<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No.1
__X__ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1998
_____ Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ______.
Commission File Number 000-24789
SYNERGY 2000, INC.
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(Exact name of small business issuer as specified in its Charter)
Delaware 64-0872630
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2815 Cox Neck Road, Chester, Maryland, 21619
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(Address of principal executive offices)
(410) 643-5563
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(Telephone)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for 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
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As of December 1, 1998, Registrant had outstanding 10,651,500 shares of Common
Stock, $.001 par value.
<PAGE>
SYNERGY 2000, INC.
Table of Contents
PART I FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997
Consolidated Statements of Operations for the Three and
Nine months ended September 30, 1998 and 1997
Consolidated Statements of Retained Earnings as of December 31, 1997 and
September 30, 1998.
Consolidated Statements of Cash Flows for the Nine months ended
September 30, 1998 and 1997.
Consolidated Notes to Financial Statements
ITEM 2. Management 's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II OTHER INFORMATION
EXHIBIT 27 - Financial Data Schedule
SIGNATURES
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<PAGE>
SYNERGY 2000, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 141,232 $137,612
Accounts Receivable 272,841 64,024
Common Stock Subscriptions Receivable -- --
---------- --------
Total Current Assets $ 414,073 $201,636
Equipment, Net 4,532 3,635
Other Assets:
Intangible Assets, Net 936,765 --
Organization Costs, Net 104 136
---------- --------
Total Other Assets 936,869 136
---------- --------
Total Assets $1,355,474 $205,407
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 44,645 $ 5,273
Accrued Payroll Taxes 9,020 $ 10,395
Accrued Income Taxes 51,237 --
---------- --------
Total Current Liabilities 104,902 $ 15,668
Deferred Income Taxes -- --
Minority Interest in Consolidated Subsidiary 463,728 --
Stockholder's Equity:
Common Stock, Par Value $.001:
Authorized 25,000,000 Shares
Issued and Outstanding 10,651,500 Shares 10,637 10,637
Common Stock Subscribed, 112,500 Shares 112,500 112,500
Capital in Excess of Par Value of Common Stock 934,563 444,563
Retained (Deficit) (158,356) (265,461)
---------- --------
899,344 302,239
Less Subscriptions Receivable (112,500) (112,500)
---------- --------
Total Stockholders' Equity 786,844 189,739
---------- --------
Total Liabilities and Stockholders' Equity $1,355,474 $205,407
========== ========
</TABLE>
See accompanying Consolidated Notes to Financial Statements
<PAGE>
SYNERGY 2000, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
30-Sep 30-Sep
-------------------- -----------------------
1998 1997 1998 1997
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Fees Billed $ 458,912 $230,795 $1,458,581 $ 377,789
Operating Expenses:
Salaries 60,760 47,700 182,280 376,200
Contract Services 406,044 16,987 853,972 33,122
Taxes and Licenses 3,886 2,309 14,476 10,571
Auto and Truck 19 2,260 1,414 5,766
Travel and Business 15,934 48,836 42,718 71,809
Meals and Entertainment 178 3,860 1,455 4,801
Advertising 4,578 7,189 62,838 14,340
Professional Fees 28,392 -- 42,640 13,635
Rent 2,863 -- 8,777 2,250
Telephone 9,793 1,434 20,368 6,280
Supplies 2,583 3,189 11,874 6,328
Insurance 7,121 5,272 27,239 7,845
Postage and Shipping 1,876 271 3,678 1,033
Dues and Publications 38 666 690 1,545
Investor Relations 201 -- 4,617 --
Miscellaneous 27,395 5,203 28,259 5,405
--------- -------- ---------- ---------
Total Operating Expenses 571,661 145,176 1,307,295 560,930
--------- -------- ---------- ---------
Net Income (Loss) Before Income Taxes ($112,749) $ 85,619 $ 151,286 ($183,141)
Income Tax (Expense) Benefit 43,934 -- (50,230) (5,228)
--------- -------- ---------- ---------
Net Income (Loss) Before Minority Interest ($ 68,815) 85,619 100,049 (183,141)
Minority Interest in Net Loss $7,717 -- 7,056 --
--------- -------- ---------- ---------
Consolidated Net Income (Loss) ($ 61,098) $ 85,619 $ 107,105 $(183,141)
========= ======== ========== =========
</TABLE>
See accompanying Consolidated Notes to Financial Statements
<PAGE>
SYNERGY 2000, INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
Capital Total
Common In Excess Retained Stock-
Common Stock of Par Earnings Holders'
Stock Subscribed Value (Deficity) Equity
------- ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1997 10,637 112,500 444,563 (265,461) 302,239
Sales of Subsidiary Common Stock -- -- 490,000 -- 490,000
Net Income -- -- -- 107,105 107,105
------- -------- -------- --------- --------
Balance - September 30, 1998 $10,637 $112,500 $934,563 $(158,356) $899,344
======= ======== ======== ========= ========
</TABLE>
See accompanying Consolidated Notes to Financial Statements
<PAGE>
SYNERGY 2000, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
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September 30, September 30,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $100,049 $ (183,141)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Cash Provided by (Used) in Operating Activities:
Depreciation 668 --
Amortization 24,052 32
Dec (Inc) in Accounts receivable (208,817) (37,465)
Inc. (Dec.) in Accounts Payable 39,372 14,950
Inc. (Dec.) in Payroll Taxes (1,375) 15,551
Inc. (Dec.) in Deferred Income Taxes (1,007) --
Inc. (Dec.) in Accrued Income Taxes 51,237 5,228
-------- ---------
Net Cash Provided by (Used) in Operating Activities $ 5,186 $(190,073)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Equipment (1,566) --
-------- ---------
Net Cash Used in Investing Activities (1,566) --
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Stock -- 346,700
Redemption of Stock -- (74,500)
Net Cash Provided by Financing Activities -- 272,200
NET INCREASE (DECREASE) IN CASH $ 3,620 $ 82,127
CASH - BEGINNING 137,612 12,000
-------- ---------
CASH - ENDING $141,232 $ 94,127
======== =========
</TABLE>
See accompanying Consolidated Notes to Financial Statements
<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
September 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements of Synergy 2000,
Inc. and subsidiary (the Company) have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the regulations of the Securities and Exchange Commission. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998. These interim consolidated financial statements should be read in
conjunction with the financial statements and notes for the year ended December
31, 1997 contained herein.
Organization and Business - The Company is an information systems integrator and
management consulting firm providing value added technology and management
solutions for companies to prepare them tactically and strategically for the
Year 2000 and beyond. The Company offers a suite of products and services for
solving systems' problems related to the Year 2000 and the inability to process
computer application code with date-related fields.
On June 25, 1998, the Company and Argos Technologies, Inc. (an unrelated
company) agreed to form Argos 2000, Inc. for the purpose of marketing Year 2000
compatible policy administration software to the auto insurance industry. The
Company received 51% of the newly issued common stock of Argos 2000, Inc. in
exchange for 200,000 shares of its $.001 par value common stock. This common
stock is not reflected as issued and outstanding in the accompanying unaudited
consolidated financial statements since it is eliminated in consolidation. Argos
Technologies, Inc. received 49% of the newly issued common stock of Argos 2000,
Inc., plus certain contingent commissions based on sales, in exchange for an
exclusive, non-transferable, license, throughout the world, to market certain
proprietary software products. This transaction was valued at $960,785 which was
the estimated fair value of the common stock issued by Argos 2000, Inc. as of
June 25, 1998.
The results of operations presented in the accompanying unaudited consolidated
financial statements include Argos 2000, Inc. from its formation on June 25,
1998 through September 30, 1998, and are insignificant.
Since the Company's clients include all industries, its ability to collect
amounts due from them as a result of extending them credit, is not affected by
economic fluctuations in any particular industry.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its 51% owned subsidiary, Argos 2000, Inc. All
significant intercompany transactions and balances have been eliminated.
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<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
(Continued)
September 30, 1998
Revenue Recognition - Revenue from contract consulting services are recognized
on the percentage-to-completion method. Revenue from sales of software and
software documentation products is generally recognized upon product shipment
provided that no significant vendor obligations remain and collection of the
resulting receivable is deemed probable.
Depreciation - The Company's equipment is depreciated using the straight-line
method. Depreciation expense totalled $668 for the nine months ended September
30, 1998.
Intangible Asset - In June 1998, Argos 2000, Inc. acquired an exclusive,
non-transferable, license, throughout the world, to market a fully automated,
year 2000 compatible, policy administration system designed for the auto
insurance industry. This intangible asset is amortized using the straight-line
method over 10 years. Amortization expense totalled $24,020 for the nine months
ended September 30, 1998.
Organization Costs - Organization costs ($215) are being amortized using the
straight-line method over 60 months. Amortization expense charged to operations
amounted to $32 for the nine months ended September 30, 1998. Accumulated
amortization was $111 at September 30, 1998.
Deferred Income Taxes - For income tax reporting, the Company uses accounting
methods that recognizes depreciation sooner than for financial statement
reporting and does not recognize income and certain expenses until received or
paid. As a result, the basis of equipment, accounts receivable, and certain
accrued expenses for financial reporting exceeds its tax basis. Deferred income
taxes have been recorded for the excess, which will be taxable in future periods
through reduced depreciation deductions, and increased income for tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
NOTE 2 - EQUIPMENT
Equipment consists of the following:
Computer Equipment $ 5,604
Accumulated Depreciation
(1,072)
--------
$ 4,532
========
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<PAGE>
SYNERGY 2000, INC. AND SUBSIDIARY
Consolidated Notes to Financial Statements (Unaudited)
(Continued)
September 30, 1998
NOTE 3 - INCOME TAXES
The income tax provision consists of the following:
Current $ 51,237
Deferred --
--------
$ 51,237
========
The income tax provision differs from the expense that would result from
applying statutory rates to income before income taxes because of nondeductible
meals and entertainment or $727.
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock Subscribed - On December 31, 1996, 250,000 shares of the Company's
$.001 par value common stock was subscribed to for a total price of $250,000.
For the year ended December 31, 1997, $137,500 of the subscriptions were
received. The remaining $112,500 was outstanding at September 30, 1998.
Net Income Per Share - Net income per common share has not been computed since
it is not significant.
NOTE 5 - RELATED PARTY TRANSACTIONS
For the nine months ended September 30, 1998, the Company paid Argos 2000, Inc.
$72,044 for services provided to the Company.
<PAGE>
SYNERGY 2000, INC.
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(Continued)
September 30, 1998
Net Income Per Share - Net income per common share has not been computed since
it is not significant.
Note 5 - RELATED PARTY TRANSACTIONS.
For the nine months ended September 30, 1998, the Company paid Argos 2000, Inc.,
$72,044 for services provided to the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion
Introduction
The Company's sales are comprised primarily of providing consulting and
management services relating to information systems. It is also a reseller of
software in most instances arising from its consulting services. In addition, a
substantial portion of its sales have been provided from clients and customers
seeking solution to problems relating to the year 2000 (Y2K).
It is anticipated that certain repeat customers will be using the Company for
expanded new program development in both the Y2K area as well as new program
development. The Company is also entering into new areas of consulting and
maintenance whereby the Company's personnel will be developing entirely new
programs for existing and new customers, implementing those programs and
maintaining that system.
The Company's consulting and management arrangements generally last several
months and generally are not with the same client. The Company's future revenues
are always dependent upon obtaining additional contracts.
Statement of Operations September 30, 1998 to September 30, 1997 (unaudited)
The Company's revenues or fees billed was approximately $458,912 and $1,458,581
for the three and nine month periods ended September 30, 1998 compared to
approximately $230,795 and $377,789 for the comparable periods in 1997. These
increases were due primarily to an increase in the number of consulting
arrangements entered into by the Company as well as increased revenues derived
from the sales of software.
The Company's operating expenses during the three and nine month periods ended
September 30, 1998 were approximately $571,661 and $1,307,295 compared to
$145,176 and $560,930 during the comparable periods in 1997. The increased
expenses were primarily attributed to the increased volume. The Company had net
income of $107,105 for the nine month period ended September 30, 1998 and a loss
of approximately $183,141 in the comparable period in 1997. The increase
in net income is primarily the result of increased volume. In addition, the
Company had an extraordinary expense of $207,900 charged to salaries resulting
from the value of restricted common shares transferred to certain officers of
the Company. The Company incurred a loss of $61,098 during the quarter ended
September 30, 1998 as compared to a profit of $60,763 in the comparable period
in 1997. The loss resulted from the accrual of operating expenses for projects
producing fees in subsequent periods. The Company does not believe the first
nine months of 1997 is a representative period as the Company was just beginning
to derive revenues from income producing activities prior to such period. A
substantial portion of its operations were devoted to start-up activities until
1998.
The Company is not aware of any trend that will adversely affect its revenues in
1998. The Company relies on programmers and consultants to perform its contracts
and from time to time there have been shortages of such programmers. The Company
has not in the past nor does it anticipate any difficulty in the immediate
future in obtaining programmers. Any change could result in increased fees paid
for outside technical help.
The Company's revenues beyond 1998 are dependent upon its ability to diversify
beyond offering Year 2000 services, which it is currently doing.
<PAGE>
Intangible Assets
In June 1998, Argos 2000, Inc, acquired an exclusive, non-transferable, license,
throughout the world, to market a fully automated year 2000 compatible, policy
administration system designed for the automobile industry. This intangible
asset is amortized using the straight-line method over 10 years. Amortization
expense totaled $24,000 for the nine months ended September 30, 1998.
Liquidity and Capital Resources
The Company's working capital was approximately $309,171 as of September 30,
1998 compared to approximately $185,968 at December 31, 1997. The increase was
primarily attributable to the increase in accounts receivable resulting from
increased revenues.
The Company has derived its cash from operations and the sale of shares. The
Company has no commitments for capital expenditures and believes its available
cash is adequate for its present operations for the next twelve months.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
(Registrant) Synergy 2000, Inc.
Date 29-June-2000
By /s/ Eli Dabich, Jr.
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Eli Dabich, Jr. as President
PART II. OTHER INFORMATION
EXHIBIT 27 - Financial Data Schedule
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