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 June 30, 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
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(State of incorporation) (IRS Employer ID Number)
2591 Dallas Parkway, Suite 102, Frisco, TX 75034-8543
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(Address of principal executive offices)
(469) 633-0100
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(Issuer's telephone number)
16910 Dallas Parkway, Suite 100, Dallas, TX 75248
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(Former name, former address and former fiscal year, if changed from last
report)
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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
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 8, 2000: 2,525,000
Transitional Small Business Disclosure Format (check one): YES NO X
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<PAGE>
Whispering Oaks International, Inc.
Form 10-QSB for the Quarter ended June 30, 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 11
Item 2 Changes in Securities 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
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 June 30, 2000 and 1999 and the
accompanying statements of operations and comprehensive income for the six and
three months ended June 30, 2000 and 1999 and the statements of cash flows for
the six months ended June 30, 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
August 8, 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
June 30, 2000 and 1999
(Unaudited)
June 30, June 30,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
------
Current Assets
Cash on hand and in bank $ 4,988 $ 8,903
--------- ---------
Total current assets 4,988 8,903
--------- ---------
Livestock - At Cost -- 32,000
Less accumulated depreciation -- (15,558)
--------- ---------
Net Livestock -- 16,442
--------- ---------
Total Assets $ 4,988 $ 25,345
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable - trade $ -- $ --
Due to affiliates 58,925 58,605
--------- ---------
Total current liabilities 58,925 58,605
--------- ---------
Commitments and Contingencies
Shareholders' Equity
Common stock - $0.001 par value
125,000,000 shares authorized
2,525,000 shares issued and outstanding 2,525 2,525
Additional paid-in capital 27,475 27,475
Contributed capital 22,500 17,500
Accumulated deficit (106,437) (80,760)
--------- ---------
Total shareholders' equity (53,937) (33,260)
--------- ---------
Total Liabilities and Shareholders' Equity $ 4,988 $ 25,345
========= =========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. See Accountant's
Review Report. The accompanying notes are an integral part of these financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
Whispering Oaks International, Inc.
Statements of Operations and Comprehensive Income
Six and Three months ended June 30, 2000 and 1999
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Sales of livestock $ -- $ 26,125 $ -- $ 26,125
----------- ----------- ----------- -----------
Cost of Sales
Net capitalized cost of livestock -- -- -- --
----------- ----------- ----------- -----------
Gross profit -- 26,125 -- 26,125
----------- ----------- ----------- -----------
Expenses
Livestock expenses (174) 8,157 -- 4,775
Executive compensation contributed
by a controlling shareholder 2,500 2,500 1,250 1,250
General and administrative 13,222 -- 4,235 --
Depreciation -- 5,333 -- 2,666
----------- ----------- ----------- -----------
Total expenses 15,548 15,990 5,485 8,691
----------- ----------- ----------- -----------
Income (Loss) from
operations before
provision for
income taxes (15,548) 10,135 (5,485) 17,434
Provision for income taxes -- -- -- --
----------- ----------- ----------- -----------
Net Income (Loss) (15,548) 10,135 (5,485) 17,434
Other Comprehensive Income -- -- -- --
----------- ----------- ----------- -----------
Comprehensive Income (Loss) $ (15,548) $ 10,135 $ (5,485) $ 17,434
=========== =========== =========== ===========
Income (Loss) per weighted-
average share of common
stock outstanding, computed
on net loss - basic and fully diluted $(0.01) nil nil $0.01
===== ==== ==== ====
Weighted-average number of shares
of common stock outstanding -
basic and fully diluted 2,525,000 2,525,000 2,525,000 2,525,000
=========== =========== =========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. 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
Six months ended June 30, 2000 and 1999
(Unaudited)
Six months Six months
ended ended
June 30, June 30,
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (Loss) $(15,548) $ 10,135
Adjustments to reconcile net income to net cash
provided by operating activities
Gain on sale of livestock -- (26,125)
Depreciation -- 5,333
Executive compensation contributed
by a controlling shareholder 2,500 2,500
Increase (Decrease) in
Accounts payable -- (12,231)
-------- --------
Net cash provided by (used in) operating activities (13,048) (20,368)
-------- --------
Cash Flows from Investing Activities -- --
-------- --------
Cash Flows from Financing Activities
Net change in advances from affiliates -- (12,100)
-------- --------
Net cash provided by financing activities -- (12,100)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents (13,048) (6,363)
Cash and cash equivalents at beginning of period 18,036 15,266
-------- --------
Cash and cash equivalents at end of period $ 4,988 $ 8,903
======== ========
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ -- $ --
======== ========
Income taxes paid (refunded) $ -- $ --
======== ========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. 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 1 - Basis of Presentation
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 June 30, 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 June 30, 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 June 30, 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 six months ended June 30, 2000 and 1999, respectively, the Company
incurred direct expenses related to livestock of approximately $(174) and
$8,157. 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.
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 income (loss) of approximately $(15,500) and $10,000
for the six months ended June 30, 2000 and 1999, respectively. The net income
during the first six months of 1999 was a result of the Company's sale of its
last owned horse.
(3) Liquidity and Capital Resources
The Company maintained liquidity during the three months ended June 30, 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
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.
August 8 , 2000 /s/ Kevin B. Halter
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Kevin B. Halter
President and Director
11
