[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: January 31, 1999
------------------
[ ] 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: January 31, 1999 13,050,178
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 January 31, July 31,
1999 1998
--------- ---------
Current Assets:
Cash ................................... $ -- $ --
Inventory .............................. 155,679 173,130
Prepaid Expenses ....................... 800 800
Accounts Receivable .................... 31,047 28,872
--------- ---------
Total Current Assets ................ 187,526 202,802
--------- ---------
Fixed Assets, at Cost:
Furniture and Equipment ................ 140,135 140,135
Leasehold Improvements ................. 6,741 6,741
Less - Accumulated
Depreciation ....................... (76,079) (62,443)
--------- ---------
70,797 84,433
--------- ---------
Other assets:
Deferred Tax Benefit ................... 327,031 172,301
Intangible Assets, Net ................. -- --
Deposits ............................... 10,327 10,327
--------- ---------
Total Other Assets .................. 337,358 182,628
--------- ---------
Total Assets ........................ $ 595,681 $ 469,863
========= =========
3
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY January 31, July 31,
1999 1998
----------- -----------
Current Liabilities:
Accounts Payable ....................... $ 14,603 $ 31,782
Accrued liabilities .................... 290,927 204,189
Accrued Commissions .................... 43,828 48,451
Shareholder Loans ...................... 26,000 4,500
----------- -----------
Total Current Liabilities ............ 375,358 288,922
----------- -----------
Stockholder' Equity:
Preferred Stock; $.001 par
value; 5,000,000 shares
authorized; 403 shares
issued and outstanding ............... 1 1
Premium on Preferred Stock ............. 155,331 155,331
Common Stock; $.001 par
value; 50,000,000 shares
authorized; 13,050,178 and
5,837,010 shares issued
and outstanding January
31, 1999 and July 31,
1998, respectively ................... 13,050 5,837
Additional Paid-in Capital ............. 1,739,533 971,902
Retained Earnings ...................... (1,687,592) (952,130)
----------- -----------
Total Stockholders' Equity ........... 220,323 180,941
----------- -----------
Total Liabilities, and
Stockholders' Equity ............... $ 595,681 $ 469,863
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
<TABLE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(Unaudited) (Unaudited)
For the Three For the Six
Months Ended Months Ended
January 31, January 31,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales, Net ................. $ 361,409 $ 632,669 $ 673,078 $ 1,504,971
Cost of Sales .............. 72,851 191,159 192,830 454,987
------------ ------------ ------------ ------------
Gross Margin .......... 288,558 441,510 480,248 1,049,984
Selling & Marketing ........ 186,192 393,632 337,214 869,011
Research & Development ..... -- 529 50,000 2,947
General & Administrative ... 631,350 149,448 979,311 261,900
------------ ------------ ------------ ------------
Total Expenses ........ 817,542 543,609 1,366,525 1,133,858
------------ ------------ ------------ ------------
Operating Income (Loss) (528,984) (102,099) (886,277) (83,874)
Other Income
Interest, Net ............ (2,768) 2,880 (3,516) 6,299
------------ ------------ ------------ ------------
Income (Loss) Before Income
Taxes ...................... (531,752) (99,219) (889,793) (77,575)
Income Taxes ............... -- -- -- --
Deferred Tax (Benefit) ..... (97,244) (33,000) (154,331) (26,361)
------------ ------------ ------------ ------------
Net Income (Loss) .......... $ (434,508) $ (66,219) $ (735,462) $ (51,214)
============ ============ ============ ============
Earnings Per Common Share:
Basic & Diluted Earnings Per
Share: ..................... $ (0.06) $ (0.02) $ (0.11) $ (0.01)
Weighted Average Shares
Outstanding
Basic Shares Outstanding ... 7,705,412 3,850,000 6,829,999 3,850,000
Diluted Shares Outstanding . 11,735,412 8,910,000 10,917,717 8,910,000
</TABLE>
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 Six
Months Ended
January 31,
----------------------
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) .................................. $(735,462) $ (51,214)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Used in Operating Activities:
Depreciation and Amortization .................... 13,636 13,904
Common Stock exchanged for services .............. 774,844 --
Changes in Assets and Liabilities-
(Increase) in Accounts Receivable ................ (2,175) 276
Decrease in Prepaid Expenses .................... -- 27,047
(Increase) Decrease in Inventory ................. 17,450 (29,000)
(Increase) Decrease in Other Assets .............. (154,732) (11,075)
Increase (Decrease) in Accounts Payable ......... (17,178) (90,708)
Increase (Decrease) in Accrued Liabilities ...... 86,741 (6,054)
Increase (Decrease) in Accrued Commissions ...... (4,624) (3,526)
--------- ---------
Net Cash Provided by Operating Activities .......... (21,500) (150,350)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: .............. -- --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shareholder Loans .................... 21,500 --
--------- ---------
Net Cash Provided by Financing Activities .......... 21,500 --
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents -- (150,350)
Cash and Cash Equivalents at Beginning of Period ... -- 419,332
--------- ---------
Cash and Cash Equivalents at End of Period ......... $ -- $ 268,982
========= =========
Supplemental Disclosures of Cash Flow Information
Cash paid During the Year For:
Interest ....................................... $ 2,768 $ 34
Income Taxes ................................... $ -- $ --
6
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JANUARY 31, 1999
(Continued)
Supplemental Disclosure of Non-Cash Financing Activities:
During December 1997, the Company issued 434,000 shares to three employees. The
shares were offered at approximate market value.
During September 1998, the Company issued 9,000 shares to distributors for
promotional contest winnings.
During October 1998, the Company issued 900,000 shares in exchange for
consulting services.
During October 1998, the Company issued 200,000 shares in exchange for research
and development services.
During January 1999, the Company issued 1,000,000 shares pursuant to a top up
provision.
During January 1999, the Company issued 3,500,000 shares to a company and a
majority shareholder in exchange for personal loan guarantees.
During January 1999, the Company issued 1,100,000 shares to a director for
directorship fees.
During January 1999, the Company issued 320,000 shares in exchange for
consulting services.
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JANUARY 31, 1999
(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
three and six month periods ended January 31, 1999, are not necessarily
indicative of the results that may be expected for the year ended July 31, 1999.
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, 1998.
2. Short Term Borrowing
The company has three revolving bank lines of credit. The balance due
on these lines as of January 31, 1999 is $103,811. The credit lines accrue
interest at variable rates from10.5% to 12.275% on January 31, 1999.
8
<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, 1998.
During the six month periods ended January 31, 1999, the Company
introduced a new line of patent applied products, the "Body Lite Tiger Diet".
The Body Lite Tiger Diet is a low glycemic diet that includes two nutritional
supplements which, when combined with eating right and low impact exercises,
will help aide in weight management. The two components to the Body Lite Tiger
Diet are:
1. BODYLITE TIGER POWER (capsules and liquid), 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. Tiger Power 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 LOW GLYCEMIC SHAKE, 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 and six
months ended January 31, 1999 and 1998, certain items from the Company's
Condensed consolidated Statements of Income expressed as a percentage of net
sales.
9
<PAGE>
Three Months Ended Six Months Ended
January 31, January 31,
--------------- ---------------
1999 1998 1999 1998
----- ----- ----- -----
Sales, Net ............................. 100.0% 100.0% 100.0% 100.0%
Cost of Sales .......................... 20.2 30.2 28.7 30.2
----- ----- ----- -----
Gross Margin ........................... 79.8 69.8 71.4 69.8
Operating Expenses ..................... 226.2 85.9 203.0 75.3
----- ----- ----- -----
Operating Income (Loss) ................ (146.4) (16.1) (131.7) (5.5)
Interest Income, Net ................... (0.8) 0.4 (0.5) 0.4
----- ----- ----- -----
Income (Loss) Before Income Taxes ...... (147.1) (15.7) (132.2) (5.1)
Income Taxes
Deferred Tax (Benefit) ................. (26.9) (5.3) (22.9) (1.7)
----- ----- ----- -----
Net Income (Loss) ...................... (120.2) (10.4) (109.3) (3.4)
===== ===== ===== =====
Net Sales
Net sales for the second quarter of Fiscal 1998 were less than the
second quarter for Fiscal 1997 by $271,261 or 42.9%. Net sales for the six month
period were less than the comparable period of Fiscal 1997 by $831,893 or 55.3%.
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 second quarter of Fiscal 1998 decreased
$118,308 or 61.9% compared to the second quarter of Fiscal 1997. As a percentage
of sales, cost of sales decrease from 30.2% to 20.16%. This decrease is due to
reductions in certain fixed overhead costs allocated to cost of sales.
On a year-to-date basis, cost of sales decreased $262,157 or 57.6%.
As a percentage of sales year-to-date, cost decreased from 30.2% to 28.7%.
10
<PAGE>
Operating Expenses
Operating expenses during the second quarter of Fiscal 1998 increased
$273,933 or 50.4% compared to the second quarter of Fiscal 1997. For the six
month period, operating expenses increased $232,667 or 20.5% from $1,133,858 to
$1,366,525. As a percentage of sales, operating expenses increased from 85.9% of
sales to 226.21% of sales. For the six month period, operating expenses as a
percent of sales increased from 75.3% to 203.0.0%. This increase is due
primarily to consulting, personal loan guarantees, directorship fees, and
research and development services exchanged for stock in the amount of $494,084
and $774,844 during the three and six months respectively.
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 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 six months ended
January 31, 1999, operating activities used cash of $21,500 as compared to net
cash used of $150,350 for the six months ended January 31, 1998.
Financing activities provided $21,500 for the six months ended
January 31, 1999. The increase in cash flow from financing activities was from
shareholder loans.
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, 1999 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.
Factors That May Affect Future Results
Management's Discussion and Analysis contains 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:
Year 2000 Date Conversion
In general, the Year 2000 issue relates to computers and other
systems being unable to distinguish between the years 1900 and 2000 because they
use two digits, rather than four, to define
11
<PAGE>
the applicable year. Systems that fail to properly recognize such information
will likely generate erroneous data or cause a system to fail to properly
recognize such information will likely generate erroneous data or cause a system
to fail possibly resulting in a disruption of operations. The Company's products
do incorporate such date coding but the Company believes all of its product
systems are Year 2000 compliant. The Company has also undertaken efforts to
address the Year 2000 issue in the following three areas: (i) the Company's
information technology ("IT") systems; (ii) the Company's non-IT systems (i.e.,
machinery, equipment and devices which utilize technology which is "built in"
such as embedded microcontrollers); and (iii) third-party suppliers.
The Company is currently working to resolve the potential impact of
the Year 2000 issue on the processing of date-sensitive data by the Company's
computerized information systems. Specifically, the Company is analyzing all of
its accounting and financial software to ensure no interruption in the Company's
financial systems. The Company is analyzing all other IT and non-IT systems to
determine if any other modification or upgrades are necessary to be Year 2000
compliant. The Company believes it will be Year 2000 compliant. The amount
charged to expense during the three months ended January 31, 1999, as well as
the amounts anticipated to be charged to expense related to the Year 2000
computer modifications, have not been and are not expected to be material to the
Company's financial position, results of operations or cash flows.
The Company is also evaluating and taking steps to resolve Year 2000
compliance issues that may be created by suppliers and financial institutions
with whom the Company does business. The Company is examining third party
suppliers and may send out confirmation letters of Year 2000 compliance if the
Company determines such action is necessary. In the event the Company determines
that any third party presents a risk arising from failure to be Year 2000
compliant, then the Company will seek to replace such third party. The Company
cannot, however, guarantee that the systems of other entities will be converted
on a timely basis. Failure of such third party entities to be Year 2000
compliant may cause interruptions in the Company's operations.
The foregoing statements are based upon management's current assumptions.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
During January 1999, the Company issued 1,000,000 shares pursuant to a top
up provision.
During January 1999, the Company issued 3,500,000 shares to a company and a
majority shareholder in exchange for personal loan guarantees.
During January 1999, the Company issued 1,100,000 shares to a director for
directorship fees.
During January 1999, the Company issued 320,000 shares in exchange for
consulting services.
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 January 31, 1999.
13
<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: March 23, 1999 By: /s/
--------------------------- ----------------------------
William Clapham, President
(Principal financial and
Accounting Officer)
14
<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 JANUARY 31, 1999 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE AND SIX MONTHS
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 31
<ALLOWANCES> 0
<INVENTORY> 156
<CURRENT-ASSETS> 188
<PP&E> 147
<DEPRECIATION> 76
<TOTAL-ASSETS> 596
<CURRENT-LIABILITIES> 375
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 207
<TOTAL-LIABILITY-AND-EQUITY> 596
<SALES> 673
<TOTAL-REVENUES> 673
<CGS> 193
<TOTAL-COSTS> 193
<OTHER-EXPENSES> 1367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (890)
<INCOME-TAX> (154)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (735)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
