<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FORM 10-QSB
FOR THE QUARTER ENDED MAY 31, 2000
COMMISSION FILE NUMBER 333-88139
Sea Shell Galleries, Inc.
(Exact name of Registrant as specified in its charter)
Nevada 91-1985634
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2635 Meta Dr., San Jose, Ca 95130
Registrant's Address
(408) 379-1351
Registrant's Telephone Number, including area code
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 twelve months, and (2) has
been subject to such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report: 16,215,000 shares.
<PAGE>3
Sea Shell Galleries, Inc.
(A Development Stage Company)
Balance Sheet
May 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets: 2000
------
Cash $ 2,591
Inventory -
--------
Total current assets 2,591
--------
$ 2,591
STOCKHOLDERS' EQUITY
Current liabilities:
Total current liabilities $ -
Stockholders' equity:
Preferred stock, $.001 par value,
1,000,000 shares authorized, no shares
issued and outstanding -
Common stock, $.001 par value,
49,000,000 shares authorized, 16,215,000
shares issued and outstanding 16,215
Additional paid in capital 134,335
(Deficit) accumulated during
development stage (147,959)
---------
2,591
---------
$ 2,591
</TABLE>
See accompanying notes to financial statements.
<PAGE>4
Sea Shell Galleries, Inc.
(A Development Stage Company)
Statement of Operations
For the Three Months and Nine Months Ended May 31, 2000 and
the Period From Inception (March 22, 1999) to May 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Period From
Ended Ended Inception To
May 31, May 31, May 31,
2000 2000 2000
---- ------ ------
<S> <C> <C> <C>
Sales $ - $ 500 $ 500
Cost of sales - 150 150
---------- ----------- ----------
Gross profit - 350 350
Operating expenses:
Compensation of officers and directors - - 14,900
Management fees 3,000 9,000 111,500
Professional fees - 1,250 17,950
Stockholder expenses - 3,871 3,871
Other expenses - 37 88
-------- ----------- ----------
3,000 14,158 148,309
(Loss) from operations and net (loss) $ (3,000) $(13,808) $ (147,959)
Per share information:
Basic and diluted (loss) per common share $ (0.00) $ (0.00) $ (0.01)
Weighted average shares outstanding 16,215,000 16,215,000 15,962,619
</TABLE>
See accompanying notes to financial statements.
<PAGE>5
Sea Shell Galleries, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Nine Months Ended May 31, 2000 and
the Period From Inception (March 22, 1999) to May 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Period From
Ended Inception To
May 31, May 31,
2000 2000
------ ------
<S> <C> <C>
Net income (loss) $ (13,808) $ (147,959)
Adjustments to reconcile net income to net
cash provided by operating activities:
Management fees contributed by officers 9,000 9,000
Services provided for common stock - 102,400
Changes in assets and liabilities:
(Increase) decrease in:
Inventory 150 150
----------- ------------
Total adjustments 9,150 111,550
----------- ------------
Net cash provided by (used in)
operating activities (4,658) (36,409)
Cash flows from financing activities:
Common stock sold for cash, net of offering costs - 39,000
----------- ------------
Net cash provided by (used in)
financing activities - 39,000
----------- ------------
Increase (decrease) in cash (4,658) 2,591
Cash and cash equivalents,
beginning of period 7,249 -
----------- ------------
Cash and cash equivalents,
end of period $ 2,591 $ 2,591
</TABLE>
See accompanying notes to financial statements.
<PAGE>6
Sea Shell Galleries, Inc.
Notes to Financial Statements
Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions incorporated in
Regulation 10-SB of the Securities and Exchange Commission.
Accordingly, they do not include all of 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 adjustments and accruals) considered
necessary for a fair presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's financial statements for the period
ended August 31, 1999.
Basic loss per share was computed using the weighted average number of
common shares outstanding.
During the nine months ended May 31, 2000, the certain of the
Company's officers provided office and administrative services
including the provision of office facilities without charge to the
Company. The fair value of the services provided amounted to $1,000
per month. Since the officers do not expect to be reimbursed by the
Company and the Company is not obligated to make such reimbursement
for the provided services, an amount of $9,000 has been charged to
expense with a corresponding credit to additional paid in capital in
the accompanying financial statements for the nine months ended May
31, 2000.
The Company was formed on March 22, 1999 and had no activity during
the period ended May 31, 1999.
<PAGE>7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
May 31, 2000
Trends and Uncertainties. Demand for Sea Shell's products will be
dependent on, among other things, market acceptance of Sea Shell's
concept, its proposed operations and general economic conditions which
are cyclical in nature. Inasmuch as a major portion of Sea Shell's
activities is the receipt of revenues from its consignment sales, Sea
Shell's business operations may be adversely affected by Sea Shell's
competitors and prolonged recessionary periods.
Capital Resources and Liquidity. Sea Shell requires substantial
capital in order to commence its current and strategic business plans.
Initial working capital has been obtained by private sale of common
stock ($39,000). As of May 31, 2000, Sea Shell had cash remaining of
$2,591. We have financed a major part of our operating expenses by
issuing common shares for services. Due to lack of current operating
expenses, available cash can satisfy current expenses for only three
to nine months while we continue to pursue sufficient financing. We
require an additional $200,000 in order to commence operations. We
will seek additional debt and equity financing to commence limited
operations until the warrants are exercised, if ever. Revenues, if
any, received from consignment sales will be utilized to continue
limited operations. Sea Shell hopes to generate sufficient capital
to begin operations by August 2000 and expects to generate sufficient
revenue to finance limited operations by January 2001
If we fail to raise the additional financing necessary, we shall
discontinue our business plan and consider alternative strategies. We
do not currently have any specific alternative strategies and if none
are developed, we may not be able to continue operations and you may
lose the entire investment.
On a long term basis, liquidity is dependent on commencement of
operation and receipt of revenues, additional infusions of capital and
debt financing. Sea Shell believes that additional capital and debt
financing in the short term will allow Sea Shell to increase its
marketing and sales efforts and thereafter result in increased revenue
and greater liquidity in the long term. However, there can be no
assurance that Sea Shell will be able to obtain additional equity or
debt financing in the future, if at all.
Results of Operations. Since inception, Sea Shell has not received
any material revenues from operations. Sea Shell had operating
expenses of $148,309 for the period from inception to May 31, 2000.
These expenses consisted of compensation of officers and directors of
$14,900, management fees of $111,500, professional fees for legal and
accounting services of $17,950, stockholder expenses of $3,871 and
other expenses of $88.
For the nine months ended May 31, 2000, Sea Shell had operating
expenses of $3,000, which consisted of management fees of $3,000.
The management fees were paid in cash ($15,000) and the balance
consisting of 437,500 units at $.20 per unit to unaffiliated
consultants who assisted us with corporate structuring and developing
our strategy.
<PAGE>8
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SEA SHELL GALLERIES, INC.
By: /s/John Wong
------------------------
John Wong, President
Date: August 7, 2000
