outstanding 3,306,878 at September 30, 2000
and June 30, 2000, respectively (Note 5) 3,306 3,306
Additional paid-in capital 1,543,358 1,543,358
Accumulated deficit (1,654,624) (1,663,887)
------------- -------------
Total shareholders' Deficit (107,960) (117,223)
------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDER'S DEFICIT $ 165 $ 165
============= =============
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
ENDLESS YOUTH PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
For the three months ended September 30,
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 9,263 $ 10,966
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & Amortization - 1,100
Increase (Decrease) in deferred revenue - (70,833)
Increase (Decrease) in accounts payable (9,263) (51,750)
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES - (110,517)
------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - -
Advances from (Repayments to) shareholders - 23,611
------------- -------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES - 23,611
------------- -------------
NET CHANGE IN CASH - (86,906)
CASH AT BEGINNING OF YEAR 165 355,434
------------- -------------
CASH AT END OF YEAR $ 165 $ 268,528
------------- -------------
Interest expense paid during the period was: 15 -
Income taxes paid during the period was: - -
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
ENDLESS YOUTH PRODUCTS, INC.
STATEMENTS OF OPERATIONS
For the three months ended
September 30,
2000 1999
--------------- ---------------
<S> <C> <C>
Gross Receipts $ 36,720 $ -
Less: Returns and allowances - -
--------------- ---------------
Net Sales 36,720 -
Cost of Sales - -
--------------- ---------------
Gross Profit 36,720 -
Selling, General and Administrative
Expenses 27,442 -
--------------- ---------------
Income (Loss) from Operations 9,278 -
Other Income and (Expenses)
Interest Income - -
Interest Expense 15 -
--------------- ---------------
Income (Loss) before income taxes $ 9,263 -
Provision for income taxes - (Note 4) - -
--------------- ---------------
Net income (Loss) from continuing operations $ 9,263 -
Discontinued operations:
Income (loss) from operations of vitamins and personal care
products line disposed of (net of income taxes) - (Note 3) 10,966
Net income $ 9,263 $ 10,966
=============== ===============
Income per share amounts:
Basic:
Net income (loss) from continuing operations $ 0.00
Net income (loss) from discontinuted operations $ 0.00
Diluted:
Net income (loss) from continuing operations $ 0.00
Net income (loss) from discontinuted operations $ 0.00
Weighted average common and
common equivalent shares:
Basic 3,306,878 3,295,708
=============== ===============
Diluted 3,306,878 3,504,692
=============== ===============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
ENDLESS YOUTH PRODUCTS, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
Additional Accumu- Net
Common Stock paid in lated Shareholders'
Shares Amount Capital Deficit Deficit
------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 2000 3,306,878 $3,306 $ 1,543,358 $ (1,663,887) $(117,223)
Net Income for Period 9,263 9,263
--------- ----- --------- ---------- --------
Balance at Sept. 30, 2000 3,306,878 3,306 1,543,358 (1,654,624) (107,960)
========= ===== ========= ========== ========
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
ENDLESS YOUTH PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Endless Youth Products, Inc., (the Company) was incorporated July of 1996 in the
State of Nevada. The Company is engaged in selling computer software systems and
advisory services with special consideration to Internet technology.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. Since its inception in 1996 the Company has incurred
substantial development stage and operating losses. The Company's management has
reduced operating expenses and is currently evaluating future operating
activities to improve cash flow. The Company had net income of $9,000 for the
three months ended September 30, 2000, however, as of September 30, 2000 the
Company had a working capital deficiency of $108,000 and a shareholder's deficit
of $108,000. The Company's financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from
the possible inability of the Company to continue as a going concern.
Cash Equivalents
The Company considers all highly liquid certificates of deposit with an original
maturity of three months or less to be cash equivalents.
Revenue Recognition
Revenue from product sales is recognized upon shipment. Test market sales
experience as well as research conducted by outside consultants provides the
Company with a reasonable basis for estimating future returns.
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 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.
6
<PAGE>
ENDLESS YOUTH PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
Provisions (benefits) for federal and state income taxes are calculated on
reported financial statement income (loss) based on current tax law and also
include the cumulative effect of any changes in tax rates from those used
previously in determining deferred tax assets and liabilities. Such provisions
(benefits) differ from the amounts currently payable because certain items of
income and expense, known as temporary differences, are recognized in different
tax periods for financial reporting purposes than for income tax purposes.
Earnings (Loss) Per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128). This statement requires the company to report
basic and diluted earnings (loss) per share. Basic earnings per share is
computed by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share include the effect of the additional common shares that would
have been outstanding if dilutive stock options had been exercised.
The following table summarized the calculation of basic and diluted earnings per
share for the three months ended September 30,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Numerator:
Basic and diluted earnings per share -
net income (loss) from continuing operations $ 9,293 $ -
net income (loss) from discontinued operations - 10,966
Denominator:
Basic earnings per share - weighted average number
of common shares outstanding during the period 3,306,878 3,295,708
Incremental common shares attributable to
assumed exercise of options and warrants - 208,984
Denominator for diluted earnings per share 3,306,878 3,504,692
Basic earnings per share:
Net income from continuing operations $ 0.00
Net income from discontinued operations $ 0.00
Diluted earnings per share:
Net income from continuing operations $ 0.00
Net income from discontinued operations $ 0.00
</TABLE>
7
<PAGE>
ENDLESS YOUTH PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock Based Compensation
The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees". Compensation cost for stock options and warrants is
measured at the excess of the quoted market price of the Company's stock at the
date of grant over the amount the employee must pay to acquire the stock.
Restricted stock is recorded as compensation cost over the requisite vesting
periods based on the market value on the date of grant. Compensation cost for
shares issued under performance share plans is recorded based upon the current
market value of the Company's stock at the time the shares are granted. Options
and warrants issued for outside services are accounted for under SFAS 123 using
the Black-Scholes option-pricing model.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment consist of the following at:
September 30, June 30,
2000 2000
---- ----
Furniture and Fixtures $ - $ -
Computer Equipment - -
less: Accumulated Depreciation - -
---------- ----------
$ - $ -
========== ==========
Depreciation expense charged to operations was $0 and $1,100 for three months
ended September 30, 2000 and 1999.
NOTE 3 - DISCONTINUED OPERATIONS
In July 2000 the Company disposed of its vitamins and personal care products
line. There was no gain or loss recognized from the disposal. Operating results
of the vitamins and personal care products line for the three months ended
September 30, 2000 and 1999 are shown separately in the accompanying income
statement. Net sales of the vitamins and personal care products line for the
three months ended September 30, 2000 and 1999 were $0 and $71,275 respectively.
These amounts are not included in net sales in the accompanying income
statement.
8
<PAGE>
ENDLESS YOUTH PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
NOTE 4 - INCOME TAXES
There is no current or deferred income tax expense for the three months ended
September 30, 2000 and 1999. As of June 30, 2000, the Company has net operating
loss carryforwards of $1,363,514. These losses will expire between 2012 and 2014
if not utilized.
SFAS 109 requires that the future tax benefit of net operating loss
carryforwards be recorded as an asset using current tax rates to the extent that
management assesses the utilization of such carryforwards to be more likely then
not. As of September 30, 2000 the Company has recorded a deferred tax asset of
$460,445 with a valuation allowance of $460,445.
The following reconciles the federal statutory income tax rate to the effective
rate of the provision for income taxes.
Sept. 30, 2000 Sept. 30, 1999
Federal Statuatory rate 34 % 34 %
Valuation allowance adjustment (34) % (34) %
---------------- -----------------
Effective rate 0 % 0 %
================ =================
NOTE 5 - SHAREHOLDERS' EQUITY
During the three months ended September 30, 2000 and year ended June 30, 2000
the Company issued 0 and 11,170 shares of common stock, respectively, in
exchange for services rendered. The cost of the services has been charged to
operations, and, additional paid in capital has been increased by $0 and $2,078
for the three months ended September 30, 2000 and year ended June 30, 2000,
respectively, representing the excess fair market value of the services over the
par value of the common stock.
The Company applies APB 25 in accounting for its employee stock options and
warrants. The option price equals or exceeds the fair market value of the common
shares on the date of the grant and, accordingly, no compensation cost has been
recognized under the provisions of APB 25 for stock options. The Company applies
SFAS 123 for options and warrants issued for outside services. Compensation cost
is measured at the grant date based on the value of the award and is recognized
over the service (or vesting) period.
9
<PAGE>
ENDLESS YOUTH PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND JUNE 30, 2000
NOTE 5 - SHAREHOLDERS' EQUITY (continued)
Had compensation cost for Company's employee stock option and warrant agreements
been determined under SFAS 123, based on the fair market value at the grant
dates, the Company's pro forma net earnings and net earnings per share would
have been reflected as follows at September 30:
2000 1999
Net earnings
As reported $ 9,263 $ 10,966
Pro forma $ 9,263 $ 3,330
Net earnings per share
As reported $ 0.00 $ 0.00
Pro forma $ 0.00 $ 0.00
The fair value of each option and warrant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used for those options and warrants granted during years ended
September 30, 2000 and 1999, respectively: dividend yield of 0%, expected
volatility of 58%, risk-free interest rates of 5%, and expected lives ranging
from 1 to 10 years.
10
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's discussion and analysis should be read in conjunction with the
Company's financial statements and the notes thereto set forth in this Form
10-QSB.
General
Endless Youth Products, Inc., (the "Company") engages in the business of selling
computer software systems and advisory services with special emphasis on
Internet technology. The following discussion is based on the financial
statements for the three months ending September 30, 2000 and 1999. The
financial statements have been prepared in conformity with generally accepted
accounting principles.
Results of Operations
Net Sales
Net sales for the three months ended September 30, 2000 decreased by $34,555 or
48.4% compared to the three months ended September 30, 1999. Net sales for the
three months ended September 30, 2000 primarily consist of software sales. Net
sales for the three months ended September 30, 1999 consisted of licensing fees.
The decrease in sales is the result of a change in the company's primary
business from nutritional and personal care products to computer software and
advisory services. The Company has abandoned its nutritional business and is
developing a plan to engage in information technology consulting and
procurement. the Company does not anticipate any further revenues from the
nutritional business and revenues from it's proposed new business may not
develop for a significant period of time.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by $162,867 during the
three months ended September 30, 2000 compared to the three months ended
September 30, 1999. This decrease was primarily due to decreased sales activity,
expenses related to product development and marketing. The Company's management
continues to pursue cost reduction measures consistent with the level of
business wherever opportunities can be identified.
Liquidity and Capital Resources
Although the Company has negative working capital and equity, management
believes it will be able to obtain sufficient financing to fund the Company's
operations and capital requirements for the 2001 fiscal year. Management plans
to keep monthly expenses at a minimal until cash flows from operations improve.
Forward Looking Statements
This report on Form 10-QSB contains certain 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. These
forward-looking statements relate to matters such as the Company's future
operating results and liquidity. Such forward-looking statements are based on
the beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Such statements are
based on management's current expectations and are subject to certain risks,
uncertainties and assumptions. Should one or more risks or uncertainties
materialize, or should underlying assumptions prove incorrect, the Company's
actual results, performance or achievements could differ materially from those
expressed in, or implied by such forward-looking statements.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently party to any legal proceeding, however,
Schulberg Media Works has claimed that it is owed $175,000 despite former
management's claim that no amounts were due to Schulberg Media for Programs
produced by Vendor Services. Current management is evaluating the claim with a
view to settlement. Management does not believe that the Company will have
liability for such claim beyond that which it has accrued.
Item 5. Other Events
On November 2, 2000, Edward Shah, then sole director of the Company,
appointed David B. Caney and Jacqueline Antin as President and Chief Financial
Officers, respectively of the Company. Mr. Shah also appointed Mr. Caney and
Mrs. Antin to be directors, to serve until the Company's next annual meeting of
Shareholders at which their successors, if any, are elected and duly qualified.
Mr. Caney's experience includes a long history of management of
international trade and shipping companies including Humatech Ltd. for which he
has served as a major director since 1998. Humatech Ltd. is the European
distributor for Humatech, Inc. a U.S. based distributor of organic based feed
and agricultural products. From 1992 to 1997, he served as a managing director
of Crusader Navigation Ltd. (Tunbridge Wells), a British, American and Italian
owned operator and manager of commercial ships ranging from 35,000 to 150,000
tons operating in the United Kingdom, the United States, Western Europe,
Australia, Asia, the Middle East and South Africa. In such capacity, he was
responsible for a small team whose duties included business evaluation,
estimating and budgeting, contract negotiation, customer relations, marketing,
development strategy, chartering, administration and day-to-day management. The
company carried an average of about 4 million tons of cargo per annum (the
lowest being 1997 at 1.3 million and highest being just over 8 million in
1993/4) mostly under long-term contract, on vessels under long-term charter. At
the peak in 1993/4/5 the company had between 16 and 20 ships in their fleet. Mr.
Caney left the partnership in 1997. Prior to joining Crusader Navigation Ltd. in
1992, Mr. Caney co-founded and organized NS Lemos & Co. (London) in 1983, a ship
owner at which he was responsible for the company's entry into the market, the
purchase and sale of ships and all aspects of ship chartering and fleet
marketing, cost estimation and future business development. Concurrent from 1989
to 1992 he also served as director of The Baltic Exchange (London), an
international shipping exchange and futures market where he served as a member
of the finance committee.
Mrs. Antin served as a bank officer for NatWest PLC from 1977 to 2000,
her most recent title being Senior Manager. At NatWest PLC Mrs. Antin operated
in various capacities including lending, securities settlement, investment,
mortgages and account management. She offers the Company extensive financial and
banking experience secured during a career of more than 30 years.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
27 Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 2000 ENDLESS YOUTH PRODUCTS, INC.
By: /s/ Jacqueline Antin
----------------------------
Jacqueline Antin, CFO
13
