FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2000
Commission File Number: 0-29183
RICHMOND SERVICES, INC.
Nevada 76-0430898
(Incorporation) (IRS Number)
34700 Pacific Coast Highway, Suite 300, Capistrano Beach, CA 92624
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 248-893
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 5,047,991
Yes[x] No[] (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.)
As of March 31, 2000, the number of shares outstanding of the Registrant's
Common Stock was 5,047,991.
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PART I: FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS.
Attached hereto and incorporated herein by this reference are unaudited
financial statements (under cover of Exhibit 00QF-1) for the three months ended
March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. On February 29, 2000, we
approved a Plan of Reorganization by which we would acquire as a wholly owned
subsidiary, eKnowledge Group, Inc., a private Nevada state corporation engaged
in providing supplemental, distance learning over the internet. This transaction
is scheduled to be consummated on April 17, 2000. The name of the corporation
will be changed to eKnowledge.com, Inc. in completion and closing of this
acquisition. The preliminary terms of the acquisition would provide for the
acquisition of 100% of the total issued and outstanding stock of eKnowledge
Group, Inc. in exchange for a 77.5% of the total issued and outstanding of the
issuer. These acquisition shares would be newly issued investment shares, and
would be issued pursuant to Rule 145, and would, if and when issued, be
restricted securities as if so defined by Rule 144(a). Additionally, we would
provide $500,000 in equity financing to the combined entities, once the
acquisition is consummated. The equity contribution is expected to be raised
through the private placement of existing shares from the majority shareholder.
It is important to understand clearly, that any and all funding arrangements
would be made on the basis of the acquisition, and not in reliance on our
present pre-acquisition condition. This acquisition is subject to approval by
our shareholders at a meeting being called. If that acquisition is not made, we
will continue the search for a reverse-merger candidate for the next twelve
months. In this Item we will discuss our present condition first, and the
possible acquisition second.
CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We have
no immediate or foreseeable need for additional funding, from sources outside of
its circle of shareholders, if at all, during the next twelve months, to
continue our search for an acquisition, should the present proposed acquisition
fail. We have had no revenues and incurred $64,333 in General Administrative
expenses for 1999, consisting almost entirely of legal and professional fees,
accounting and auditing expenses. We would estimate that as much as $20,000 may
be advanced by our shareholders, if needed for corporate maintenance, legal and
accounting, if our present acquisition fails. No agreement by shareholders to
make such advances is in place, and no guarantee can presently be given that
additional funds, if needed, will be available. It is by far more likely that
advances will take the form of providing services on a deferred compensation
basis. Should further auditing be required, such services by the Independent
Auditor may not be the subject of deferred compensation. The expenses of
independent Audit cannot be deferred or compensated in stock or notes, or
otherwise than direct payment of invoices in cash.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We have had no material operation to date and have recorded no revenues. In 1999
we incurred General Expenses of $64,433, almost entirely in Legal and
Professional fees. We had an abortive acquisition in 1999. Management believes
that the expenses for legal, professional and accounting fees in that year were
extraordinary, and do not reflect the cost of maintaining our company in a
search for an acquisition target. Accordingly our quarter to quarter comparison
of 2000 to 1999 first quarters is not considered indicative of future results.
We incurred expenses and operating loss of a modest $7,843 this first quarter,
compared to $21,478 in 1999. The difference is due to the lack of the same
extraordinary expenses which we faced last year.
Revenues. We has had no revenues for the previous two years ended December
31, 1999, and the three months ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES. We have virtually no cash on hand. This is
not a significant change from the previous year. Our advances from affiliates
has increased from $6,960, in 1998, to $34,078 in 1999. These advances have
increased to $41,921, in this first quarter. The increase in our Deficit
Accumulated During the Development Stage is accountable to these advances, and
our General Administrative Expenses previously discussed. This is consistent
with our previous statement that we do not need additional cash, outside of our
circle of affiliates, to remain in operation as a company with no operations
seeking a profitable acquisition; however, should our currently proposed
acquisition proceed to consummation, numerous other considerations would be
applicable. We would expect to provide $500,000 in equity financing to the
combined entities, once the acquisition is consummated. The equity contribution
is expected to be raised through the private placement of existing shares from
the majority shareholder as a part of that acquisition. It is important to
understand clearly, that any and all funding arrangements would be made on the
basis of the acquisition, and not in reliance on our present pre-acquisition
condition. This acquisition is subject to approval by our shareholders at a
meeting being called.
LONG-TERM DEBT. On December 31, 1999, the Company had no long-term debt.
FUTURE PROSPECTS. The Board of Directors is recommending that the
shareholders approve the acquisition of eKnowledge Group, Inc., as a wholly
owned subsidiary of us, by which the shareholder of that target would become
shareholders of our Company. The terms and conditions of this proposed
acquisition are that Richmond Services, Inc. would issue 15,155,556 shares (post
reverse split) of the common stock of the Company. These shares will not have
been registered under the Securities Act of 1933, and may not be resold unless
the shares are registered under the Act or an exemption from such registration
is available. They would be Restricted Securities subject to the holding periods
of Rule 144. These shares shall be issued to the shareholders of eKnowledge
Group, Inc. As a part of the proposed reorganization and acquisition, the
representatives of eKnowledge Group, Inc. with our cooperation will attempt to
consummate a private placement offering on behalf of to-be-reorganized Company,
up to 500,000 new investment shares of our common stock on a post-reverse stock
split basis, by which approximately $500,000 in funding would be obtained. Final
consummation of this acquisition is not contingent upon the completion of such
offering, but up to 500,000 shares of eKnowledge Group on a post-reverse stock
split basis may be issued simultaneously with or subsequent to the closing of
this acquisition.
The current Internet media convergence creates a compelling opportunity to
dramatically alter and enhance the way in which supplemental, for-profit
education is taught and delivered. The eKnowledge Group management team has
successfully exploited this opportunity, capturing 4% market share, with the
introduction of its initial supplemental learning course, Home LSAT, a test
preparatory course for takers of the Law School Admission Test (LSAT) delivered
via the Internet and in video/audio format. eKnowledge will further develop its
unique value proposition by providing students of all levels with on-demand
access to courses delivered via streaming video over the Internet and including
downloadable written materials. Spending in this market is near $80 billion
annually with substantial room for growth and markets tapped will be in both the
business-to-business and business-to-consumer space. Management will leverage
its successful test preparation experience, marketing savvy, and technological
know-how to create the dominant brand name in lifelong online supplemental
education.
IF THE ACQUISITION FAILS, we would be unable to predict when we might
participate in a business opportunity. The reason for this uncertainty arises
from our limited resources, and competitive disadvantages with respect to other
public or semi-public Registrants. Notwithstanding the foregoing cautionary
statements, assuming the continuation of current conditions, we would expect to
proceed to select a business combination within no sooner than six months nor
expect to close an acquisition in a shorter period than within the next twelve
months. The acquisition of such an opportunity could and likely would result in
some change in control of our corporation at such time. This would likely take
the form of a reverse acquisition. That means that this Issuer would likely
acquire businesses and assets for stock in an amount that would effectively
transfer control of our corporation to the acquisition target Issuer or
ownership group. It is called a reverse-acquisition because it would be an
acquisition by this Issuer in form, but would be an acquisition of this Issuer
in substance. Capital formation issues for the future would arise only when
targeted business or assets have been identified. Until such time, we would have
no basis upon which to propose any substantial infusion of capital from sources
outside of its circle of affiliates. Targeted acquisitions for stock may be
accompanied by capital formation programs, involving knowledgeable investors
associated with or contacted by the owners of a target Issuer. If the currently
proposed acquisition fails, it would be expected that a reverse acquisition of a
target Issuer or business would be associated with some private placements
and/or limited offerings of common stock for cash. Such placements, or
offerings, if and when made or extended, would be made with disclosure of and
reliance on the businesses and assets to be acquired, and not upon our present
or future condition without revenues or substantial assets.
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PART II: OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None this quarter. Shareholder meeting called for April 17, 2000 as previously
disclosed.
ITEM 5. OTHER INFORMATION
None
ITEM 6. REPORTS ON FORM 8-K
None
EXHIBITS
Attached hereto and incorporated herein by this reference are unaudited
financial statements (under cover of Exhibit 00QF-1) for the three months ended
March 31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Q Report for the Quarter ended March 31, 2000, has been signed below by
the following person on behalf of the Registrant and in the capacity and on the
date indicated.
Dated: March 31, 2000
RICHMOND SERVICES, INC.
/s/
Mark Zouvas
Sole Officer and Director
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EXHIBIT EXHIBIT 00QF-1
UN-AUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
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RICHMOND SERVICES, INC.
BALANCE SHEETS (UNAUDITED)
For the fiscal year ended December 31, 1999
And for the periods ended March 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
March 31, December 31,
----------
2000 1999 1999
---------- -------- -------------
ASSETS
CURRENT ASSETS
Cash 269 84 269
Total Current Assets 269 84 269
TOTAL ASSETS 269 84 269
========== ======== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Loan and notes payable 41,921 6,960 34,078
---------- -------- -------------
Total Liabilities 41,921 6,960 34,078
STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value; authorized 50,000,000
shares; issued and outstanding, 3,447,900 shares,
3,647,900 shares and 5,047,825 shares respectively 505 365 505
Additional Paid-In Capital 61,703 9,343 61,703
Stock subscription receivable (100) (100) (100)
Accumulated Surplus (Deficit) (103,760) (16,484) (95,917)
---------- -------- -------------
Total Stockholders' Equity (41,652) (6,876) (33,809)
---------- -------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 269 84 269
========== ======== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RICHMOND SERVICES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For the fiscal year ended December 31, 1999
And for the periods ended March 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
March 31, December 31,
-----------
2000 1999 1999
----------- ----------- --------------
Revenues $ 0 $ 0 $ 0
----------- ----------- --------------
Expenses
General and Administrative 7,843 21,478 64,433
Bad debt -0- (15,000)
Total Expenses 7,843 21,478 79,433
----------- ----------- --------------
Net Income (Loss) ($7,843) ($21,478) ($79,433)
=========== =========== ==============
Income (Loss) per Share $ (0.00155) $(0.00613) $ (0.01650)
=========== =========== ==============
Weighted average shares outstanding 5,047,991 3,502,845 4,814,643
=========== =========== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RICHMOND SERVICES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)
For the period from inception of the Development Stage on June 14, 1993,
For the fiscal year ended December 31, 1999
And for the periods ended March 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Additional Accumulated Stock Total Stock-
Common Par Paid-In Equity Subscription holders' Equity
Stock Value Capital (Deficit) Receivable (Deficit)
---------- ------ ----------- ------------- -------------- -----------------
Inception (June 14, 1993) 0 $ 0 $ 0 $ 0 $ 0 $ 0
Inception through December
31, 1993: Stock issued for
organization costs 3,333,333 333 4,667 0 0 0
Stock issued for subscription
Receivable, June 15, 1993 66,667 7 93 0 0 0
Stock Subscription Receivable 0 0 0 0 (100) 0
Net (Loss) for the period 0 0 0 (500) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Year ended December 31, 1993 3,400,000 340 4,760 (500) (100) 4,500
Net (Loss) for the period 0 0 0 (1,000) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Year ended December 31, 1994 3,400,000 340 4,760 (1,500) (100) 3,500
Net (Loss) for the period 0 0 0 (1,000) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Year ended December 31, 1995 3,400,000 340 4,760 (2,500) (100) 2,500
Net (Loss) for the period 0 0 0 (1,000) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Year ended December 31, 1996 3,400,000 340 4,760 (3,500) (100) 1,500
Common shares sold for cash 47,900 5 1,603 0 0 0
Net (Loss) for the period 0 0 0 (8,984) 0 0
Year ended December 31, 1997 3,447,900 345 6,363 (12,484) (100) (5,876)
Common shares sold for cash 200,000 20 2,980 0 0 0
Net (Loss) for the period 0 0 0 (4,000) 0 0
Year ended December 31, 1998 3,647,900 365 9,343 (16,484) (100) (6,876)
Common shares sold for cash 1,400,000 140 52,360 0 0 0
Common shares issued in
rounding down 91 0 0 0 0 0
Net (Loss) for the period 0 0 0 (79,433) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Year ended December 31, 1999 5,047,991 505 61,703 (95,917) (100) (33,809)
Net (Loss) for the period 0 0 0 (7,843) 0 0
---------- ------ ----------- ------------- -------------- -----------------
Balances at March 31, 2000 $5,047,991 $ 505 $ 61,703 ($103,760) ($100) ($33,809)
========== ====== =========== ============= ============== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RICHMOND SERVICES, INC.
STATEMENTS OF CASH FLOW (UNAUDITED)
For the fiscal year ended December 31, 1999
And for the periods ended March 31, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
March 31, December 31,
-----------
2000 1999 1999
----------- --------- --------------
Beginning Cash $ 84 $ 584 $ 84
Operating Activities
Net Income (Loss) (7,843) (21,478) (79,433)
----------- --------- --------------
Total working capital (used) (7,843) (21,478) (79,433)
Cash received from financing activities:
sale of Common Stock; 52,500
Borrowings 7,843 27,118 27,118
Increase (Decrease) in
working capital 0 185
----------- --------------
Ending Cash $ 84 $ 5,640 $ 269
=========== ========= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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RICHMOND SERVICES, INC.
(a Development Stage Company)
Notes to the Financial Statements
December 31, 1999,
and the periods edned March 31, 1999 and 2000
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The Company was incorporated in the State of Delaware on June 14, 1993. The
Company was organized for the purpose of initiating commuter air services from
Sugar Land Airport in Richmond, Texas, however it neve realized its original
goal and has remained in the development stage since its formation on June 14,
1993.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a calendar year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Loss Per Share
The computations of loss per share of common stock are based on weighted
average number of outstanding shares during the period of the financial
statements.
e. Provision for Income Taxes
At March 31, 2000, the Company has net operating loss carryforwards
totaling approximately $103,760 that may be offset against future taxable income
through 2013. No tax benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater chance the net operating
loss carryforwards will expire unused. Accordingly, the potential tax benefits
of the loss carryforwards are offset by a valuation allowance of the same
amount. The valuation allowance increased in the amount of $7,843 for the period
ended March 31, 2000.
f. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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RICHMOND SERVICES, INC.
(a Development Stage Company)
Notes to the Financial Statements
December 31, 1999,
and the periods edned March 31, 1999 and 2000
page two
NOTE 2 - Going Concern
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has current liabilities in excess of current
assets and has experienced losses from inception. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties. It is management's plan to find an operating company to merge
with providing necessary operating capital.
NOTE 3 - Shareholders Equity
The Company is authorized to issue 50,000,000 shares of Common Stock with a
par value of $0.0001 each. In 1993 the Company issued 3,400,000 shares of its
common stock in exchange for organizational costs which management valued at
$5,100. In 1997 the Company issued 47,900 shares of its common stock in exchange
for $1,608 in cash. In September 1998 the Company issued 200,000 shares of its
common stock in exchange for services and $3,000 in cash. In February 1999 the
Company issued 1,400,000 shares of its common stock in exchange for $52,500 in
cash. In June of 1999, the Company authorized a two for three reverse split of
its common stock. For purposes of clarity, all share amounts and par values have
been stated as if the new capitalization had been in effect since inception.
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