UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
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(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- ---------- OF 1934
For the transition period from ____________ to ___________
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Commission File Number: 0-26947
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Whispering Oaks International, Inc.
(Exact name of small business issuer as specified in its charter)
Texas 75-2742601
- ----------------------------- -----------------------------
(State of incorporation) (IRS Employer ID Number)
16910 Dallas Parkway, Suite 100, Dallas, TX 75248
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(Address of principal executive offices)
(972) 248-1922
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(Issuer's telephone number)
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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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: May 4, 2000: 2,525,000
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
<PAGE>
Whispering Oaks International, Inc.
Form 10-QSB for the Quarter ended March 31, 2000
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 10
Part II - Other Information
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Defaults Upon Senior Securities 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
Item 1 - Part 1 - Financial Statements
Accountant's Review Report
--------------------------
Board of Directors and Stockholders
Whispering Oaks International, Inc.
We have reviewed the accompanying balance sheets of Whispering Oaks
International, Inc. (a Texas corporation) as of March 31, 2000 and 1999 and the
accompanying statement of operations and comprehensive income and statement of
cash flows for the three months ended March 31, 2000 and 1999. These financial
statements are prepared in accordance with the instructions for Form 10-QSB, as
issued by the U. S. Securities and Exchange Commission, and are the sole
responsibility of the company's management.
We conducted our 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 on an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has no significant assets and is dependent
upon significant shareholders to provide sufficient working capital to maintain
the integrity of the corporate entity. These circumstances create substantial
doubt about the Company's ability to continue as a going concern and are
discussed in Note A. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
May 4, 2000
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
3
<PAGE>
<TABLE>
<CAPTION>
Whispering Oaks International, Inc.
Balance Sheets
March 31, 2000 and 1999
(Unaudited)
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
------
Current assets
Cash on hand and in bank $ 9,284 $ --
--------- ---------
Livestock -- 32,000
Accumulated depreciation -- (12,892)
--------- ---------
Net livestock -- 19,108
--------- ---------
Total Assets $ 9,284 $ 19,108
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Cash overdraft $ -- $ 916
Accounts payable - trade 61 14,031
Advances from affiliates 58,925 56,105
--------- ---------
Total liabilities 58,986 71,052
--------- ---------
Commitments and contingencies
Stockholders' equity
Common stock - $0.001 par value
125,000,000 shares authorized
2,525,000 issued and outstanding, respectively 2,525 2,525
Additional paid-in capital 27,475 27,475
Contributed capital 21,250 16,250
Accumulated deficit (100,952) (98,194)
--------- ---------
Total stockholders' equity (49,702) (51,944)
--------- ---------
Total Liabilities and Stockholders' Equity $ 9,284 $ 19,108
========= =========
</TABLE>
See Accountant's Review Report
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Whispering Oaks International, Inc.
Statements of Operations and Comprehensive Income
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
2000 1999
----------- -----------
Revenues
Sales of livestock $ -- $ --
Cost of Sales
Net capitalized cost of livestock -- --
----------- -----------
Gross Profit -- --
----------- -----------
Operating expenses
Livestock expenses (174) 3,382
Executive compensation contributed
by a controlling shareholder 1,250 1,250
General and administrative expenses 8,987 --
Depreciation -- 2,667
----------- -----------
Total operating expenses 10,063 7,299
----------- -----------
Income (Loss) from operations (10,063) (7,299)
Other income (expense) -- --
----------- -----------
Income (Loss) before income taxes (10,063) (7,299)
Provision for income taxes -- --
----------- -----------
Net Income (Loss) (10,063) (7,299)
Other comprehensive income -- --
----------- -----------
Comprehensive Income (Loss) $ (10,063) $ (7,299)
=========== ===========
Income (Loss) per weighted-average share
of common stock outstanding, computed
on net loss - basic and fully diluted nil nil
=========== ===========
Weighted-average number of
common shares outstanding 2,525,000 2,525,000
=========== ===========
See Accountant's Review Report
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Whispering Oaks International, Inc.
Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) for the year $(10,063) $ (7,299)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation -- 2,667
Executive compensation contributed
by a controlling shareholder 1,250 1,250
Increase (Decrease) in accounts payable 61 1,800
-------- --------
Net cash used in operating activities (8,752) (1,582)
-------- --------
Cash flows from investing activities -- --
-------- --------
Cash flows from financing activities
Increase (decrease) in cash overdraft -- 916
Advances from affiliates -- (14,600)
-------- --------
Net cash used in financing activities -- (13,684)
-------- --------
Increase (Decrease) in Cash (8,752) (15,266)
Cash at beginning of year 18,036 15,266
-------- --------
Cash at end of year $ 9,284 $ --
======== ========
Supplemental disclosure of interest and income taxes paid
Interest paid for the period $ -- $ --
======== ========
Income taxes paid for the period $ -- $ --
======== ========
</TABLE>
See Accountant's Review Report
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Whispering Oaks International, Inc.
Notes to Financial Statements
Note A - Organization and Description of Business
Whispering Oaks International, Inc. (Company) was incorporated on December 8,
1997 under the laws of the State of Texas. The Company was formed to engage in
the acquisition and sale of thoroughbred race horses of every age, from
broodmares and weanlings to mature racehorses and stallions. The Company
intends, initially, to focus in the area of purchasing and selling weanlings and
yearlings at various auctions in an activity commonly referred to as
"pinhooking".
Pinhooking is essentially the purchase of thoroughbred weanlings and yearlings
at auction and reselling them at a different, but similar, auction in the near
future. The Company projects an average historical holding period of five to six
months between purchase and resale.
The Company began operations in January 1998 with its initial capitalization and
its initial livestock purchase.
On October 15, 1999, the Company's Board of Directors amended the Company's
Articles of Incorporation to modify the Company's capital structure to allow for
the issuance of up to 125,000,000 total equity shares consisting solely of
common stock with a par value of $0.001 per share and effected a five (5) for
one (1) forward stock split. The effects of these transactions are reflected in
the accompanying financial statements as of the first day of the first period
presented.
The Company has elected a year-end of December 31 and uses the accrual method of
accounting.
As of December 31, 1999, the Company has liquidated its livestock stable and has
no significant assets and owes related entities amounts in excess of available
cash. Accordingly, the Company is dependent upon management and/or significant
shareholders to provide sufficient working capital to preserve the integrity of
the corporate entity at this time. It is the intent of management and
significant shareholders to provide the sufficient working capital necessary to
support and preserve the integrity of the corporate entity for the foreseeable
future.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form SB-2 filed with the U. S. Securities and Exchange Commission on
February 14, 2000. The information presented herein may not include all
disclosures required by generally accepted accounting principles and the users
of financial information provided for interim periods should refer to the annual
financial information and footnotes contained in its Annual Report Pursuant to
Section 13 or 15(d) of The Securities Exchange Act of 1934 on Form 10-SB when
reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 2000.
7
<PAGE>
Whispering Oaks International, Inc.
Notes to Financial Statements - Continued
Note A - Organization and Description of Business - Continued
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.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Livestock
---------
Livestock is recorded at cost and are depreciated on a straight-line basis,
over their estimated useful lives (generally 3 years). Foals delivered
after the broodmare is purchased are capitalized by the Company at a "zero
cost" basis. As of December 31, 1999, the Company had liquidated its entire
stable of livestock.
3. Organization costs
------------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
4. Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At March 31, 2000 and 1999, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
At December 31, 1999, the Company has a net operating loss carryforward for
income purposes of approximately $70,000, after a Fiscal 1999 utilization
of approximately $5,000. If this carryforward is not fully utilized, it
will expire in 2018. As of March 31, 2000 and 1999, the deferred tax asset
related to the Company's net operating loss carryforward is fully reserved.
8
<PAGE>
Whispering Oaks International, Inc.
Notes to Financial Statements - Continued
Note B - Summary of Significant Accounting Policies - Continued
5. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of March 31, 2000 and 1999, the Company
had no warrants and/or options outstanding.
Note C - Common Stock Transactions
On October 15, 1999, the Company's Board of Directors amended the Company's
Articles of Incorporation to modify the Company's capital structure to allow for
the issuance of up to 125,000,000 total equity shares consisting solely of
common stock with a par value of $0.001 per share and effected a five (5) for
one (1) forward stock split. The effects of these transactions are reflected in
the accompanying financial statements as of the first day of the first period
presented.
Note D - Contributed Capital
Executive management and oversight services are provided to the Company by a
controlling shareholder. The accompanying financial statements reflect
management's estimate of the estimated fair value of the services contributed on
a quarterly basis to the Company during each fiscal year based on the time and
effort required to administer the Company's operations and affairs.
(Remainder of this page left blank intentionally.)
9
<PAGE>
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) Results of Operations
The Company began operations on January 19, 1998 with the purchase of eight (8)
broodmares for approximately $225,000. As of March 31, 1999, the Company had
only one broodmare and one foal in its stable, which were sold in subsequent
quarters of 1999. The Company accounts for all purchased livestock at its
original cost and assigns no basis to foals delivered during the Company's
ownership. Subsequent to the 1999 sale of the Company's stable of horses, the
Company did not acquire any other horses.
During the three months ended March 31, 2000 and 1999, respectively, the Company
incurred direct expenses related to livestock of approximately $(174) and
$3,382. The credit for the first quarter of 2000 results from a final adjustment
and refund of insurance premiums on the Company's former livestock stable.
General and administrative expenses for the first quarter of 2000 were for audit
and legal expenses directly related to the Company's reporting requirements
under The Securities Exchange Act of 1934 and a Registration Statement on Form
SB-2 which is still under review by the U. S. Securities and Exchange Commission
as of the date of this filing. Management anticipates that this Registration
Statement will be declared effective during the month of May 2000.
The Company does not pay any compensation to its management for their services
to Whispering Oaks. If Whispering Oaks had the resources to pay and did pay even
nominal compensation to its management, Whispering Oaks would have recognized
greater losses in first quarter of 2000 and 1999, respectively. However, the
accompanying financial statements reflect management's estimate of the estimated
fair value of the services contributed on a quarterly basis to the Company
during each fiscal year based on the time and effort required to administer the
Company's operations and affairs.
The Company experienced net loss of approximately $(10,000) and $(7,300) for the
three months ended March 31, 2000 and 1999, respectively.
(3) Liquidity and Capital Resources
The Company maintained liquidity during the three months ended March 31, 2000
and 1999 through the use of available cash resources on hand, principally
developed through the sale of common stock, subject to an exemption from
registration under Regulation D, Rule 504 of the US Securities and Exchange
Commission, the sale of common stock to the Company's founders, the proceeds
from sales of livestock and non-interest bearing advances from entities related
to the Company through common ownership and/or control during prior periods.
Where necessary in future periods, it is the intent of the controlling
shareholders of the Company to fund the necessary expenses to sustain the
corporate entity and/or future purchases of livestock.
10
<PAGE>
The Company has identified no significant capital requirements for the current
annual period. Liquidity requirements mandated by future business expansions or
acquisitions, if any are specifically identified or undertaken, are not readily
determinable at this time as no substantive plans have been formulated by
management. Additionally, management is of the opinion that there is additional
potential opportunity for the sale of additional common stock through either
private placements or secondary offerings.
(4) Year 2000 Considerations
The Year 2000 (Y2K) date change was believed to affect virtually all computers
and organizations. The Company undertook a comprehensive review of its
information systems, including personal computers, software and peripheral
devices, and its general communications systems. The Company has no direct
electronic links with any customer or supplier. The Company has not experienced
any detrimental effects related to any Y2K issues or date changes through the
date of this filing. However, there can be no assurance that all of the
Company's systems, and the systems of its suppliers, shippers, customers or
other external business partners will continue to function appropriately.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
11
<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.
WHISPERING OAKS INTERNATIONAL, INC.
May 4 , 2000 /s/ Kevin B. Halter
------- -----------------------------------
Kevin B. Halter
President and Director
12
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<NAME> Whispering Oaks International, Inc.
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<PERIOD-START> JAN-01-2000
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