[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: October 31, 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: December 31, 1999 7,125,010
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 October 31, July 31,
1998 1998
--------- ---------
Current Assets:
Cash ................................... $ -- $ --
Inventory .............................. 147,720 173,130
Prepaid Expenses ....................... 3,970 800
Accounts Receivable .................... 31,485 28,872
--------- ---------
Total Current Assets ................ 183,175 202,802
--------- ---------
Fixed Assets, at Cost:
Furniture and Equipment ................ 140,135 140,135
Leasehold Improvements ................. 6,741 6,741
Less - Accumulated
Depreciation ....................... (69,261) (62,443)
--------- ---------
77,615 84,433
--------- ---------
Other assets:
Deferred Tax Benefit ................... 184,464 172,301
Intangible Assets, Net ................. -- --
Deposits ............................... 10,327 10,327
--------- ---------
Total Other Assets .................. 194,791 182,628
--------- ---------
Total Assets ........................ $ 455,581 $ 469,863
========= =========
3
<PAGE>
VOYAGER GROUP USA-BRAZIL, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY October 31, July 31,
1998 1998
----------- -----------
Current Liabilities:
Accounts Payable ....................... $ 51,677 $ 31,782
Accrued liabilities .................... 222,105 204,189
Accrued Commissions .................... 41,975 48,451
Shareholder Loans ...................... 24,000 4,500
----------- -----------
Total Current Liabilities ............ 339,757 288,922
----------- -----------
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; $.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 ................... 5,837 5,837
Additional Paid-in Capital ............. 971,902 971,902
Retained Earnings ...................... (1,017,247) (952,130)
----------- -----------
Total Stockholders' Equity ........... 115,824 180,941
----------- -----------
Total Liabilities, and
Stockholders' Equity ............... $ 455,581 $ 469,863
=========== ===========
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)
For the Three
Months Ended
October 31,
-------------------------------
1998 1997
------------ ------------
Sales, Net ......................... $ 311,669 $ 872,302
Cost of Sales ...................... 119,979 263,828
------------ ------------
Gross Margin .................. 191,690 608,474
Selling & Marketing ................ 131,904 358,847
Research & Development ............. -- 2,418
General & Administrative ........... 136,319 228,984
------------ ------------
Total Expenses ................ 268,223 590,249
------------ ------------
Operating Income (Loss) ....... (76,533) 18,225
Other Income
Interest, Net .................... (748) 3,419
------------ ------------
Income (Loss) Before Income
Taxes .............................. (77,281) 21,644
Income Taxes
Deferred Tax (Benefit) ............. (12,165) 7,000
------------ ------------
Net Income (Loss) .................. $ (65,116) $ 14,644
============ ============
Earnings Per Common Share:
Basic & Diluted Earnings Per
Share: ............................. $ (0.01) $ --
Weighted Average Shares
Outstanding
Basic Shares Outstanding ........... 5,837,010 3,850,000
Diluted Shares Outstanding ......... 10,047,010 8,910,000
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 Three
Months Ended
October 31,
----------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) .................................... $ (65,116) $ 14,644
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Depreciation and Amortization ...................... 6,818 9,072
Changes in Assets and Liabilities-
(Increase) in Accounts Receivable .................. (2,614) (194)
Decrease in Prepaid Expenses ...................... (3,169) (6,787)
(Increase) Decrease in Inventory ................... 25,409 41,600
(Increase) Decrease in Other Assets ................ (12,165) 6,925
Increase (Decrease) in Accounts Payable ........... 19,896 (70,908)
Increase (Decrease) in Accrued Liabilities ........ 17,917 (6,054)
Increase (Decrease) in Accrued Commissions ........ (6,476) (3,526)
--------- ---------
Net Cash Provided by Operating Activities ............ (19,500) (15,228)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES: ................ -- --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shareholder Loans ...................... 19,500 --
--------- ---------
Net Cash Provided by Financing Activities ............ 19,500 --
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents . -- (15,228)
Cash and Cash Equivalents at Beginning of Period ..... -- 419,332
--------- ---------
Cash and Cash Equivalents at End of Period ........... $ -- $ 404,104
========= =========
Supplemental Disclosures of Cash Flow Information
Cash paid During the Year For:
Interest ......................................... $ 748 $ 34
Income Taxes ..................................... $ -- $ --
During December 1997, the Company issued 434,000 shares to three employees. The
shares were offered at approximate market value.
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 THREE MONTHS ENDED OCTOBER 31, 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
three month period ended October 31, 1998, 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 two revolving bank lines of credit. The balance due on
these lines as of October 31, 1998 is $55,467. The credit lines accrue interest
at variable rates of 10.5% and 12.275% on October 31, 1998.
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, 1998.
During the three month period ended October 31, 1998, 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 months
ended October 31, 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
October 31,
---------------------
1998 1997
------ ------
Sales, Net ...................................... 100.0% 100.0%
Cost of Sales ................................... 38.5 30.2
------- ------
Gross Margin .................................... 61.5 69.8
Operating Expenses .............................. 86.1 67.7
------- ------
Operating Income (Loss) ......................... (24.6) 2.1
Interest Income, Net ............................ (0.2) 0.4
------- ------
Income (Loss) Before Income Taxes ............... (24.8) 2.5
Income Taxes
Deferred Tax (Benefit) .......................... (3.9) 0.8
------- ------
Net Income (Loss) ............................... (20.9) 1.7
======= ======
Net Sales
Net sales for the first quarter of Fiscal 1998 were less than the first
quarter for Fiscal 1997 by $560,633 or 64.3%. 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%, reformulation 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 first quarter of Fiscal 1998 decreased $143,849 or
54.5% compared to the first quarter of Fiscal 1997. As a percentage of sales,
cost of sales increased from 30.2% to 38.5%. This increase is due to increased
costs of materials and the ratio of lower sales over certain fixed overhead
costs allocated to cost of sales.
Operating Expenses
Operating expenses during the first quarter of Fiscal 1998 decreased
$322,026 or 54.6% compared to the first quarter of Fiscal 1997. As a percentage
of sales, operating expenses increased from 67.7% of sales to 86.1% of sales.
This increase is due to the ratio of fixed costs over decreased sales
9
<PAGE>
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 three months ended
October 31, 1998, operating activities used cash of $20,000 as compared to net
cash used of $15,000 for the three months ended October 31, 1997.
Financing activities provided $20,000 for the three months ended October
31, 1998. 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 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
10
<PAGE>
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
October 31, 1998, 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.
11
<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
October 31, 1998.
12
<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: February 12, 1999 By: /s/
------------------------------ -------------------------------
William Clapham, President
(Principal financial and
Accounting Officer)
13
<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 OCTOBER 31, 1998 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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