U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB/A
Amendment #2
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Voyager Group USA-Brazil, Ltd.
(Name of Small Business Issuer in its charter)
Nevada 76-0487709
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
6354 Corte Del Aberto, Suite F, California 92009
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (760)-603-0999
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of class)
Convertible Preferred Series AA 1996, $0.001 Par Value
(Title of class)
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
Item 1. Description of Business.
(a) Business Development.
The Company was first incorporated in the State of Nevada on June 12,
1990 as EEE-Hunter Associates, Inc. On July 27, 1995 the Company changed its
domicile to the State of Texas with a plan of reorganization and revival, to
merge into a Texas Corporation, EEE-Energy Consultants, Inc. Neither company
had any operating activity. On July 2, 1996 the Company changed domicile to
Nevada.
On July 17, 1996 the Company entered into an agreement and plan of
reorganization to acquire Voyager Group, Inc. (a Delaware Corporation). In a
tax-free corporate reorganization the Company issued 360 shares of restricted
convertible preferred stock series AA 1996, par value $0.001, (convertible
into 3,600,000 restricted common shares) in exchange for 100% of the issued
and outstanding capital stock of Voyager Group, Inc. As a result of the
acquisition, Voyager Group, Inc., became a wholly owned subsidiary of the
Company. Mr. Galus Villard in accordance with the merger agreement returned
15,000,000 restricted common shares to the Company on July 31, 1996. Mr.
James Ronald Parker received in July 1996, 15 restricted convertible preferred
shares series AA 1996 (convertible to 150,000 restricted common shares) and
will be issued 300,000 shares of restricted common stock as a finders fee in
connection with said merger and as payment for promotional activities.
The above stated transaction has been accounted for as a reverse
purchase. Income and expense have been presented since the inception of the
Delaware Company.
The consolidated financial statements include the accounts of the Issuer,
and its wholly-owned subsidiary, The Voyager Group, Inc. All significant
intercompany accounts and transactions have been eliminated.
Also on July, 17, 1996 the Company changed the name of the Company to
Voyager Group-U.S.A.-Brazil, Ltd.
(b) Business of Issuer.
The Company's independent distributors distribute dietary supplements and
personal care products through a multi-level marketing network. The Company
has grown in the level of distributor sponsorship from one thousand
distributors in 1995 to 25,000 distributors. The Company has little or no
control over the level of sponsorship of new distributors and cannot predict
the timing or degree of fluctuations.
The independent distributors introduce the products and business
opportunity to others through word of mouth or various forms of advertising,
who in turn, introduce it to even more prospective customer/distributors.
This networking has resulted in the number of distributors increasing each
month. There can be no assurance that the number and productivity of the
Company's distributors will be sustained at current levels or increased in the
future.
There is no cost or investment to become an independent distributor. The
Company's distributors are not required to inventory products because the
Company ships directly to the distributor's customers. The results each new
distributor can achieve is based upon their own individual efforts, desire and
determination. Each independent distributor receives income on product sales
to their customers, as well as product sales to additional independent
distributors, who then become part of their sales organization. The
independent distributors receive monthly residual income from commissions on
subsequent product orders placed by those in their sales organization. The
Company has limited control over who becomes a distributor.
(1) Distribution System
The foundation of the Company's sales philosophy and distribution system
is network marketing. Products are sold exclusively to or through independent
distributors who are not employees of the Company.
Network marketing is an effective vehicle to distribute the Company's
products because (i) a consumer can be educated about a product in person by a
distributor, which is more direct than the use of television and print
advertisements; (ii) direct sales allow for actual product sampling by a
potential consumer; (iii) the impact of distributor and consumer testimonials
is enhanced; and (iv) as compared to other distribution methods, distributors
can give customers higher levels of service and attention among other things,
educating consumers on product benefits and following up on sales to ensure
proper product usage and customer satisfaction, and to encourage repeat
purchases. Under the Company's network marketing system, most independent
distributors purchase products either for personal consumption or resale.
Direct selling as a distribution channel has been enhanced in the past decade
due to advancements in communications, including telecommunication, and the
proliferation of the use of videos and fax machines, direct selling companies
can now produce high quality videos for use in product education,
demonstrations and sponsoring sessions that project a desired image for the
Company and the product line. Management believes that high quality sales
aids play an important role in the success of distributor efforts. For this
reason the Company will in the next 36 months, engage in the production of
video and audio cassettes, for the purposes of affecting a more efficient and
comprehensive sales tool. Management is committed to fully utilizing current
and future technological advances that continue to enhance the effectiveness
of direct selling.
The Company's network marketing program differs from many other network
marketing programs in several respects. First, the compensation plan allows
the Company distributors to develop a seamless network of down line
distributors. Second, the Company order and fulfillment systems eliminate the
need for distributors to carry significant levels of inventory. Third, the
compensation plan is financially rewarding and can result in commissions to
distributors aggregating up to 60% of a product's price. Commissions have
averaged 51% of revenue from commission able sales over the past years.
The Company's revenue is directly dependent upon the efforts of
distributors. Growth in sales volume requires an increase in the productivity
of distributors and /or growth in the total number of distributors. Because
the distributors have contracted directly with the Company, the Company has no
control over who becomes a distributor and little or no control over the
levels of sponsorship new distributors will be sustained at current levels or
increased in the near term. Loss of a distributor, together with a group of
distributors or such distributor's down line network, or the loss of a
significant number of distributors for any reason, could adversely affect the
Company's results of operations.
(2) Sponsoring
The Company relies solely on distributors to sponsor new distributors.
While the Company provides an optional starter kit, product samples,
brochures, magazines and other sales material, distributors are primarily
responsible for educating new distributors in their down line with respect to
products, the compensation plan, and how to build a successful
distributorship. The sponsoring of new distributors creates multiple levels
in the network marketing structure. Persons whom a distributor sponsors are
referred to as "down line" or "sponsored" distributors. If down line
distributors also sponsor, they create additional levels in the structure ,
but their down line distributors remain part of the same down line network as
their original sponsoring distributor.
Sponsoring activities are not required of distributors, however, because
of the financial incentives provided to those who succeed in building a
distributor network, the Company believes that most of its distributors
attempt, with varying degree of effort and success to sponsor additional
distributors. Generally, distributors invite friends family members and
acquaintances to sales meetings where company products are presented and where
the compensation plan is explained. People are often attracted into becoming
distributors after having used company products and become regular customers.
Once a person becomes a distributor, he or she is able to purchase products
directly from the Company at preferred prices or resale to consumers or for
personal consumption. The distributor is also entitled to sponsor other
distributors in order to build a network of distributors and product users.
(3) Compensation Plan
Management believes that one of the Company's key competitive advantages
is the compensation plan. The compensation plan is seamlessly integrated
across all markets in which company products are sold. This seamless
integration means that the Company's distributor base has total reach and that
the knowledge and experience resident in current distributors can be used to
build distributor leadership in new markets. The compensation plan allows an
individual the opportunity to develop a business, the success of which is
based upon that individual's level of commitment, time spent, personal skills,
contacts and motivation. For many, a distributorship is a very small
business, in which products may be purchased primarily for personal
consumption and for resale to relatively few customers. For others, a
distributorship becomes a full time occupation. Distributor incentives, based
upon knowledge of network marketing distributor compensation plans , the
Company believes that the compensation plan is among the most financially
rewarding plans offered to distributors by network marketing companies. There
are two fundamental ways in which distributors can earn money: (I) through
retail markups; and (ii) through a series of commissions on product sales
within the distributor's down line.
Each product carries a specified commission value. Commissions are based
on total personal and group sales volume per month. Commission value is
essentially based upon a product's cost, net of sales tax. As a distributor's
retail business expands and as he or she successfully sponsors other
distributors into the business who in turn expand their own business , he or
she may qualify to receive a higher percentage of commissions.
(4) Distributor Support
The Company is committed to providing a high level of support services to
the needs of its distributors in each market. The Company meets the needs and
builds the loyalty of its distributors with personalized distributor services.
A support staff that assists distributors as they build networks of down line
distributors. Because many distributors have only a limited number of hours
each week to concentrate on their business, management believes that
maximizing a distributor's efforts through effective support of each
distributor will continue to be important to the success of the Company.
Through training meetings, annual conventions, distributor focus groups,
regular telephone conference calls and personal contacts with distributors,
the Company seeks to understand and satisfy the needs of each distributor.
The Company provides walk-in, telephonic and computerized fulfillment and
tracking services that result in user-friendly, and timely product
distribution. In addition, the Company is committed to evaluating new ideas
in technology and services, such as automatic product reordering, that the
Company can provide to distributors. The Company currently utilizes,
teleconferencing and fax services. Internet access including company and
product information, ordering abilities and group and person sales volume
inquiries is anticipated to be provided to distributors in the future.
(5) Rules Affecting Distributors
Company distributor agreement, policies and procedures and compensation
plan outline the scope of permissible distributor marketing activities. The
Company's distributor rules and guidelines are designed to provide
distributors with maximum flexibility and opportunity within the bounds of
governmental regulations regarding network marketing. Distributors are
independent contractors and are thus prohibited from representing themselves
as agents or employees of the Company. Distributors are obligated to present
the company products and business opportunity ethically and professionally.
Distributors agree that the presentation of the Company's business opportunity
must be consistent with, and limited to the product claims and representations
made in literature distributed by the Company. No medical claims may be made
regarding the products, nor may distributors prescribe any particular product
as suitable for any specific ailment.
Distributors must represent that the receipt of commission is based on
substantial efforts. Exhibiting commission checks or statements about
commission checks is prohibited. Sales aids such as videotapes, promotional
clothing, pens, stationary and other miscellaneous items must be produced by
or pre-approved by the Company.
Distributors may not use any form of media advertising not approved by
the Company to promote products. Products may be promoted by personal contact
or by literature produced by or approved by the Company. Generic business
opportunity advertisements without using either the company name may be placed
in accordance with certain guidelines in certain markets. Distributors may
not use trademarks or other intellectual property of the Company without
consent.
Products may not be sold, and the business opportunity may not be
promoted, in traditional retail environments such as food markets, pharmacies
and drugstores. Distributors who own or are employed by a service related
business such as a doctor's office, hair salon, or health club, may make
products available to regular customers as long as products are not displayed
visibly to the general public in such a way as to attract the general public
into the establishment to purchase products.
General, distributors can receive commission bonuses if, on a monthly
basis (I) the distributor achieves a qualifying personal volume, (ii) the
distributor sells and/or consumes at least 70% of personal sales volume, and
(iii) the distributor is not in default of any material policies or
procedures.
The Company reviews alleged reports of distributor misbehavior. If the
Company determines that a distributor has violated any of the distributor
policies or procedures, it may either terminate the distributor's rights
completely or impose sanctions such as warnings, probation, suspension of
privileges of a distributorship, fines or penalties, withholding commissions
until specified conditions are satisfied, or other appropriate injunctive
relief. Distributors terminations based on violation of the companies policies
and procedures have aggregated less than 0.50% of the Company's distributor
force since inception. Distributors may voluntarily terminate their
distributorship at any time.
(6) Payment
Distributors generally pay for products prior to shipment. The Company
carries no account receivable from distributors. Distributors pay for
products in one of several ways: cash, money order, check or credit card.
(7) Certain Business Consideration and Risk Factors
There are certain significant risks facing the Company, many of which are
substantial in nature. Stockholders and prospective stockholders in the
company should consider carefully the following risks and information in
conjunction with the other information contained herein. The statements in
this section are historical facts or are forward-looking statements. Reliance
on forward-looking statements involve certain risks and uncertainties. Actual
results and outcomes may differ materially from those discussed in this
section. Factors that might cause such differences include, but are not
limited to, the risks and factors discussed below.
Reliance upon independent distributors of the Company, the Company
distributes its products exclusively through independent distributors who have
become distributors of the Company. Consequently, distributors can
voluntarily terminate being a distributor at any time with the Company. The
Company's revenue is directly dependent upon the efforts of these independent
distributors, and any growth in future sales volume will require an increase
in the productivity of these distributors and /or growth in the total number
of distributors. As is typical in the direct selling industry, there is
turnover in distributors from year to year, which requires the sponsoring and
training of new distributors by existing distributors to maintain or increase
distributor force and motivate new and existing distributors. The size of the
distribution force can also be particularly impacted by general economic
business and a number of intangible factors such as public perception of the
Company's products and product ingredients. The Company has limited control
over who becomes a distributor. In addition, because distributors are
independent contractors the Company is not in a position to provide the same
level of direction, motivation and oversight as it would with respect to its
own employees.
Potential negative impact of a distributor action can negatively impact
the Company and its products. For example, the publicity resulting from
distributor activities such as inappropriate earnings claims and product
representations by distributors can make the sponsoring and retaining of
distributors more difficult, thereby negatively impacting sales. Furthermore,
the Company's business and results of operations could be adversely affected
if the Company terminates a significant number of distributors or certain
distributors who play a key role in the Company's distributor system. There
can be no assurance that these or other distributor actions will not have a
material adverse effect on the Company or results of operations.
(8) Control by Stockholders: Convertible Preferred Stock Series AA 1996.
The capitalization of the Company was structured in such a manner as to
minimize the possibility of a change in control of the Company without consent
of the Preferred stockholders. Consequently, the shares of convertible
preferred series AA 1996 enjoy ten thousand to one voting privileges over the
common stock until the outstanding of preferred stock constitute less than 10%
of the total outstanding shares of common stock. As of April 7, 1997, the
preferred stockholders. i.e. management and certain affiliates and
non-affiliates shareholders collectively own 100% of the outstanding shares
of the preferred stock, representing approximately 56% of the combined voting
power of the outstanding shares of common stock. Accordingly, as of such
date, the preferred stockholders and certain affiliates and non-affiliates
shareholders, acting fully or partially in concert are able to control the
election of the Board of Directors of the Company and thus the direction and
future operations of the Company without supporting vote of any other of the
companies common shareholders, including decisions regarding acquisitions and
other business opportunities, the declaration of dividends and the issuance of
addition shares of preferred and other securities.
(9) Reliance and Concentration of Outside Manufactures
All the Company's products are currently produced by manufactures
unaffiliated with the Company. The Company's profit margins and its ability
to deliver its existing products on a timely basis are dependent upon the
ability of the Company's outside manufactures to continue to supply products
in a timely and cost efficient manner. Furthermore, the Company's ability to
enter new markets and sustain satisfactory levels of sales in each market
depends in part upon the ability of suitable outside manufactures to
reformulate existing products, if necessary to comply with local regulations
or market environments, for introduction into such markets. Finally, the
development of additional new products in the future will likewise be
dependent in part on the services of suitable outside manufacturers.
The Company currently acquires products or ingredients from suppliers
that are considered by the Company to be the superior suppliers of such
ingredients. The Company believes that, in the event it is unable to purchase
any products or ingredients from its current suppliers, the Company could
produce such products or replace such products or substitute ingredients
without great difficulty or prohibitive increases in the cost of goods sold.
However, there can be no assurance that the loss of such a supplier would not
have a material adverse effect on the Company's business and results of
operations.
The Company currently relies on one unaffiliated manufacturer to produce
approximately 80% of its products, the Company's agreement with the primary
supplier of the Company's products is limited to a non-disclosure agreement.
The Company believes that in the event that the Company's relationship with
the key manufacturer is terminated, the Company will be able to find suitable
replacement manufacturers. However, there can be no assurance that the loss of
the manufacturer would not have a material adverse effect on the Company's
business and results of operations.
(11) Principle products.
Many of Voyager's products are produced from what it considers to be
non-artificial herbs, botanicals, and nutrients, and are formulated by Voyager
with the goal of producing specific sets of effects. Voyager is of the
opinion that the formulas for its products are proprietary and cannot be
duplicated without the master recipes which are secured in safekeeping.
Voyager attempts to protect its products and formulas with, among other
things, "nondisclosure/noncompete" agreements with its manufacturers and
employees, and with copyright protection.
Current products including:
A. VITAL 90.
Vital 90 is a proprietary formula of dietary vitamins in a base of aloe
vera, distilled water, vegetable glycerine, natural flavors, and grapefruit
seed extract as a natural preservative.
Product Composition
One serving (1/2 Ounce provides)
U.S. R.D.A. (Has not been established for this nutrient)
Vitamin A 10,000 IU, Vitamin D 400 IU, Vitamin E 60 IU, Vitamin K 30 mcg,
Vitamin C 300 mg, Vitamin B-1 3.0 mg, Vitamin B-2 3.4 mg, vitamin B-3 40 mg,
Vitamin B-6 4mg, Vitamin B-12 30 mcg, Folio Acid 400 mcg, Biotin 100 mcg,
Panlothenic Acid 20 mg, Choline 50 mg, Myoinisitol 50 mg.
Ionic Trace Mineral Complex:
Aluminum, Antimoney, Barium, Beryllium, Sixmuth, Boron, Bromine, Cadmium,
Cerium, Cesium, Chromium, Cobalt, Copper, Dysprosium, Erbium, Europium,
Fluorine, Gadolinium, Gallium, Germanium, Gold, Hafnium, Holmium, Indium,
Iodine, Iridium, Iron, Lanthanum, Lithium, Lutetium, Manganese, Molybdenum,
Neodymium, Nickel, Niobium, Osmium, Palladium, Platinum, Praeseodymium,
Rheniumi, Rhodium, Ruthenium, Sarmarium, Scandium, Selenium, silicon, Silver,
Strontium, Tantalum, Tellurium, Terbium, Thallium, Thorium, Thulium, Tin,
Titanium, Tungsten, Vanadium, Ytterbium, Yttrium, Zinc, Zirconium.
B. VITAL MINERALS.
Vital Minerals is a proprietary formula of dietary minerals in a base of
aloe vera, distilled water, vegetable glycerine, citric acid, gum, carageenan,
potassium sorbate, grapefruit seed extract as a natural preservative, and
natural flavor (pina coloda taste).
Product Composition
Calcium 500mg, Magnesium 250mg, Potassium 99mg, Zinc 15mg, Boron 1mg, Selenium
70mcg.
Ionic Trace mineral Complex.
Aluminum, Antimony, Barium, Beryllium, Bismuth, Boron, Bromine,
Cadmium, Cerium, Cesium, Chromium, Cobalt, Copper, Dysprosium, Erbium,
Europium, Fluorine, Gadolinium, Gallium, Germanium, Gold, Hafnium, Holmioum,
Indium, Iodine, Iridium, Iron, Lanthanum, Lithium, Lutetium, Manganese,
Molybdenum, Neodymium, Nickel, Niobium, Osmium, Palladium, Platinum,
Praeseodymium, Rhenium, Rhodium, Rubidium, Ruthenium, Samarium, Scandium,
Selenium, Silicon, Silver, Strontium, Tantalum, Tellurium, Terbium, Thallium,
Thorium, Thulium, Tin, Titanium, Tungsten, Vanadium, Ytterbium, Zinc,
Zirconium.
C. CHITO CAPS (Chitosan).
CHITO CAPS is a proprietary formula of dietary fiber in a base of
ascorbic acid (vitamin C) and citric acid.
Product Composition
Capsule: 395mg net weight:
Contains: Chitosan, Chromulin, Inulin, Manganese, Chromium as
Arginate/Chelidamate
D. Real D.H.E.A.
Real D.H.E.A. is a proprietary blend of dehydroepiandrosterone.
Product Composition
Dehydroepiandrosterone (DHEA) 1000mg
Each 12 inch strip provides approximately 3mg. Og
active ingredients:
Pregnenolone 500mg Oleic Acid, Linseed Oil (a natural source of
essential acids including GLA), Methyl Nicotinate, SD alcohol derived from
naturally grown sources.
Natural Fragrance
E. COLLOIDAL CAT'S CLAW
Colloidal Cat's Claw is a proprietary formula of Uncaria Tomentosa in a
base of distilled water, natural vegetable glycerine, grapefruit seed extract,
natural flavors, and potassium sorbate as a preservative.
Product Composition
500mg. Uncaria Tomentosa
F. LIQUID-PYC (Proanthocyanidins)
Liquid-PYC is a proprietary formula of an antioxidant product in a base
of distilled water, natural vegetable glycerine, grapefruit seed extract,
natural flavors, and potassium sorbate as a preservative.
Product Composition:
Proanthocyanidins(Pine Bark and Grape Seed) 50mg Green Tea,
Curcuminiod, Ginkgo Biloba, Orange Peel, Peppermint, Ligusticum, and
Astragalus.
G.P.Y.C. PLUS
Is proprietary product of the issuer.
Product Composition:
Each Two Capsules Contain Curuminoid 200 mg, Aloe Vera 100mg, Proanthocyanidin
(Grape Seed & Pine Bark) 50mg, Astragalus 50mg, Suma 50mg, Deodorized Garlic
50mg, Maitake 50mg, Dioscorea 25mg, Vitamin C (Ascorbic Acid) 60mg=100%RDA,
Vitamin A (Beta Carotene)5,000 I.U. =100 R.D.A., Vitamin E (D-Alpha
Tocopherol) 30 I.U.=100% R.D.A
In a base of: Sage Leaf, Ginger Root, Red Clover, Burdock Root, Parsley Leaf,
Peppermint Leaf, and Chamonile.
H.SLENDER YOU. (Liquid)
Slender You is a proprietary blend of green tea, kola nut, yerba matte,
uva ursi, siberian ginseng, L-carnitine, white willow bark, ginger, bladder
wrack, Fo-Ti, hawthorn berry, saw palmetto, ginkgo biloba, L-methione,
choline, and inositol in a Base of distilled water, aloe vera, natural
vegetable glycerine, colloidal minerals, grapefruit seed extract, natural
flavors, and potassium sorbate as a preservative.
Product Composition:
Half Ounce Serving Provides: Chromulin, (Inulin, Manganese, and Chromium as
Arginate/Chelidamate) 1000mg, CitriMax(Hydroxycitric Acid-HCA) 300mg.
I.COLLOIDAL SILVER
Colloidal Silver is a proprietary formula anti-microbial.
Product Composition:
3-5 ppm Silver(Electro-Sonic colloidal process= 300 billion particles per
milliliter) Measured in nanometers, not microns.
J.HERBAL SENSATIONS SHAMPOO
Herbal Sensations Shampoo is a proprietary formula hair care product which in
our opinion helps cleans hair with out animal by products, laureth, and
sulfates.
Product Composition:
Infusion of: Cransbill, Nettle, Comfrey, Horsetail, Burdock, Chapparel,
Rosemary, Sage, Quassia, Walnut, Buckthorn, Yarrow, Hops, Lindenflower,
Arnica, Marshmallow, Kelp, Sodium C 12-14 Olefin Sulphonate, Coconut,
Vegetable Protein, Betaine, Sodium Chloride, Citric Acid, Cinnamate, Trace
Minerals, Methyl Choiro Isothiazolinone (Biocide Freshness Enhancer),
Panthenol, Natural Fragrance.
K.HERBAL CONDITIONER
Herbal Conditioner is a proprietary formula hair care product.
Product Composition:
Purified Water, PEG 40, Safflower Oil, Olive Oil, Vegetable Protein,
Panthenol, Methyl Paraben, Propyl Paraben, Extract of : Cransbill, Nettle,
Comfrey, Horsetail, Burdock, Chapparel, Rosemary, Chamomile, Quassia, Walnut,
Buckthorn, Yarrow, Hops, Lindenflower, Arnica, Marshmallow, and Kelp, Trace
Minerals, Cinnamate, Natural Fragance.
L.SUPER SOY.
A issuer formula proprietor.
Product Composition:
500 mg. Soy from soy sprouts
M.VITAL ESSENCE
Is a Proprietary product of the issuer.
Product Composition:
Natural Progesterone 500mg, Each 12' strip provides approximately
2mg of active ingredients. Rose Essence, Oleic Acid, Linseed Oil, (a natural
source of fatty acids including GLA), SD alcohol derived from naturally grown
sources, Natural Fragrance.
N.OPTIMAL ENZYMES:
Is a proprietary product of the issuer:
Product Composition:
Each capsule is 46mg net weight Contains blend: Magnesium, Glycinate, Papain,
Bromelain, Amylase, Protease, Invertase, Lipase, Maltase, Cellulase, Lactase,
Pectinase, Fructooigosaccharides, (FOS), Yellow Dock Root, Beet Root, Fennel
Seed, Ginger Root, Burdock Root and Cayenne.
O.VITAL BIOTIC.
Is a proprietary product of the issuer.
Product Composition:
Each capsule is 495mg net weight Contains Blend: Lactobacillus
Acidophilus, DDSI Acidophilus Bifidus, L-Salivarius, L-Brevis,
L-Plantarum, L-Bulgaricus, L-Lactis, L-Casie, and Fructooligosaccharides (FOS)
in an base of SBO's-(Soil born micro organisms.)
P.ULTRA PHASE 5TM
Is a proprietary product of the issuer for use as a dietary supplement
Product Composition:
Ingredients: a proprietary blend of Green Tea Extract, Choline Bitartrate,
Inulin, L-Pyroglutamate, Niacin, DMAE Bitartrate, L-Phenylalanine, Potassium
Aspartate, N-Acetyl-L-Carnitine, Ginko Biloba, Magnesium Glycinate. PATENT
PENDING
Q.DOLO RXTM
Is a proprietary product of the issuer for use as a topical cream for
muscle and joint pain relief.
Product Composition:
Deionized Water, Denatured Alcohol, TMEA Trioleate, Phenoxyethanol, Isopropyl
Palmitate, Carbomer, Allantoin, Panthenol, C11-15 Pareth-9, Menthol, Methyl
Salicylate, Amino Methyl Propanol, Methyparaben, Propylparaben, Diazolidinyl
Urea. PATENT PENDING
As a company selling branded consumer products nationwide, Voyager
believes that establishing trade and service marks and copyrights for brand
names and associated advertising and labeling materials is important in
maintaining company and product identification and integrity. Accordingly,
Voyager is engaged on a continuing basis in developing brand names and such
associated materials for its new products, securing trade and service mark
protection for such brand names and copyright protection for such associated
materials, policing its existing marks, and enforcing its legal rights in
cases of potential infringement by third parties of its legally protected
marks and copyrights.
(12) Competitive business conditions and the names of principal suppliers.
Competition in the nutritional supplement industry is vigorous,
characterized by a relatively large number of companies (estimated at
approximately 200), most of which have relatively small sales. Industry
sources estimate that there are less than 20 companies in the industry that
have annual sales of $50 million or more. Based on its current sales, Voyager
believes that it is within the approximately top one-third of the
approximately 200 nutritional supplement companies, based on sales. However,
since many of the companies in this industry are privately-held, little
reliable financial data is available. Many of the companies have established
reputations for successfully developing and marketing nutritional supplement
products, with a variety of well-established marketing outlets. Many of such
companies have greater financial, managerial, and technical resources than
Voyager. Principal competitors include American Cyanamid,
Smith-Kline-Beecham, American Home Products, Rexall Sundown, Inc., and
Nature's Sunshine Products, although not all of these companies produce
natural supplements. Included in that group of competitors are Herbal Life
International, Sun Rider Corporation, and Shakley. Many of these companies
rely exclusively on retail sales as opposed to multi-level marketing or
network marketing.
The Company competes by emphasizing the value and premium quality of the
Company's products and the convenience of the Company's distribution system.
There can be no assurance that the Company's business and results of
operations will not be affected materially by market conditions and
competition in the future.
(13) Sources and availability of raw materials and principal suppliers.
The majority of Voyager's products are manufactured by a single domestic
non-affiliated, manufacturer pursuant to specifications and proprietary
recipes of the issuer. Prior to selecting a manufacturer to produce its
products, Voyager reviews the manufacturer's raw material sources, quality
assurance procedures, and reliability to assure that the proposed manufacturer
meets Voyager's criteria. The companies that manufacture for Voyager are
required to meet strict manufacturing standards, and Voyager believes that it
benefits from such regulation in the overall quality of the products
manufactured by such regulated entities for Voyager. To date, Voyager has
relied exclusively on domestic manufacturers in order to facilitate Voyager's
quality assurance monitoring function. The manufacturers are not in any way
affiliated to the issuer or the issuer affiliated in any way to the
manufacturers or manufacturers' affiliates. The issuer has contacted other
domestic manufacturers and in the opinion of management, if the current
manufacturers were to have a natural or domestic problem (ie. labor) the flow
of proprietary recipes and products to distributors would not be significantly
interrupted.
Voyager places purchase orders with its suppliers for individual product
manufacturing lots for delivery of packaged and labeled product to Voyager's
warehouse in Carlsbad, California, for distribution. Voyager has no long-term
manufacturing agreements with its current suppliers, but purchases
manufactured lots pursuant to individual purchase orders. Voyager maintains
minimal inventory quantities and to date has not experienced any significant
shortages of manufactured products for delivery. All ingredients in Voyager's
products are generally available from a number of alternative sources,
although the ingredients, such as those based on agricultural products, are
subject to seasonable availability to a limited degree.
(14) Dependence on one or a few customers.
No customer accounts for more than 10% of sales. Voyager is a supplier
and formulator of vitamins and nutritional supplements which are designed and
formulated to address the dietary needs of the general public.
(15) Patents, trademarks, licenses, franchises, concessions, royalty agreement
or labor contracts, including duration.
As a company selling branded consumer products nationwide, Voyager
believes that establishing trade and service marks and copyrights for brand
names and associated advertising and labeling materials is important in
maintaining company and product identification and integrity. Accordingly,
Voyager is engaged on a continuing basis in developing brand names and such
associated materials for its products, securing trade and service mark
protection for such brand names and copyright protection for such associated
material, policing its existing marks, and enforcing its legal rights in cases
of potential infringement by third parties of its legally protected marks and
copyrights.
William Clapham, the President of the Company, provided the Company with
the marketing distribution plans (uni-level and matrix network compensation
program, commission payout structure, operations, and automated monthly
ordering system), and proprietary formulas for dietary supplements (complex
liquid essential vitamins, minerals, essential fatty acids, amino acid
complex, suspension base of vegetable glycerine, purified water and aloe,
liquid herbal extracts antioxidant formulas, encapsulated antioxidant
formula), weight management formula, and natural hair care product formula.
In exchange for the use of the formulas and marketing plans Mr. Clapham
receives minimum royalties of $20,000 per year with provisions for royalties
of $6,000 per month when sales volume is greater than $2,000,000 per year and
$10,000 per month when sales volume is greater than $6,000,000 per year.
(16) Need for any government approval of principal products or services.
The Company's products currently do not require government approval.
However, the processing, formulation, packaging, labeling and advertising of
Voyager's products are subject to regulation by one or more federal agencies
including the FDA, the Federal Trade Commission, the Consumer Products Safety
Commission, the Department of Agriculture, the Postal Service, and the
Environmental Protection Agency. Voyager's activities are also subject to
regulation by various agencies of the states and localities in which Voyager's
products are sold. The FDA has been the main agency regulating the types of
products sold by nutritional supplement firms such as Voyager, but much of
that authority stemmed from the FDA'S treatment of dietary supplements as food
additives and drugs. The FDA's jurisdiction in this regard has been somewhat
eroded and its role has been reduced to mainly policing the activities of
makers of dietary supplements by the enactment of the Dietary Supplement
Health and Education Act of 1994 ("DSHEA") in October 1994, as discussed
below. The DSHEA amends and modifies the application of certain provisions of
the FDA Act as they relate to dietary supplements. The DSHEA established an
Office of Dietary Supplements at the National Institutes of Health in order to
coordinate and conduct scientific research into the health benefits of dietary
supplements and also established a presidential commission to study and make
recommendations on the regulation of label claims and statements for dietary
supplements. The FDA is required to promulgate regulations that are
consistent with the DSHEA and the recommendations of the commission.
Before enactment of the DSHEA, the FDA had adopted regulations concerning
the labeling of dietary supplements, including the making of health claims.
These regulations required nutrition labeling on all dietary supplements and
prohibited the making of any health claim on a dietary supplement unless the
supplement was consumed as a food, its components were demonstrated to be
safe, and the health claim was supported by significant scientific agreement
and approved by the FDA. Part of the enactment of the DSHEA curbed the FDA's
adopted regulations, and the FDA agreed that it would not seek to enact
further regulations until after the end of 1996.
During the years preceding passage of the DSHEA, members of Congress were
under intense pressure from various sources, including the dietary supplement
industry, to reduce the regulatory burdens on dietary supplements imposed or
threatened by the FDA through its broad interpretation and application of the
FDA Act and its regulatory authority. Recognizing the importance of improving
the health of United States citizens and the role of dietary supplements in
promoting such improvement, Congress enacted the DSHEA to allow consumers to
have wider access to dietary supplements that are not unsafe, toxic,
unsanitary, or adulterated and to increase the access of consumers to truthful
information about such products. Passage of the DSHEA impacted the FDA's
ability to issue and implement any regulations with respect to dietary
supplements through its exemption of such products from being considered "food
additives" or, in most circumstances, "drugs." Although the DSHEA is
generally viewed as a positive development for companies that sell dietary
supplements such as vitamins, minerals, herbs, botanicals, amino acids, and
similar substances, the legislation imposed significant requirements that must
be adhered to in order for a product to qualify for the safe harbors
established by DSHEA.
The DSHEA broadly defines a dietary supplement to include any product
intended to supplement the diet that bears or contains a vitamin, mineral,
herb or other botanical, an amino acid, a dietary substance for use by man to
supplement the diet by increasing the total dietary intake, or concentrate,
metabolic constituent, extract, or combination of any such ingredient,
provided that such product is either intended for ingestion in tablet,
capsule, powder, softgel, gelcap, or liquid droplet form or, if not intended
to be ingested in such form, is not represented for use as a conventional food
or as a sole item of a meal or the diet and, in any case, is not represented
for use as a conventional food or as a sole item of a meal or the diet and is
labeled as a dietary supplement. The definition also includes highly
technical provisions dealing with a dietary supplement that contains an
ingredient that also has been approved by the FDA as a drug. The practical
effect of such an expansive definition is to ensure that the new protections
and requirements of the DSHEA will apply to a wide class of products.
One important provision of the DSHEA exempts the dietary ingredients in
dietary supplements from being treated as "food additives." Any substance
that is added to a food product that is not "generally recognized as safe" by
experts whose opinion is based on published scientific literature is subject
to being regulated as a food additive by the FDA. Under the FDA Act, a
substance that is a food additive may not be added to food products unless
explicitly permitted by the FDA by issuance of a regulation. In petitioning
the FDA for such a regulation, a process that often takes five years or more,
a petitioner might be required to spend several hundreds of thousands of
dollars or more to test a product and participate in any ensuing proceedings.
Prior to enactment of the DSHEA, dietary supplement ingredients were often
alleged to have "food additive" status and, unless approved by the FDA, were
treated as illegal foods by such agency, although many contended that this
represented overreaching on the part of the FDA in light of its permitted
powers. This clearly posed a substantial negative impact on the industry's
business and operations because of the risk that the FDA could choose to treat
any product offered by any company as containing food additives. The DSHEA
removed this potential problem and any ambiguity related thereto by exempting
dietary ingredients in dietary supplements from being treated as food
additives.
(17) Effect of existing or probable governmental regulation on the business.
Although dietary supplements are now exempted from treatment as food
additives by the FDA, the DSHEA imposed significant new safety standards
regulating dietary supplements to prevent the sale of dietary supplements that
are unsafe, toxic, unsanitary, or adulterated. These standards are summarized
below.
First, the DSHEA provides that a dietary supplement will be deemed to be
an adulterated food if it presents a significant or unreasonable risk of
illness or injury when used in accordance with its labeling or, if no
conditions of use are suggested or recommended in the labeling, under ordinary
conditions of use. Generally, the FDA Act prohibits the introduction or
delivery of adulterated food into interstate commerce so a dietary supplement
that is deemed adulterated may not be sold or distributed through interstate
commerce. The FDA has the burden of proof in establishing that a dietary
supplement is adulterated under such a standard, thereby reducing the FDA's
role from one of preapproval of dietary supplements to that of policing those
substances that present a significant or unreasonable risk of illness or
injury.
Second, the DSHEA imposes additional requirements that must be adhered to
for those dietary supplements containing a "new" dietary ingredient which,
under the DSHEA, is an ingredient that was not marketed in the United States
before October 15, 1994. A dietary supplement that contains such a new
dietary ingredient will be deemed to be adulterated unless either (a) all
ingredients contained in the dietary supplement have been present in the food
supply as an article used for food in a form in which the food has not been
chemically altered, or (b) there is a history of use or other evidence of
safety establishing that the new dietary ingredient, when used under the
conditions recommended or suggested in the labeling, will reasonably be
expected to be safe. In order to qualify for the safe harbor under the second
condition, a manufacturer/distributor of the new dietary ingredient or
supplement must provide, at least 75 days before introducing or delivering for
introduction such substance into interstate commerce, information to the FDA
that forms the basis on which the manufacturer/distributor has concluded that
a dietary supplement containing the new dietary ingredient will reasonable be
expected to be safe.
Finally, the DSHEA provided non-delegable authority to the Secretary of
the Department of Health and Human Services to declare a dietary supplement as
posing an imminent hazard to public health or safety. Following such
declaration, it is immediately illegal to market such a product, although the
Secretary must thereafter promptly hold a formal hearing in order to determine
whether to affirm or withdraw the declaration.
The effect of these new safety standards is that, although the authority
of the FDA to regulate dietary supplements has been limited, it and the
Secretary of the Department of Health and Human Services have been granted
substantial new policing authority to stop the distribution of a dietary
supplement if government personnel believe they can show that the product is
not safe. Voyager is not able to predict with certainty the impact of the new
regulatory scheme on its activities.
The DSHEA increases the ability of sellers of dietary supplements to
provide information about their products. The intent of Congress in promoting
such information is to empower consumers to make more informed choices about
preventive health care programs based on available scientific data about the
health benefits of diet supplements. Prior to the enactment of the DSHEA, the
FDA asserted that any publication used in connection with the sale of a
dietary supplement could be regulated by the FDA as "labeling." Further, if
the publication in question contained information claiming or suggesting that
an ingredient present in a dietary supplement might be used in the cure,
mitigation, treatment, or prevention of any disease, such supplement would be
subject to regulation under the FDA Act as a drug. Under the DSHEA, however,
a publication, including an article, a book or chapter in a book, or an
official abstract of a peer reviewed scientific publication that appears in an
article and was prepared by the authors or the editors of a publication, is not
defined as a labeling and may be used in connection with the sale of a dietary
supplement to consumers if such publication is reprinted and it (i) is not
false or misleading; (ii) does not promote a particular manufacture or brand
of a dietary supplement; (iii) is displayed or presented with other items on
the same subject matter so as to present a balanced view of the available
scientific information; (iv) is physically separate from dietary supplements
if displayed in an establishment where such products are sold; and (v) does
not have appended to it any information by sticker or any other method. The
United States has the burden of proof to establish that a publication is false
or misleading if a proceeding is established to prevent a publication. The
DSHEA specifically provides that it does not restrict a retailer or wholesaler
of dietary supplements in any way whatsoever from selling books or other
publications as a part of its business. These provisions of the DSHEA may
indirectly affect Voyager because they will make it easier for retailers and
wholesalers that sell Voyager's products to display and sell publications that
are related to Voyager's business and discuss the benefits of dietary
supplements such as the ones that Voyager manufactures and distributes.
FDA regulations published prior to the enactment of the DSHEA and
pursuant to the Nutrition Labeling and Education Act ("NLEA") prohibit the use
of any health claim in the labeling of any food products, including brochures,
unless the claim of such labeling is first approved by the FDA by regulation.
The DSHEA carves out an exception to this regulation that allows companies
that manufacture and distribute dietary supplements to make any of the
following four types of statements with regard to nutritional support on
labeling without FDA approval: (1) a statement that claims a benefit related
to a classical nutrient deficiency disease and discloses the prevalence of
such disease in the United States; (2) a statement that describes the role of
a nutrient or dietary ingredient intended to affect structure or function in
humans: (3) a statement that characterizes the documented mechanism by which a
nutrient or dietary ingredient acts to maintain or function; or (4) a
statement that "describes general well-being" from consumption of a nutrient
or dietary ingredient. In addition to making sure that a statement meets one
of the four criteria, a manufacturer of the dietary supplement must have
substantiation that such statement is truthful and not misleading, must not
claim to diagnose, mitigate, treat, cure, or prevent a specific disease or
class of diseases, and must contain the following disclaimer, prominently
displayed in boldface type: "This statement has not been evaluated by the Food
and Drug Administration. This product is not intended to diagnose, treat,
cure, or prevent any disease." Additionally, the manufacturer must notify the
Secretary of Health and Human Services no later than 30 days after the first
marketing of the dietary supplement to which such statement relates.
In addition to the above statements that are allowed to be made by
manufacturers, a dietary supplement must be properly labeled. To be properly
labeled, a dietary supplement must list the name and quantity of each
ingredient and the total weight of a proprietary blend, be identified as a
"dietary supplement," and identify the part of a plant from which any herb or
botanical ingredient is derived. In addition, there are special rules for
branding a supplement if there is an official compendium covering the dietary
supplement.
The DSHEA did not limit the FDA's ability to regulate manufacturing but
authorized the FDA to prescribe good manufacturing practice regulations for
dietary supplements which are to be modeled after current good manufacturing
practice regulations for food. Voyager cannot predict the impact that such
regulations could have on those suppliers that manufacture its products.
However, since most of these manufacturers also produce a number of products
that are already subject to manufacturing standards of the FDA, it is not
likely that any new regulations regarding manufacture of dietary supplements
would adversely affect Voyager or its suppliers.
In summary, Voyager can not determine or predict the final effects that
DSHEA will ultimately have on the regulatory scheme of dietary supplements.
Further, Voyager can not predict what recommendations will be made by the
presidential commission established to study this subject and make
recommendations. Although the DSHEA seems to be generally beneficial to
manufacturers of dietary supplements because it limits the FDA's authority to
regulate supplements as drugs or food additives, there is no real indication
of its ultimate effect. The FDA has recently proposed regulations that are
intended to become effective January 1, 1997, for the purpose of implementing
the DSHEA. There is no way to predict what form the final regulations will
take or what effect such regulations will have on the business activities of
Voyager.
(18) Estimate the amount spent during each of the two fiscal years on research
and development.
For the years ended July 31, 1997 and 1996 there was no money allocated
to research and development. Royalty agreements provided that the research
and development expenses are to be paid by the royalty holder.
(19) Cost and effects of compliance with environmental laws.
None.
(20) Number of employees.
As of October 31, 1997 the Company had a total of 14 employees engaged in
the general management and administration.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
The following discusses the financial position and results of operations
of the Company and its consolidated subsidiary, The Voyager Group Inc., which
have been combined and accounted for as a reverse purchase.
Liquidity and Capital Resources
The Company requires working capital principally to fund its current
operations. Generally the Company has adequate funds for its activities.
There are no formal commitments from banks or other lending sources for lines
of credit or similar short-term borrowing. It is anticipated that the current
operations will expand and the funds generated will exceed the Company's
working capital requirements for the next year.
The increase in liquidity and capital resources during the past two years
reflects the increases attributable to the issuance of preferred and common
stock as well as cash generated from operations. The Company generates and
uses cash flows through three activities: operating, investing, and
financing. During the year ended July 31, 1996, operating activities provided
cash of $172,000 as compared to net cash used of $58,000 for fiscal 1997.
Cash flows used in investing activities in 1996 and 1997 were primarily
due to the acquisition of $42,000 and $91,000 respectfully of computer
equipment and office furniture. During the fiscal year 1997 the Company moved
into a larger facility and purchased additional equipment in preparation for
the anticipated increase in sales activity
Financing activities provided $187,000 in fiscal year 1996 and $245,000
in 1997. The increase in cash flow from financing activities was primarily
from the sale of preferred and common stock.
Management believes that the Company's current cash and funds available
will be sufficient to meet capital requirements and short term and long term
working capital needs in the fiscal year ending July 31, 1998 and beyond,
unless a significant acquisition or expansion is undertaken. The Company is
constantly searching for potential acquisitions and/or expansion
opportunities. However, there are no arrangements or ongoing negotiations for
any acquisition or expansion.
Results of Operations
1995 was the first year of operations of Voyager Group, Inc., the subsidiary
which accounted for the majority of the operating activities of the Company.
Gross revenues increased 1400% due in part because 1995 was not a full year of
operations and during 1996 additional products were introduced. The customer
base increased by nearly 10,000 distributors during 1996. During 1997 the
distributor base increased to more than 25,000 distributors. This increase in
distributors and introduction of new products has been the primary reason for
the growth in revenue from $1,215,000 in 1996 to $3,967,000 in 1997 although
customers with repeat business accounted for some of the revenues generated
there is no assurance that such customers will maintain or increase the level
of volume of business of the Company or that the level of distributors will be
maintained.
October 11, 1996 the Company entered into an agreement with Celebrity Foods,
Inc., also known as Robert Eubanks, to assist in promotion and advertising of
Company products and the expansion of the Company's independent distributor
network. The expenses of this advertising program were recorded in the first
quarter of fiscal year ended July 31, 1997
In the later part of fiscal year 1996, the Company began gearing up for
anticipated increases in sales revenue by increasing staff and moving into
larger facilities. The additional staffing and larger facilities accounted
for the increase in general and administrative expenses from $195,000 for the
entire fiscal year 1996 to $980,000 for 1997. Selling and marketing expenses
have increased from 38% of revenues in fiscal year 1996 to 64% in 1997. Part
of the increase has been due to the promotional activities of the Company,
however, the majority of the increase is due to the commission structure which
provides for a maximum of 70% of revenue going toward commissions as the down
line matures. $425,000 of the increase is due to the Company entering into a
five year agreement with Dr. Morris Mann to assume the position of director of
product development to enhance the integrity and quality of the Company's
product lines, the intellectual property of the Company and the Company image.
In February of 1997 the Company entered into a tacit agreement with Dr.
William Regelson to be a consultant to the Company for product review and
enhancement. This tacit agreement will last for one year from February 1997
to 1998 and Dr. William Regelson shall be paid $2,000 per month. Dr. William
Regelson, Curriculum Vitae states he is a professor of medicine at the Medical
College of Virginia, Virginia Commonwealth University in Richmond. A
specialist in medical oncology with joint appointments in microbiology and
biomedical engineering, he has been a leading researcher in the field of
aging for more than twenty years. He was formerly the scientific Director of
the Fund for Integrative Biomedical Research dedicated to research on the
biology of aging. In the past he has consultant for Monsanto, A.H. Robins,
Merrill-National Laboratories and others. He has patents such as
Dehydroepiandrostrone (DHEA) to improve immune response and others.
Inflation and Regulation
The Company's operations have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices. The
Company encounters competition from a variety of firms selling dietary
supplements in its market area. Many of these firms have long standing
customer relationships and are well-staffed and well financed. The Company
believes that competition in the dietary supplement industry is based on
competitive pricing, although the ability, reputation and support of a multi-lev
el marketing network is also significant. The Company does not believe that
any recently enacted or presently pending proposed legislation will have a
material adverse effect on its results of operations.
Factors That May Affect Future Results
Management's Discussion and Analysis and other parts of this registration
statement contain information based on management's beliefs and
forward-looking statements that involve a number of risks, uncertainties, and
assumptions. There can be no assurance that actual results will not differ
materially for the forward-looking statements as a result of various factors,
including but not limited to the following:
The markets for many of the Company's offerings are characterized by
rapidly changing technology, evolving industry standards, and frequent new
product introductions. The Company's operating results will depend to a
significant extent on its ability to design, develop, or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the
costs of these offerings. The success of these and other new offerings is
dependent on many factors, including proper identification of customer needs,
cost, timely completion and introduction, differentiation from offerings of
the Company's competitors, and market acceptance. The ability to successfully
introduce new products and services could have an impact on future results of
operations.
Item 3. Description of Property.
The Company at this time has no properties. The Company occupies certain
sales offices under a noncancellable lease. The lease is for thirty-six
months expiring August 31, 1999. It is expected that in the normal course of
business, leases that expire will be renewed or replaced by leases on other
properties. The current lease requires minimum rental payments of $30,384.00
per year. The obligations of the lessee under the lease are guaranteed by
William Clapham, the president of the Company.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners.
The following table sets forth the number and percentage of the Company's
common shares owned of record and beneficially by each person owning more than
5% of such common shares at July 31, 1997.
(1) (2) (3) (4)
Title of Class Name and Amount and Percent of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
Preferred
Series AA 1996 Thaisa Branco 360 83.53%
816 Okra Ct. (Convertible to (47% if
Carlsbad, CA 3,600,000 shares converted)
92009 Common)
Common Stock James Ronald
Parker 300,000 8.45%
Sacramento,
California
The following table set forth the number and percentage as of the date of
this filing, the shares beneficially owned by all directors and nominees:
(1) (2) (3) (4)
Title of Class Name and Amount and Percent of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
Preferred
Series AA 1996 Thaisa Branco ---see above---
There have been no common shares issued to any of the directors of the
Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Directors and Executive Officers.
(1) (2) (3)
NAME and AGE POSITION TERM OF OFFICE
William Clapham 38 Director/President July 21, 1996 to Present
Thaisa Branco 28 Director/Vice Pres. July 21, 1996 to Present
Michael Johnson 31 Director July 21, 1996 to Present
Thaisa Branco is the wife of William Clapham
Business Experience
William H. Clapham, Director/President, is 38 years of age and co-founded The
Voyager Group, Inc., with his wife, Thaisa Branco, in January of 1995 and has
served as its President from that time until present. During the past five
years Mr. Clapham has spent one year in business school and has been a private
consultant in the marketing and product development in the nutritional
supplement industry. Mr. Clapham has created several product brands and
marketing strategies with distribution including direct sales. Mr. Clapham
has also developed private label nutritional and personal care products for
both domestic and international distribution. Mr. Clapham earned a Bachelor
of Science Degree from Northeastern University College of Business in Boston,
Mass.
Thaisa Branco, Director/Vice President/Secretary/Treasurer, is 28 years of age
and co-founded The Voyager Group, Inc. with her husband, William Clapham, and
has served as Vice President of operations from inception to the present.
Ms. Branco earned her Bachelor of Science Degree in Business Administration
from UNA (Brazil) and holds a Masters Degree in Marketing and Strategic
Planning in Brazil. In 1994, Ms. Branco earned a Post Graduate Degree in
Business Administration from Harvard University in Cambridge, Mass.
Michael Johnson, Director, is 31 years of age and has been a director since
July 17, 1996 to the present. Mr. Johnson received a certificate of
graduation from Berkshire School and has attended Lake Forest College, Lake
Forest, Chicago, University of Utah, Salt Lake City, Utah, New York Institute
of Finance, N.Y., N.Y. and New York University, N.Y., N.Y. From 1987 to 1989
Mr. Johnson was employed by Mel Schnel and Company, N.Y., N.Y. as a clerk, New
York-Comex Commodities. During 1989 to 1990 Mr. Johnson was employed by New
Mercantile Exchange, N.Y., N.Y. as a commodity futures trader, arbitrage
futures contracts and energy markets: oil, gas, etc. For the past five years
Mr. Johnson has been self-employed buying and selling contracts.
Item 6. Executive Compensation.
Annual Compensation
(a) (b) (c) (e)
Name Other
and Annual
Principal Salary Compensation
Position Year $ $
William Clapham, President 1995 - $ 20,000
1996 - $ 25,000
1997 $58,600 $ 72,000
Item 7. Certain Relationships and Related Transactions.
William Clapham, the President of the Company, provided the Company with
the marketing distribution plans (uni-level and matrix network compensation
program, commission payout structure, operations, and automated monthly
ordering system), and proprietary formulas for dietary supplements (complex
liquid essential vitamins, minerals, essential fatty acids, amino acid
complex, suspension base of vegetable glycerine, purified water and aloe,
liquid herbal extracts antioxidant formulas, encapsulated antioxidant
formula), weight management formula, and natural hair care product formula.
In exchange for the use of the formulas and marketing plans Mr. Clapham
receives minimum royalties of $20,000 per year with provisions for royalties
of $6,000 per month when sales volume is greater than $2,000,000 per year and
$10,000 per month when sales volume is greater than $6,000,000 per year.
Also, See Item 4 and Item 5 above.
Item 8. Description of Securities.
The corporation has authorized fifty million (50,000,000) shares of
common stock with a par value of $0.001 per share, and five million
(5,000,000) of convertible preferred stock series AA 1996 with a par value of
$0.001 per share and no other class or classes of stock, for a total
capitalization of $55,000. The corporation's capital stock may be sold from
time to time for such consideration as may be fixed by the Board of Directors,
provided that no consideration so fixed shall be less than par value. There
are no preemptive rights. No dividends have been declared. Fully-paid stock
of this corporation shall not be liable to any further call or assessment.
The preferred stock are convertible at a ratio of 10,000 shares of common
stock per preferred share converted. In the event of any voluntary or
involuntary liquidation, the holders of the preferred stock are entitled to an
amount equal to the net book value of the Corporation plus all unpaid
dividends. The preferred stock is entitled to vote 10,000 votes per preferred
share.
As of July 10, 1997 there are 3,550,000 shares of common stock issued and
outstanding and 431 shares of restricted cumulative preferred stock issued and
outstanding.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
The stock is traded over-the-counter on the NASDAQ Bulletin Board with
the trading symbol "VYGP". The following high and low bid information was
provided by PC Financial Network. The quotations provided reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may
not represent actual transactions.
1996 HIGH BID LOW BID
(To the best knowledge of
management, there was no
trading of shares for fiscal
1995 and the first three
quarters of fiscal 1996.)
Fourth Quarter (07/31/96) $ 4.000 $ 2.875
First Quarter (10/31/96) $ 3.625 $ 1.000
Second Quarter (01/31/97) $ 2.125 $ 1.125
Third Quarter (04/30/97) $ 2.875 $ 2.000
Fourth Quarter (07/31/97) $ 3.000 $ 1.750
The number of shareholders of record of the Company's common stock as of
November 12, 1997 was approximately 200. The number of shareholders of record
of the Company's preferred stock as of November 12, 1997 was 4.
The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
Item 2. Legal Proceedings.
On May 13, 1997, James R. Parker (Plaintiff) filed a Complaint for Damages
against various individuals and the Voyager Group, Inc. in Superior Court of
the State of California in and for the County of Sacramento (Case No.
97AS02458). The complaint alleges that the Voyager Group, Inc. and its
directors, officers, agents and shareholders among others, promised to pay the
Plaintiff approximately 781,250 shares of the Voyager Group. The complaint
seeks, among other things, damages from the defendants in the aggregate amount
of $2,900,000, plus attorney fees and interest. During November 1997, the
Company successfully negotiated to settle all claims by issuing 300,000 shares
of restricted common stock to Mr. Parker. The amount of the settlement and
any liabilities or other costs that may be incurred in connection with this
matter have been provided for in the financial statements.
Item 3. Changes in and Disagreements with Accountants.
There are not and have not been any disagreements between the Company and
its accountants on any matter of accounting principles, practices or financial
statements disclosure.
Item 4. Recent Sales of Unregistered Securities.
The Company over the past three years has sold 2,650,000 shares of common
stock and 431 shares of cumulative preferred stock.
On December 19, 1995 the Company completed an offering under Regulation D
- - Rule 504, and/or Uniform Limited Offering Exemption whereby the Company
through its officers, directors and employees without the use of an
underwriter sold 28,000 common shares for $2,800. The shares were sold only
to accredited and/or sophisticated investors. Each investor was required to
supply the issuer with information sufficient to enable the issuer to justify
a reasonable belief that the investor did in fact come within the description
of accredited and/or sophisticated. Following are the names of the investors:
C.J, Krickbaum, Howard M. Overson, Melagro Holdings, Inc., Corporation owned
by Howard H. Oveson, Gilbert E. Romero, Jenifer Romero, Karin Bourdos, Pete
Bourdos, John Licko, Pauline Licko.
On July 3, 1996 the Company sold 15,000,000 restricted common shares to
one individual, Mr. Gaius Villard - a US person, for $15,000. The Company
relied on the exemption provided under Regulation D Rule 506 exemption for
limited offers and sales without regard to dollar amount of offering. The
issuer furnished Mr. Villard with the following information: a copy of the
issuer's business plan, the type of restricted securities offered, and all
financial information about the issuer. The restricted common stock was
returned to the Company treasure on July 31, 1996 under Section 78.283 of the
Nevada Sate Corporate Laws.
July 15, 1996 the Company through its officers, directors and employees
without the use of an underwriter sold 2,022,000 common shares for $14,154 to
accredited investors under provisions of Regulation D-Rule 504. Each investor
was provided with an offering memorandum dated July 7, 1996 and a subscription
agreement. Following are the names of the investors: Dean Dulhan, Miles
Desharrnis, Larry Grant, Lorenda Mayers, Bob Maning, David Saad, Kelly Lohn,
Peter B. Lefeavx, Ronald Kiraly, Walter Meranze, Robt Smith, Mark Haab, Victor
Hagar, K. Nelson, Murray Mullin, Chas Gild, Donald hale, R.P. Spooner, Geo
Turner, Bobby Young, Yancey Tender, Olive Wright, Herbert Wyler, J.E.
Brackett, Edward Kent, Charlotte Shepard, Conrad Green, Scott Griffin, Colleen
Mosca, John Nail, Paul King, K. Funkhouser, Winn Gance, Peter Kosinski, Auth
Sonia, Carol Trott, Mary Trufant, william Dodge, Paul Sonburg, A.W. Leiman,
Henry Alexander, Frances Amos, Foster Yancey, Elmer Mann, Frank and Wendy
Burtnett.
On July 17, 1996 the Company entered into an agreement and plan of
reorganization to acquire Voyager Group, Inc. (a Delaware Corporation). In a
tax-free corporate reorganization the Company issued 360 shares of restricted
convertible preferred stock series AA 1996, par value $0.001, (convertible
into 3,600,000 restricted common shares) in exchange for 100% of the issued
and outstanding capital stock of Voyager Group, Inc. As a result of the
acquisition, Voyager Group, Inc., became a wholly owned subsidiary of the
Company. At the same time, the Company sold 56 restricted Convertible
Preferred Shares Series AA (convertible to 560,000 restricted common shares
par value $0.001 ) to a Mr. Joe Brazil (not affiliated to Company or related
to any officer, or director) and Mr. Michael Johnson, for $150,010 ($2,678.75
dollars for each preferred share) under Reg. D- Rule 506 of the Securities and
Exchange Act of 1933. Mr. James Ronald Parker received in July 1996, 15
restricted convertible preferred shares series AA 1996 (convertible to 150,000
restricted common shares) and in November, 1997 received 300,000 common shares
as a finders fee in connection with said merger and as payment for promotional
activities.
October 11, 1996 the Company entered into a agreement with Celebrity
Foods, Inc., also known as Robert Eubanks, to assist in promotion and
advertising of company products and the expansion of the Company's independent
distributor network, to be performed over a thirty six month period from
October 11,1996 to October 11, 1999. On October 27, 1996 the Company issued
150,000 restricted common shares under Regulation D Rule 506 of the Securities
and Exchange Commission Act of 1933 to Celebrity Foods also known as Robert
Eubanks.
On November 11, 1996 the Company completed a 250,000 units* offering, on
a best efforts basis at $1.00 per unit to Credit Suisse Bank. The unit
offering memorandum was pursuant to Reg. D-504. Total proceeds of the sale of
250,000 units was $250,000 dollars with offering expenses of $5,000 dollars.
The Reg. 504 unit offering by the Company provided funding to improve product
shipment, product labeling and operating capital.
*Units- consist of 250,000 common shares and 750,000 warrants. Warrants
are exercisable for a period of 24 months, upon completion of the offering, or
upon the Company's successful registration of the common shares underlying the
warrants under the Securities Act of 1933, as amended and applicable by State
statutes. Warrants are detachable upon completion of the offering with an
exercise price of $.01 per warrant. Warrants may be redeemed by the Company,
any time upon 20 day's prior written notice to the warrant holder at a price
of $0.005 per warrant.
On April 1, 1997 the Company entered into an agreement with Dr. Morris
Mann to assume the position of director of product development to enhance the
integrity and quality of the Company's product lines, the intellectual
property of the Company and the Company image. On April 11, the Company
issued 200,000 restricted common shares under Regulation D Rule 506 of the
Securities and Exchange Act of 1933, to Dr. Morris Mann.
Item 5. Indemnification of Directors and Officers.
Pursuant to Nevada statutes, the registrant is authorized to
indemnify a director, officer, employee or agent in actions by or in the right
of the corporation to procure a judgement in its favor against expenses,
including amounts paid in settlement and attorney's fees, actual and
reasonably incurred by such actions if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interest of the corporation. Indemnification may not be made from any claim
or matter as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom to be liable to the
corporation or for amounts paid in settlement to the corporation, unless a
court of competent jurisdiction determines upon application, that the person
is nonetheless, fairly and reasonably entitled to indemnity for such expenses
as the court deems proper.
Part F/S
The following documents are filed as part of this report.
Independent Auditor's Report 31
Consolidated Balance Sheet,
July 31, 1997 and 1996 32
Consolidated Statements of Income,
For the Years Ended July 31, 1997 and 1996 34
Consolidated Statements of Cash Flows,
For the Years Ended July 31, 1997 and 1996 35
Consolidated Statements of Changes in Stockholders' Equity,
For the Years Ended July 31, 1997 and 1996 37
Notes to Consolidated Financial Statements 39
Schedule I, Condensed Financial Information
of Registrant (All Required Information
Reported in Consolidated Financial Statements
and Notes to the Consolidated Financial Statements)
Schedule II, Valuation of Qualifying Accounts
(All Required Information Reported in Consolidated
Financial Statements and Notes to the
Consolidated Financial Statements)
Schedule III, Real Estate and Accumulated Depreciation
(Not Applicable)
Schedule IV, Mortgage Loans on Real Estate
(Not Applicable)
Schedule V, Supplemental Information Concerning
Property-Casualty Insurance Operations
(Not Applicable)
Independent Auditor's Report
To the Stockholders
of Voyager Group USA-Brazil, Ltd. and Subsidiaries
We have audited the consolidated balance sheet of Voyager Group
USA-Brazil, Ltd. and Subsidiaries as of July 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity, and cash
flows for the years then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects the financial position of Voyager
Group USA-Brazil, Ltd., and Subsidiaries as of July 31, 1997 and 1996 and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
October 21, 1997
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31,
1997 1996
ASSETS
Current Assets:
Cash $ 419,332 $322,787
Inventory 165,212 4,326
Prepaid Expenses 56,318 1,311
Accounts Receivable 16,789 -
Total Current Assets 657,651 328,424
Fixed Assets, at Cost:
Furniture and Equipment 138,760 54,598
Leasehold Improvements 6,741 -
Less - Accumulated
Depreciation (44,925) (13,525)
100,576 41,073
Other Assets:
Deferred Tax Benefit 96,867 -
Intangible Assets, Net 1,449 2,015
Deposits 5,252 5,032
Total Other Assets 103,568 7,047
Total Assets $ 861,795 $ 376,544
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
July 31,
1997 1996
LIABILITIES AND STOCKHOLDERS
EQUITY
Current Liabilities:
Accounts Payable $ 130,675 $ 30,646
Accrued Liabilities 46,267 37,282
Accrued Commissions 146,027 13,435
Total Current Liabilities 322,969 81,363
Stockholders' Equity
Preferred Stock, $.001 par
value; 5,000,000 shares
authorized; 431 shares issued
and outstanding 1 1
Premium on Preferred Stock 155,331 155,331
Common Stock to be Issued 300 -
Common Stock; $.001 par value;
50,000,000 shares authorized;
3,550,000 and 2,950,000 shares
issued and outstanding July 31, 1997
and 1996, respectively 3,550 2,950
Additional Paid-in Capital 920,489 38,004
Retained Earnings (Deficit) (540,845) 98,895
Total Stockholders' Equity 538,826 295,181
Total Liabilities, and
Stockholders' Equity $ 861,795 $ 376,544
The accompanying notes are an integral part of these consolidated financial
statements.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended
July 31,
1997 1996
Sales, net of allowances
of $51,653 and $3,413 $3,967,363 $ 1,215,191
Cost of Sales 1,195,473 433,008
Gross Margin 2,771,890 782,183
Selling & Marketing 2,563,413 461,747
General & Administrative 979,634 195,389
Net Income (Loss) from
Operations (771,157) 125,047
Other Income (Expense)
Interest 7,404 (987)
Income (Loss) Before Income
Taxes (763,753) 124,060
Income Tax Benefit (Expense) 124,013 (37,984)
Net Income (Loss) $ (639,740) $ 86,076
Earnings (Loss) Per Common Share:
Primary $ (.19) $ .03
Fully Diluted $ - $ .02
Weighted Average Shares
Outstanding
Primary 3,285,205 2,950,000
Fully Diluted 8,345,205 3,877,123
The accompanying notes are an integral part of these consolidated financial
statements.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
For the Year ended
July 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (639,740) $ 86,076
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Used in Operating Activities:
Depreciation and Amortization 31,400 12,453
Common Stock in exchange for Services 638,385 -
Changes in Assets and
Liabilities-
Increase in Accounts Receivable (16,789) -
Increase in Prepaid Expenses (55,007) (1,311)
Increase in Inventory (160,886) (1,326)
Increase in Other Assets (96,521) (4,166)
Increase in Accounts Payable 100,029 29,573
Increase in Accrued Liabilities 8,985 37,282
Increase in Accrued Commissions 132,592 13,435
Net Cash Provided by Operating
Activities (57,552) 172,016
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase Furniture and Equipment (90,903) (41,731)
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Increase (Decrease) in Cash and Cash Equivalents
For the Year ended
July 31,
1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred Stock - 155,332
Proceeds from Issuance of
Common Stock 245,000 31,954
Net Cash Provided by
Financing Activities 245,000 187,286
NET INCREASE IN CASH AND CASH
EQUIVALENTS 96,545 317,571
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 322,787 5,216
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 419,332 $ 322,787
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year For:
Interest $ - $ 987
Income Taxes $ 38,276 $ 2,864
On October 27, 1996 the Company issued 150,000 shares of common stock in
exchange for advertising and promotional services to be performed within a 36
month period.
On April 11, 1997 the Company issued 200,000 shares of common stock in
exchange for product development services.
On May 13, 1997, James R. Parker (Plaintiff) filed a Complaint for
Damages against the Voyager Group, Inc. in Superior Court of the State of
California. During November, 1997 the Parties to the Complaint reached a
settlement agreement whereby the Company will issue 300,000 shares of common
stock in full payment of all claims under the Complaint. Subsequent to July
31, 1997 the 300,000 shares of common stock have been issued.
The accompanying notes are an integral part of these consolidated financial
statements.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common
Stock Additional
Preferred Stock To Be Common Stock Paid-in Retained
Shares Amount Premium Issued Shares Amount Capital Earnings
Balance
August 1,
1995 - $ - $ - - 900,000 $ 900 $ 8,100 $ 12,819
Issuance of
Common Stock
to the Public
for Cash
October 31,
1995 - - - - 28,000 28 2,772 -
Issuance of
Common Stock
to an Individual
for Cash
July 3, 1996 - - - - 15,000,000 15,000 - -
Issuance of
Common Stock
Reg D Offering
for Cash
July 15, 1996 - - - - 2,022,000 2,022 12,132 -
Preferred Shares
Issued in Exchange
for 100% of the
Issued and
Outstanding stock
of Voyager Group,
Inc (in Conjunction
with Reverse Acquisition)
July 17,
1996 360 - 5,322 - - - - -
Preferred Shares
Issued in Exchange
for Cash (in
Conjunction with
Reverse Acquisition)
July 17,
1996 56 1 150,009 - - - - -
Preferred Shares
Issued in Exchange
for services (in
Conjunction with Reverse
Acquisition)
July 17,
1996 15 - - - - - - -
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Continued)
Common Additional
Preferred Stock Stock To Common Stock Paid-in Retained
Shares Amount Premium Be Issued Shares Amount Capital Earnings
Shares Returned
to Treasury
July 31,
1996 - - - - (15,000,000) (15,000) 15,000 -
Net Income
for Year Ended
July 31,
1996 - - - - - - - 86,076
Balance
July 31,
1996 431 1 155,331 - 2,950,000 2,950 38,004 98,895
Shares Issued
in Exchange
for Services
October 27,
1996 - - - - 150,000 150 149,850 -
Issuance of
Common Stock
Reg D Offering
for Cash
November 11,
1996 - - - - 250,000 250 244,750 -
Shares Issued
in Exchange
for Services
April 11,
1997 - - - - 200,000 200 424,800 -
Shares to
be Issued
for Settlement
Effective
August 1,
1996 - - - 300 - - 63,085 -
Net Income
for Year Ended
July 31,
1997 - - - - - - - (639,740)
Balance
July 31,
1997 431 $ 1 $155,331 $ 300 3,550,000 $3,550 $920,489 $(540,845)
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Company was first incorporated in the State of Nevada on June 12,
1990 as EEE-Hunter Associates, Inc. On July 27, 1995 the Company changed its
domicile to the State of Texas and merged into a Texas Corporation EEE-Energy
Consultants, Inc. Neither company had any operating activity. On July 2,
1996 the Company changed domicile to Nevada and on July 17, 1996 changed the
name of the Company to Voyager Group USA-Brazil, Ltd.
Also on July 17, 1996 the Company entered into an agreement with Voyager
Group, Inc. (a Delaware Corporation) whereby the Company acquired 100% of the
issued and outstanding stock of Voyager Group, Inc. in a tax-free corporate
reorganization in exchange for the issuance of 360 shares of preferred series
AA 1996 stock (convertible into 3,600,000 common shares). Mr. James Ronald
Parker received 15 restricted convertible preferred shares and will receive
300,000 common shares as a finders fee in connection with the merger and as
fees for promotional activities. This transaction has been accounted for as a
reverse purchase. Income and expense have been presented since the inception
of the Delaware Company.
Principles of Consolidation
The consolidated financial statements include the accounts of Voyager
Group USA-Brazil, Ltd. and its wholly-owned subsidiary, The Voyager Group,
Inc. All significant intercompany accounts and transactions have been
eliminated.
Nature of Business
The Company's independent distributors distribute dietary supplements and
personal care products through a multi-level marketing network. The products
are formulated to appeal to the general public and address overall health
considerations.
Inventories
Inventories consist of dietary and personal care products and related
materials and are stated at the lower of cost (first-in, first-out method) or
market, or net realizable value.
Revenue Recognition
The Company recognizes revenue from product sales at the time of
shipment.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires recognition of
deferred income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
Depreciation
Depreciation is provided at rates based on estimated useful service lives
(five to seven years for office furniture and fixtures), using accelerated
methods.
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited
or charged to income.
Amortization
Organization costs are amortized over a sixty month period. Intangible
assets are amortized over useful life.
Cash Equivalents
For the purpose of reporting cash flows, the Company considers all highly
liquid debt instruments purchased with maturity of three months or less to be
cash equivalents to the extent the funds are not being held for investment
purposes.
Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
Fully diluted net income per common share was calculated based on an
increased number of shares that would be outstanding assuming that the 431
convertible preferred shares are converted to 4,310,000 common shares. The
effect of outstanding options and other common stock equivalents are
antidillutive for 1997 and are thus not considered.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
The Company performs ongoing credit evaluations of its customers'
financial condition and generally does not require collateral. The Company
maintains reserves for estimated credit losses. Its accounts receivable
balances are primarily domestic. No customer accounts for more than 10% of
sales.
Recent Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued SFAS No.,
121, "Accounting for the Impairment of Long-lived Assets". SFAS No. 121
addresses the accounting for (i) impairment of long-lived assets, certain
identified intangibles and goodwill related to assets to be held and used, and
(ii) long-lived assets and certain identifiable intangibles to be disposed
of. SFAS No. 121 required that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. If the sum of the expected future cash
flows from the use of the asset and its eventual disposition (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized. Management does not expect that the adoption
of SFAS No. 121 will have a material impact on the Company's consolidated
financial statements.
Pervasiveness 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.
Reclassifications
Certain reclassifications have been made in the 1996 financial statements
to conform with the 1997 presentation.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 2 - PREFERRED STOCK
On July 17, 1996 the Company created convertible Preferred shares Series
AA 1996, authorizing the issuance of 1,000 shares of convertible preferred
stock to be sold, with a par value of $.001. The preferred stock are
convertible at a ratio of 10,000 shares of common stock per preferred share
converted. In the event of any voluntary or involuntary liquidation, the
holders of the preferred stock are entitled to an amount equal to the net book
value of the corporation plus all unpaid dividends. The preferred stock is
entitled to vote 10,000 votes per preferred share.
NOTE 3 - RELATED PARTY TRANSACTIONS
William Clapham, the President of the Company, provided the Company with
the marketing distribution plans (uni-level and matrix network compensation
program, commission payout structure, operations, and automated monthly
ordering system), and proprietary formulas for dietary supplements (complex
liquid essential vitamins, minerals, essential fatty acids, amino acid
complex, suspension base of vegetable glycerine, purified water and aloe,
liquid herbal extracts antioxidant formulas, encapsulated antioxidant
formula), weight management formula, and natural hair care product formula.
In exchange for the use of the formulas and marketing plans Mr. Clapham
receives minimum royalties of $20,000 per year with provisions for royalties
of $6,000 per month when sales volume is greater than $2,000,000 per year and
$10,000 per month when sales volume is greater than $6,000,000 per year.
NOTE 4 - RENT EXPENSE
The Company occupies certain sales offices under a noncancellable lease.
The lease is for thirty-six months expiring August 31, 1999. The current
lease requires minimum rental payments of $30,384 per year. The obligations
of the lessee under the lease are guaranteed by William Clapham, the President
of the Company.
NOTE 5 - ADVERTISING AND PROMOTION
On October 11, 1996 the Company entered into an agreement with Celebrity
Foods, Inc., also known as Robert Eubanks, to assist in promotion and
advertising of Company products and the expansion of the Company's independent
distributor network. The contract calls for Celebrity Foods, Inc., among
other things, to produce (1) a maximum of one audio tape for each existing
Voyager product and any new product introduced by the Company during the three
years of the contract, (2) Celebrity (Bob Eubanks) will make personal
appearances at Company functions (not to exceed two per year), (3) Bob Eubanks
will be available to host Company conference calls not to exceed four per
year, and (4) Celebrity will do no fewer than four radio and television
interviews per month. On October 27, 1996 the Company issued 150,000
restricted common shares. The value of the services were recorded at $1 per
share (the approximate closing price of the common stock on the date the
agreement was signed).
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 6 - PRIVATE PLACEMENT OF COMMON STOCK
On November 11, 1996 the Company completed a Regulation D section 504
private placement whereby the Company issued 250,000 common shares for
$245,000 (net of $5,000 expense of sale). Each share included detachable
warrants to purchase three common shares at $.01 per share for 24 months
callable at $.005.
On April 1, 1997 the Company entered into a five year agreement with Dr.
Morris Mann to assume the position of director of product development to
enhance the integrity and quality of the Company's product lines, the
intellectual property of the Company and the Company image. On April 11, the
Company issued 200,000 restricted common shares to Dr. Morris Mann in payment
for his services. The value of the services were recorded at $2.125 per share
(the approximate closing price of the common stock on the date the agreement
was signed).
NOTE 7 - INCOME TAXES
The Company is subject to corporate and state income taxes. Deferred
taxes are determined based on the estimated future tax effects of differences
between the financial reporting and tax basis of assets and liabilities given
the provisions of the enacted tax laws. The net deferred tax asset at July
31, 1997 of $96,867 is comprised of the tax benefit of the net operating loss
carryforward.
The components of the income tax (benefit) provision are as follows:
July 31,
1997 1996
Current
Federal $ - $ 27,500
State - 10,484
Deferred
Federal (114,500) -
State (9,513) -
Total $(124,013) $ 37,984
A reconciliation between the Company's effective tax rate and the statutory
federal income tax rate on the income (loss) from continuing operations is as
follows:
1997 1996
Statutory federal income tax rate (34.0%) 34.0%
State income taxes (8.0%) 8.0%
Other 26.0% (11.0%)
Effective income tax rate (16.0%) 31.0%
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 8 - LEGAL PROCEEDINGS
On May 13, 1997, James R. Parker (Plaintiff) filed a Complaint for
Damages against various individuals and the Voyager Group, Inc. in Superior
Court of the State of California in and for the County of Sacramento (Case No.
97AS02458). The complaint alleges that the Voyager Group, Inc. and its
directors, officers, agents and shareholders among others, promised to pay the
Plaintiff approximately 781,250 shares of the Voyager Group. The complaint
seeks, among other things, damages from the defendants in the aggregate amount
of $2,900,000, plus attorney fees and interest. During November 1997, the
Company successfully negotiated to settle all claims by issuing 300,000 shares
of common stock to Mr. Parker. The amount of the settlement and any liability
or other costs that may be incurred in connection with this matter have been
provided for in the financial statements.
NOTE 9 - SELECTED FINANCIAL DATA (unaudited)
The following tables set forth certain unaudited quarterly financial
information:
Quarters Ended
July 31, April 30, January 31, October 31,
1997 1997 1997 1996
Income statement data:
Net sales $ 954,583 $ 928,829 $1,063,311 $1,020,640
Gross profit 666,967 648,973 782,328 673,622
Income (loss) from
operations 41,346 (395,842) (39,855) (376,806)
Other income 3,573 3,831 - -
Income (loss)
before tax 44,919 (392,011) (39,855) (376,806)
Income tax (provision)
benefit (5,375) 62,722 6,377 60,289
Net income (loss) $ 39,544 $(329,289) $ (33,478) $(316,517)
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997, AND 1996
(Continued)
NOTE 9 - SELECTED FINANCIAL DATA (unaudited)
(Continued)
Quarters Ended
July 31, April 30, January 31, October 31,
1996 1996 1996 1995
Income statement data:
Net sales $ 486,076 $ 390,517 $ 237,896 $ 100,702
Gross profit 312,851 251,376 153,134 64,822
Income (loss) from
operations 163,978 (16,848) (15,974) (6,109)
Other expense (987) - - -
Income (loss)
before tax 162,991 (16,848) (15,974) (6,109)
Income tax (provision)
benefit (46,184) 4,200 4,000 -
Net income (loss) $ 116,807 $ (12,648) $ (11,974) $ (6,109)
PART III
Item 1. Index to Exhibits.
Item 2. Description of Exhibits.
EXHIBIT INDEX PAGE
Exhibit 2 - Articles of Incorporation and By-Laws:
EEE-Energy Consultants, Inc.
(Formerly EEE-Hunter Associates, Inc.) Incorporated
by reference
The Voyager Group, Inc.. Incorporated
by reference
Exhibit 11 - Computation of Per Share Earnings:
(Refer to Independent Auditors Report Page "Note 1")
Exhibit 23 - Consent of Robison, Hill & Co.
Exhibit 27 - Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Voyager Group USA-Brazil, Ltd.
DATE: November 17, 1997
By /s/
William Clapham, President
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF VOYAGER GROUP USA-BRAZIL, LTD. AS OF JULY 31, 1997 AND THE
RELATED STATEMENTS OF INCOME, EQUITY AND CASH FLOWS FOR THE YEAR THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERRENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 419
<SECURITIES> 0
<RECEIVABLES> 17
<ALLOWANCES> 0
<INVENTORY> 165
<CURRENT-ASSETS> 658
<PP&E> 176
<DEPRECIATION> 45
<TOTAL-ASSETS> 862
<CURRENT-LIABILITIES> 323
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 535
<TOTAL-LIABILITY-AND-EQUITY> 862
<SALES> 3967
<TOTAL-REVENUES> 3967
<CGS> 1195
<TOTAL-COSTS> 3543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (764)
<INCOME-TAX> (124)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (640)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Voyager Group USA-Brazil, Ltd.,
A Nevada Corporation
We hereby consent to the use of our report respecting Voyager Group
USA-Brazil, Ltd. and Subsidiaries dated October 21, 1997 in Part F/S of Form
10-SB/A Amendment #2.
/s/ Robison, Hill & Co.
Certified Public Accountants
Salt Lake City, Utah
November 12, 1997
