[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 30, 1998
---------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 0-21961
Voyager Group USA-Brazil, Ltd..
(Exact name of small business issuer as
specified in its charter)
Nevada 76-0487709
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
6354 Corte Del Abeto, Suite F, Carlsbad, California 92009
(Address of principal executive offices)
(760) 603-0999
Issuer's telephone number
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: June 12, 1998 4,350,000
Transitional Small Business Disclosure Format (check one). Yes ; No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS April 30, July 31,
1998 1997
--------- ---------
Current Assets:
Cash ..................................... $ 44,458 $ 419,332
Inventory ................................ 319,211 165,212
Prepaid Expenses ......................... 18,974 56,318
Accounts Receivable ...................... 18,078 16,789
--------- ---------
Total Current Assets .................. 400,721 657,651
--------- ---------
Fixed Assets, at Cost:
Furniture and Equipment .................. 140,082 138,760
Leasehold Improvements ................... 6,741 6,741
Less - Accumulated
Depreciation ......................... (65,355) (44,925)
--------- ---------
81,468 100,576
--------- ---------
Other assets:
Deferred Tax Benefit ..................... 153,105 96,867
Intangible Assets, Net ................... 1,023 1,449
Deposits ................................. 10,327 5,252
--------- ---------
Total Other Assets .................... 164,455 103,568
--------- ---------
Total Assets .......................... $ 646,644 $ 861,795
========= =========
3
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY April 30, July 31,
1998 1997
--------- ---------
Current Liabilities:
Accounts Payable ........................... $ 65,624 $ 130,675
Accrued liabilities ........................ 43,580 46,267
Accrued Commissions ........................ 142,501 146,027
--------- ---------
Total Current Liabilities ................ 251,705 322,969
--------- ---------
Stockholder' 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; 4,350,000 and
3,550,000 shares issued
and outstanding January
31, 1998 and July 31,
1997, respectively ....................... 4,350 3,550
Additional Paid-in Capital ................. 924,989 920,489
Retained Earnings .......................... (689,732) (540,845)
--------- ---------
Total Stockholders' Equity ............... 394,939 538,826
--------- ---------
Total Liabilities, and
Stockholders' Equity ................... $ 646,644 $ 861,795
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (Unaudited)
For the Three For the Nine
Months Ended Months Ended
April 30, April 30,
------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Sales, Net ............. $ 454,076 $ 928,829 $ 1,959,047 $ 3,012,780
Cost of Sales .......... 135,578 279,856 590,565 907,857
----------- ----------- ----------- -----------
Gross Margin ...... 318,498 648,973 1,368,482 2,104,923
Selling & Marketing .... 293,792 960,130 1,162,803 2,559,032
Research & Development . -- -- 2,947 --
General & Administrative 173,963 84,685 435,863 358,394
----------- ----------- ----------- -----------
Total Expenses .... 467,755 1,044,815 1,601,613 2,917,426
----------- ----------- ----------- -----------
Operating Loss .... (149,257) (395,842) (233,131) (812,503)
Other Income
Interest, Net ........ 1,345 3,831 7,644 3,831
----------- ----------- ----------- -----------
Income (Loss) Before
Income Taxes ........... (147,912) (392,011) (225,487) (808,672)
Income Taxes
Deferred Tax (Benefit) . (50,238) (62,722) (76,600) (129,388)
----------- ----------- ----------- -----------
Net Income (Loss) ...... $ (97,674) $ (329,289) $ (148,887) $ (679,284)
=========== =========== =========== ===========
Earnings Per
Common Share:
Weighted Average Shares
Outstanding ............ 3,912,500 3,394,944 3,912,500 3,372,099
Earnings Per
Common Share: .......... $ (0.02) $ (.10) $ (0.04) $ (0.20)
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine
Months Ended
April 30,
----------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) .................................... $(148,887) $(679,284)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Depreciation and Amortization ...................... 20,856 15,115
Common Stock for Services .......................... -- 575,000
Changes in Assets and Liabilities-
(Increase) in Accounts Receivable .................. (1,289) (10,428)
Decrease in Prepaid Expenses ...................... 37,344 (9,459)
(Increase) Decrease in Inventory ................... (153,999) (46,674)
(Increase) in Other Assets ......................... (61,313) (136,176)
Increase (Decrease) in Accounts Payable ........... (65,051) 2,132
(Decrease) in Accrued Liabilities .................. (2,687) (37,282)
Increase (Decrease) in Accrued Commissions ........ (3,526) 169,954
--------- ---------
Net Cash Provided by Operating Activities ............ (378,552) (157,102)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase Furniture and Equipment ..................... (1,322) (86,319)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred Stock ...................................... -- --
Proceeds from Issuance of Common Stock ............... 5,000 245,000
--------- ---------
Net Cash Provided by Financing Activities ............ 5,000 245,000
--------- ---------
Net Increase in Cash and Cash Equivalents ............ (374,874) 1,579
Cash and Cash Equivalents at Beginning of Period ..... 419,332 322,787
--------- ---------
Cash and Cash Equivalents at End of Period ........... $ 44,458 $ 324,366
========= =========
Supplemental Disclosures of Cash Flow Information
Cash paid During the Year For:
Interest ......................................... $ 34 $ --
Income Taxes ..................................... $ -- $ 33,809
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.
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED APRIL 30, 1998
(Unaudited)
1. Interim Reporting
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and with Form 10-QSB
requirements. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
nine month period ended April 30, 1998, are not necessarily indicative of the
results that may be expected for the year ended July 31, 1998. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended July 31, 1997.
7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
General - This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's report on Form 10-KSB for the year ended July 31, 1997.
During the nine month period ended April 30, 1998, the Company has
developed a new line of patented products, the "Body Lite System". The Body Lite
system includes three nutritional supplements which, when combined with eating
right and low impact exercises, will help aide in weight management and pain
relief. The three components to the Body Lite system are:
1. BODYLITE VITALIZER, a proprietary blend of natural and organic amino
acids, herbs, and vitamins designed to give a long lasting lift and
effective appetite control throughout the day. Vitalizer is
scientifically assembled to help increase the production of
neurotransmitters which signal to the brain a feeling of satisfaction
and reduces the urge to over eat as well as the urge for sweets and
fats.
2. BODYLITE STABILIZER, a proprietary blend of natural and organic
ingredients designed to provide energy and blood sugar stabilization.
3 BODYLITE 3-2-1, a novel shake that mixes with water and combines three
parts protein, two parts complex carbohydrates and one part sugar.
This balance provides a timely and balanced conversion into glouse,
which helps prevent blood sugar spikes and inadvertent, unnecessary
excess insulin release. This also helps prevent rapid blood sugar
decrease during the metabolism process and provides appetite control
for several hours.
Customers with repeat business accounted for a majority of the revenues
generated. Although the Company has provided products for its customers with
repeat business, there is no assurance that such customers will maintain or
increase the level of volume of business of the Company.
Results of Operations - The following table set forth, for the three months and
the nine months ended April 30, 1998 and 1997, certain items from the Company's
Condensed consolidated Statements of Income expressed as a percentage of net
sales.
8
<PAGE>
Three Months Ended Nine Months Ended
April 30, April 30,
--------------- ---------------
1998 1997 1998 1997
----- ----- ----- -----
Sales, Net ............................ 100.0% 100.0% 100.0% 100.0%
Cost of Sales ......................... 29.9 30.1 30.1 30.1
----- ----- ----- -----
Gross Margin .......................... 70.1 69.9 69.9 69.9
Operating Expenses .................... 103.0 112.5 81.8 96.8
----- ----- ----- -----
Operating Income (Loss) ............... (32.9) (42.6) (11.9) (26.9)
Interest Income, Net .................. 0.3 0.4 0.4 0.1
----- ----- ----- -----
Income (Loss) Before Income Taxes ..... (32.6) (42.2) (11.5) (26.8)
Income Taxes
Deferred Tax (Benefit) ................ (11.1) (6.8) (3.9) (4.3)
----- ----- ----- -----
Net Income (Loss) ..................... (21.5) (35.4) (7.6) (22.5)
===== ===== ===== =====
Net Sales
Net sales for the third quarter of Fiscal 1997 were less than the third
quarter for Fiscal 1996 by $474,753 or 51.1%. Net sales for the nine month
period were less than the comparable period of Fiscal 1996 by $1,053,733 or
35.0%. This decrease was due to a broad restructuring of the Company's sales and
compensation plan, a repricing strategy that lowered prices to distributors
approximately 30%, re-formulation of certain existing products, and research and
development of the new Body Lite System and DoloRx products. The result of
which, management believes, will have a favorable increase in sales throughout
the rest of the year and fuel continual growth into the future.
Cost of Sales
Cost of sales for the third quarter of Fiscal 1997 decreased $144,278 or
51.6% compared to the third quarter of Fiscal 1996. As a percentage of sales,
cost of sales remained relatively constant decreasing from 30.1% to 29.9%. On a
year-to-date basis, cost of sales decreased $317,292 or 34.9%. As a percentage
of sales year-to-date, cost of sales remained relatively constant at 30.1%.
Operating Expenses
Operating expenses during the third quarter of Fiscal 1997 decreased
$577,060 or 55.2% compared to the third quarter of Fiscal 1996 from $1,044,815
to $467,755. For the nine month
9
<PAGE>
period, operating expenses decreased $1,315,813 or 45.1% from $2,917,426 to
$1,601,613. As a percentage of sales, operating expenses for the third quarter
decreased from 112.5% of sales to 103.0% of sales. For the nine month period,
operating expenses as a percent of sales decreased from 96.8% to 81.8%.
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 decrease in liquidity during the quarter was primarily from cash used
by operations. The Company generates and uses cash flows through three
activities: operating, investing, and financing. During the nine months ended
April 30, 1998, operating activities used cash of $379,000 as compared to net
cash used of $157,000 for the nine months ended April 30, 1997.
Cash flows used in investing activities is primarily due to the acquisition
of $1,000 of computer equipment and office furniture for the nine months ended
April 30, 1997.
Financing activities provided $5,000 for the nine months ended April 30,
1997. The increase in cash flow from financing activities was primarily from the
exercise of warrants for 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.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. 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 share 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.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The Company did not file a report on Form 8-K during the three months ended
April 30, 1998.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES.
(Registrant)
DATE: June 19, 1998 By: /s/ William Clapham
----------------- ---------------------------
William Clapham, President
(Principal financial and
Accounting Officer)
12
<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 APRIL 30, 1998 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<INVENTORY> 319
<CURRENT-ASSETS> 401
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0
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<COMMON> 4
<OTHER-SE> 391
<TOTAL-LIABILITY-AND-EQUITY> 647
<SALES> 1959
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</TABLE>
