UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
_X_ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the Quarterly period ended September 30, 2000
___ 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 Identification No.)
incorporation or organization)
2815 Cox Neck Road, Chester, Maryland 21619
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(Address of principal executive officers)
(410) 643-5563
--------------
(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 _____
As of October 1, 2000, 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
Report of Independent Accountant
Balance Sheets as of September 30, 2000 and December 31, 1999
Statements of Operations for the three and nine months ended September
30, 2000 and 1999.
Statements of Stockholders' Equity as of September 30, 2000
Statements of Cash Flows for the nine months ended September 30, 2000
and 1999.
Notes to Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
SIGNATURES
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8K
1. EXHIBITS
27 Financial Data Schedule
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors
Synergy 2000, Inc.
I have reviewed the accompanying balance sheet of Synergy 2000, Inc. as of
September 30, 2000, and the related statements of operations, stockholders'
equity and cash flows for the nine months ended September 30, 2000 and 1999.
These financial statements are the responsibility of the Company's management.
I conducted my review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, I do not express such an opinion.
Based upon my review, I am not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ STEPHEN D. MILNER, CPA, PA
Greenville, South Carolina
November 8, 2000
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
SYNERGY 2000, INC.
BALANCE SHEETS
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Current Assets
Cash $ 353,821 $ 418,976
Accounts Receivable 522,560 272,595
Common Stock Subscriptions Receivable -- --
Prepaid Expenses -- --
Other Current Assets 20,036 13,184
------------ ------------
Total Current Assets $ 896,417 $ 704,755
Equipment, Net 17,980 13,338
Other Assets:
Intangible Assets, Net -- 816,667
Organization Costs, Net 18 50
------------ ------------
Total Other Assets 18 816,717
------------ ------------
Total Assets $ 914,415 $ 1,534,810
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts Payable $ 183,726 $ 193,679
Accrued Expenses $ 187,500 --
Deferred Income Taxes 30,103 5,747
Accrued Income Taxes -- 1,526
------------ ------------
Total Current Liabilities $ 401,329 $ 200,952
Minority Interest in Consolidated Subsidiary -- 402,340
Stockholder's Equity:
Common Stock, Par Value $.001:
Authorized 25,000,000 Shares
Issued and Outstanding 10,851,500 Shares 10,651 10,651
Common Stock Subscribed, 112,500 Shares -- 112,500
Capital in Excess of Par Value of Common Stock 479,549 969,549
Retained Earnings 22,886 (48,682)
------------ ------------
513,086 1,044,018
Less: Subscriptions Receivable -- (112,500)
------------ ------------
Total Stockholders' Equity 513,086 931,518
------------ ------------
Total Liabilities and Stockholders' Equity $ 914,415 $ 1,534,810
============ ============
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
<TABLE>
SYNERGY 2000, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2000 1999 2000 1999
---------------------------- ----------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Fees Billed $ 594,513 $ 795,488 $ 1,772,029 $ 2,175,622
Operating Expenses:
Salaries 69,470 89,617 188,629 239,408
Contract Services 365,724 553,449 1,136,075 1,442,856
Taxes and Licenses 5,384 7,245 16,681 21,616
Auto and Truck 0 3,266 0 6,270
Travel and Business 31,879 2,387 49,402 41,594
Meals and Entertainment 0 2,063 32 6,247
Advertising 2,588 2,800 4,181 28,850
Professional Fees 19,632 10,149 76,453 39,693
Rent 1,047 2,470 2,728 8,285
Telephone 3,805 6,552 9,173 18,226
Supplies 3,154 6,261 7,514 17,201
Insurance 4,605 8,065 49,634 53,622
Postage and Shipping 1,140 915 2,153 2,408
Dues and Publications 93 744 1,338 1,360
Investor Relations 0 172 975 3,522
Disposal of Subsidiary 78,977 0 78,977 0
Amortization 24,031 24,030 72,091 72,091
Depreciation 1,411 739 3,524 2,217
Bad Debts 0 0 11,815 0
Miscellaneous 274 260 2,079 534
---------------------------- ----------------------------
Total Operating Expenses 613,214 721,184 1,713,454 2,006,000
---------------------------- ----------------------------
Net Income (Loss) Before Income Taxes (18,701) 74,304 58,575 169,622
Income Tax (Expense) Benefit 2,481 (31,305) (22,830) (55,889)
---------------------------- ----------------------------
Net Income (Loss) Before Minority Interest (16,220) 42,999 35,745 113,733
Minority Interest in Net loss 11,925 12,231 35,823 36,504
---------------------------- ----------------------------
Consolidated Net Income (Loss) $ (4,295) $ 55,230 $ 71,568 $ 150,237
============================ ============================
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
<TABLE>
SYNERGY 2000, INC.
STATEMENT OF STOCKHOLDER' EQUITY (UNAUDITED)
<CAPTION>
Capital Total
Common In Excess Retained Stock-
Common Stock of Par Earnings Holders'
Stock Subscribed Value (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Balance- December 31, 1998 10,651 112,500 969,549 (215,665) $ 877,035
Net Income -- -- -- 166,983 $ 166,983
---------------------------------------------------------------------------
Balance- December 31, 1999 $ 10,651 $ 112,500 $ 969,549 ($48,682) $ 1,044,018
Shares Redeemed -- -- (490,000) -- (490,000)
Subscriptions Expired -- (112,500) -- -- (112,500)
Net Income -- -- -- 71,568 71,568
---------------------------------------------------------------------------
Balance - September 30, 2000 $ 10,651 $ 0 $ 479,549 $ 22,886 $ 513,086
===========================================================================
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
<TABLE>
SYNERGY 2000, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended
------------------------
Sept 30, Sept 30,
2000 1999
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 35,745 $ 113,733
Adjustments to Reconcile Net Income (Loss) to Net Cash
Cash Provided by (Used) in Operating Activities:
Depreciation 3,524 2,217
Amortization 72,091 72,091
Dec. (Inc.) in Accounts receivable (249,965) (261,922)
Inc. (Dec.) in Other Current Assets (7,089) 11,261
Inc. (Dec.) in Prepaid Expenses -- (30,909)
Inc. (Dec.) in Accounts Payable (9,953) 137,098
Inc. (Dec.) in Accrued Expenses 78,977 --
Inc. (Dec.) in Payroll Taxes -- --
Inc. (Dec.) in Deferred Income Taxes 24,356 55,889
Inc. (Dec.) in Accrued Income Taxes (1,526) 131
---------- ----------
Net Cash Provided by (Used) in Operating Activities (53,840) $ 99,589
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Equipment (11,315) (6,907)
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Net Cash Used in Investing Activities (11,315) (6,907)
---------- ----------
NET INCREASE (DECREASE) IN CASH (65,155) $ 92,682
CASH - BEGINNING 418,976 90,212
---------- ----------
CASH - ENDING $ 353,821 $ 182,894
========== ==========
</TABLE>
See accompanying Notes to Financial Statements
<PAGE>
SYNERGY 2000, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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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 financials 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 six month period ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. These interim consolidated financial statements should be read in
conjunction with the financials statements and notes for the year ended December
31, 1999.
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 to compete
in the 21st Century. The Company offers a variety of products and services for
solving clients' problems related to their rapidly changing technology needs and
the management thereof.
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. 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.
The operations of Argos 2000 Inc. did not commence in earnest during this period
of time. Therefore, on September 30, 2000, the Company agreed to exchange its
interest in Argos 2000 Inc. to redeem 200,000 shares of its $.001 par value
common stock. The Company remains contingently liable for a contract dispute
involving Argos 2000, Inc. Accordingly, it has provided an accrual of $187,500
at September 30, 2000 which, in the opinion of management, is sufficient to
cover any liability on the Company's part. Operating activity, for the nine
months ended September 30, 2000 and 1999, of Argos 2000, Inc. is included in the
accompanying unaudited statement of operations and is not considered
significant.
Since the Company's clients include all industries, its ability to collect
amounts due from them as a result of extending credit, is not affect by economic
fluctuations in any particular industry.
REVENUE RECOGNITION - Revenue from contracts 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 totaled $3,524 for the nine months ended September
30, 2000 and $2,217 for the nine months ended September 30, 1999.
<PAGE>
SYNERGY 2000, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
(Continued)
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 period September 30, 2000 and 1999.
Accumulated amortization was $197 at September 30, 2000.
DEFERRED INCOME TAXES - For income tax reporting, the Company uses accounting
methods that recognize depreciation sooner than for financial statement
reporting and does not recognized 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 amounts and disclosures. Accordingly, actual
results could differ from those estimates.
NOTE 2 - EQUIPMENT
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Equipment consists of the following:
Computer Equipment $23,826
Accumulated Depreciation (5,846)
---------
$17,980
=========
NOTE 3 - INCOME TAXES
---------------------
The income tax provision consists of the following
2000 1999
-------------------------
Current $ (1,526) $ --
Deferred 24,358 55,889
---------- ----------
$ 22,830 $ 55,889
========== ==========
The income tax provision differs from the expense that would result from
applying statutory rates to income before income taxes as follows:
Income Tax Expense Computed at the
Statutory Federal Income Tax Rate $ 19,916 $ 57,671
Increase (Decrease) in Income Taxes
Resulting From:
Subsidiary Losses Not Recognized 12,180 --
Surtax Exemption ` (11,467) (7,607)
State Income Tax-Net of Federal
Tax Benefit 2,186 4,763
Other 5 1,062
-------------------------
$ 22,830 $ 55,889
========== ==========
<PAGE>
SYNERGY 2000, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
(Continued)
The components of deferred income tax expense result from the following
temporary differences between earnings reported for financial reporting and
income tax purposes:
2000 1999
-------------------------
Method of Revenue and Expense
Recognition $ 22,550 $ 59,040
Additional Depreciation for Income
Tax Purposes: 6,553 5,130
-------------------------
$ 30,103 $ 64,170
========== ==========
NOTE 4 - STOCKHOLDERS' EQUITY
-----------------------------
Common Stock Subscribes - 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 expired without being exercise at September 30,
2000.
NET INCOME PER SHARE - Net income per common share has not been computed since
it is not significant.
<PAGE>
SYNERGY 2000, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS
INTRODUCTION
The Company's revenues are derived from the performance of management,
consulting and information systems integration projects. The Company's future
revenues are dependent upon obtaining additional contracts and the development
of new product lines and utilizing internet opportunities. The Company's results
may vary from quarter to quarter based upon the number of contacts performed and
the stage of completion during those quarters.
STATEMENT OF OPERATIONS SEPTEMBER 30, 2000 TO SEPTEMBER 30, 1999 (UNAUDITED)
The Company's revenues or fees billed were approximately $594,500 for the
quarter ended September 30, 2000 compared to approximately $795,488 for the
comparable period in 1999. The decrease was due primarily to a reduction in the
number of and size of the consulting arrangements entered into by the Company.
In 1999, the Company also experienced a significant increase in revenue in the
third and fourth quarters due to Year 2000 work for clients. The Company is also
spending a significant amount of time and resources devoted to the development
of its new business plan which includes web enabled information systems and
targeted acquisitions in the insurance industry.
The Company's operating expenses during the quarter ended September 30, 2000
were approximately $613,214 compared to $721,184 during the comparable period in
1999. The decreased expenses were primarily attributable to the decreased
volume. The management of the Company is continuing to make a concerted effort
to decrease direct operating expenses. The Company had a net loss of
approximately $4,300 for the quarter ended September 30, 2000 as compared to a
net profit of $55,230 for the comparable period in 1999. The decrease in net
income is primarily the result of a decrease in the volume of contract work
actually performed and the loss resulting from the disposal of a subsidiary,
Argos 2000, Inc., in the amount of $78,977 occurring in the quarter ended
September 30, 2000.
The Company's revenues or fees billed was approximately $1,772,000 for the nine
months ended September 30, 2000 compared to approximately $2,175,600 for the
comparable period in 1999. The decrease was due primarily to a decrease in the
number of and size of the consulting arrangements entered into by the Company.
The Company's operating expenses during the nine month period ended September
30, 2000 were approximately $1,731,500 compared to $2,006,000 during the
comparable period in 1999. The decreased expenses were primarily attributable to
the decreased volume of work. The Company had net income of approximately
$71,600 for the nine month period ended September 30, 2000 as compared to
$150,200 for the comparable period in 1999. The decrease in net income is
primarily attributable to the decreased volume of work actually performed and
the loss resulting from the disposal of a subsidiary in the amount of $78,977
occurring in the quarter ended September 30, 2000.
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 negative change in the availability of programmers
could result in increased fees paid for outside technical help.
<PAGE>
SYNERGY 2000, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS (CONTINUED)
The Company continues its efforts to diversify its consulting and product
development activities as well as the development of its e-commerce and internet
enabled insurance processing systems. The Company believes these steps are
necessary to accomplish its goal of providing new products for the 21st Century.
LIQUIDITY
The Company's working capital was approximately $495,100 as of September 30,
2000 as compared to approximately $503,800 at December 31, 1999. The decrease
was primarily attributable to decrease in profitability over the last twelve
months.
The Company derives its cash from operations. The Company has no commitments for
capital expenditures and believes its available cash is adequate to cover its
financial commitments for the next twelve (12) months. The Company, however,
will require additional funds for the further development, promotion and
marketing of its internet and web enabled programs. There is no assurance the
Company will be able to obtain these funds.
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunder duly authorized.
(Registrant) Synergy 2000, Inc.
Date: November 20, 2000
By: /S/ Eli Dabich, Jr.
----------------------------
Eli Dabich, Jr. as President
