UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED October 31, 2000
OR
[ ] 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: 000-31349
THE VOYAGER GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0649562
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6354 CORTE DEL ABETO, SUITE F CARLSBAD, CALIFORNIA 92009
(Address of principal executive offices, Zip Code)
(760) 603-0999
(Issuer's telephone number, including area code)
(Former name)
As of December 20, 2000, there were 985,641 (1 vote per share) Common, 3,883
(100 votes per share) Convertible Preferred Series F, and 204 (220,000 votes per
share) Convertible Preferred Series J, for a total 46,253,941 shares of the
Registrant's voting stock, par value $0.001, issued and outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE VOYAGER GROUP, INC.
BALANCE SHEETS
(Unaudited)
October 31, July 31,
2000 2000
--------- ---------
ASSETS
Current Assets:
Cash ...................................... $ 196,923 $ --
Inventory ................................. 157,340 146,304
Prepaid Expenses .......................... 19,785 4,960
Accounts Receivable ....................... 8,338 7,295
--------- ---------
Total Current Assets .................... 382,386 158,559
--------- ---------
Fixed Assets, at Cost:
Furniture and Equipment ................... 167,436 136,527
Leasehold Improvements .................... 6,741 6,741
Less - Accumulated
Depreciation ............................ (54,098) (44,063)
--------- ---------
120,079 99,205
--------- ---------
Other Assets:
Deposits .................................. 7,152 6,752
--------- ---------
Total Other Assets ...................... 7,152 6,752
--------- ---------
Total Assets ............................ $ 509,617 $ 264,516
========= =========
<PAGE>
THE VOYAGER GROUP, INC.
BALANCE SHEETS
(Continued)
(Unaudited)
October 31, July 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 2000
----------- -----------
Current Liabilities:
Accounts Payable ........................... $ 47,324 $ 42,107
Accrued Liabilities ........................ 49,802 20,609
Accrued Commissions ........................ 16,254 12,837
Shareholder Advances ....................... 26,578 8,726
Bank Indebtedness .......................... 98,523 99,233
Lease Obligations - Current Portion ........ 27,640 26,974
Shareholder Loans .......................... 450,336 416,983
----------- -----------
Total Current Liabilities ............... 716,457 627,469
----------- -----------
Long Term Liabilities:
Lease Obligations .......................... 28,394 35,560
----------- -----------
Total Liabilities ....................... 744,851 663,029
----------- -----------
Stockholders' Equity
Preferred Stock, $.001 par value;
5,000,000 shares authorized
Series J; 100 shares issued and
outstanding .......................... -- --
Series F; 3,883 and 0 shares
issued and outstanding ............... 4 --
Common Stock; $.001 par value;
100,000,000 shares authorized;
985,641 issued and outstanding ........... 986 986
Additional Paid-in Capital ................. 3,016,735 2,725,514
Retained Earnings (Deficit) ................ (3,252,959) (3,125,013)
----------- -----------
Total Stockholders' Equity .............. (235,234) (398,513)
----------- -----------
Total Liabilities, and
Stockholders' Equity ................... $ 509,617 $ 264,516
=========== ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE VOYAGER GROUP, INC.
STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
October 31,
-------------------------
2000 1999
--------- ----------
Sales, Net ..................................... $ 144,143 $ 206,913
Cost of Sales .................................. 40,015 105,325
--------- ----------
Gross Margin .............................. 104,128 101,588
Selling & Marketing ............................ 57,239 116,560
General & Administrative ....................... 160,994 222,249
--------- ----------
Total Expenses ............................ 218,233 338,809
Operating Loss ................................. (114,105) (237,221)
Other Income (Expense)
Interest ...................................... (13,641) (3,491)
--------- ----------
Income (Loss) Before Income Taxes .............. (127,746) (240,712)
Income Tax Benefit (Expense) ................... (200) (200)
--------- ----------
Net Income (Loss) .............................. $(127,946) $ (240,912)
========= ==========
Earnings (Loss) Per Common Share:
Basic & Diluted ............................... $ (0.13) $(2,409.12)
========= ==========
Weighted Average Shares Outstanding:
Basic ......................................... 985,641 100
========= ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE VOYAGER GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
October 31,
------------------------
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ............................... $(127,946) $(240,912)
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Used in Operating Activities:
Depreciation and Amortization .................. 10,035 6,807
Non-Cash Expenses .............................. -- 191,937
Changes in Assets and
Liabilities-
Increase in Accounts Receivable .............. (1,043) (1,218)
Increase in Prepaid Expenses ................. (14,825) (82,020)
Increase in Inventory ........................ (11,036) 31,219
(Increase) Decrease in Other Assets .......... (400) (9,925)
Increase in Accounts Payable ................. 5,217 (18,023)
Increase in Other Accrued Liabilities ........ 47,045 (4,956)
Increase in Accrued Commissions .............. 3,417 22,702
--------- ---------
Net Cash Provided by Operating
Activities ................................... (89,536) (104,389)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase Furniture and Equipment ................ (30,909) (538)
--------- ---------
<PAGE>
THE VOYAGER GROUP, INC.
STATEMENTS OF CASH FLOWS
(Continued)
(Unaudited)
For the Three Months Ended
October 31,
-----------------------
2000 1999
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments on Capital Leases .............. $ (6,500) $ --
Principal Payments on Bank Indebtedness ........... (710) --
Proceeds from Issuance of Preferred Stock ......... 291,225 --
Proceeds from Shareholder Loans ................... 33,353 100,000
--------- ---------
Net Cash Provided by
Financing Activities ............................ 317,368 100,000
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS .......... 196,923 $ (4,927)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ................................. -- 16,539
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR .......... $ 196,923 $ 11,612
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash Paid During the Year For:
Interest ......................................... $ 13,642 $ 3,491
Income Taxes ..................................... $ -- $ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE VOYAGER GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2000
Basis of Presentation
The unaudited interim consolidated financial information of The Voyager
Group, Inc. (the "Company" ) has been prepared in accordance with Regulations
promulgated by the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the accompanying interim consolidated financial information contains all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the Company's financial position as of October 31, 2000, and results of
operations for the three months ended October 31, 2000. These financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended July 31, 2000. The results of operations for the three
months ended October 31, 2000 may not be indicative of the results that may be
expected for the fiscal year ending July 31, 2001.
Series F Convertible Preferred Stock
During the quarter the Company authorized an offering under Rule 506 of
Series F Convertible Preferred Stock ("Series F"). Series F shares Convertible
into 100 common shares for each share of Series F. As of December 20, 2000,
3,883 of Series F have been sold.
Stock Split
On October 16, 2000 the Board of Directors authorized 10 to 1 reverse stock
split for the Company's common stock. All references in the accompanying
financial statements to the number of common shares and per-share amounts have
been restated to reflect the reverse stock split.
Voting Trust
On November 6, 2000, three officers and three shareholders contributed
117.316 (220,000 votes per share or 25,809,520 votes) into The Voting Trust
Company, Inc. (a newly formed Delaware corporation). As of December 20, 2000,
The Voting Trust Company, Inc. controls 56% of the outstanding voting shares.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this report.
Overview
Voyager develops and manufactures high-quality nutritional, anti-ageing,
pain relief and weight management products. The Company distributes its products
through a network marketing system.
The Company's four primary product lines consist of nutritional,
anti-ageing, pain relief and weight management products. Nutritional products
accounted for approximately 80% of the Company's net sales in 2000.
Cost of sales primarily consists of expenses related to raw materials,
labor, and quality assurance and overhead directly associated with the
procurement and production of Voyager's products and sales materials.
Selling and marketing include associate incentives, promotion and
advertising expenses. Associate incentives and promotion are the Company's most
significant expenses and represented 86 % of net sales in 2000. Associate
incentives include commissions and leadership bonuses, and are paid weekly based
on sales volume points. Each product sold by the Company is assigned a sales
volume point value independent of the product's price. Associates earn
commissions based on sales volume points generated in their down line.
General and administrative expenses include wages and benefits,
depreciation and amortization, rents and utilities, and professional fees along
with other administrative expenses. Wages and benefits represent the largest
component of general and administrative expenses. The Company has added human
resources and associated infrastructure for future expansion of operations.
Depreciation and amortization expense has increased as a result of
substantial investments in computer and systems communications equipment and
systems to support domestic expansion. The Company anticipates that additional
capital investments will be required in future periods to promote and support
growth in sales and the increasing size of the associate and Preferred Customer
base.
Results of Operations
The following table summarizes operating results as a percentage of net
sales, respectively for the periods indicated:
<PAGE>
(Unaudited)
For the Three Months Ended
October 31,
------------------------
2000 1999
--- ---
Sales, Net ..................................... 100% 100%
Cost of Sales .................................. 28% 51%
Gross Margin ................................... 72% 49%
Operating Expenses ............................. 151% 164%
Operating Loss ................................. 79% 115%
Net Sales.
Net sales for the three months ended October 31, 2000 were less than 1999
by approximately $63,000 or 30%. During 2001 management will implement a plan of
restructuring the independent associates compensation plan and revise certain
products. Management plans further formulation of novel, proprietary, products,
and reformulation of certain existing products. Management has added an
executive team with over 60 years combined experience in the direct marketing
industry replacing vacancies created by resignations of former executive
officers. Management believes the implementation of these plans will promote
sales growth in the years to come. The introduction of new products during the
year 2001, in the opinion of management, will promote long-term growth, with a
high associate enrollment.
Cost of Sales
Cost of sales for 2000 decreased approximately $65,000 or 62% compared to
1999. As a percentage of sales, cost of sales decreased from 51% to 28%. The
decrease in cost of sales as a percentage of net sales is attributable to the
repricing of products as part of managements overall restructuring and
implementation of its independent associates compensation plan, repricing of
products, and total reorganization of executive management team.
Operating Expenses
Operating expenses during 2000 decreased approximately $121,000 or 36%
compared to 1999 from $339,000 to $218,000. Newly elected executives have
completely overhauled the Company's human resources, technological
communications, product order processing of customers, and increase in volume
based efficiencies in production and procurement activities.
Liquidity and Capital Resources
The President, C.E.O. and shareholders have committed to funding required
working capital necessary for the Company. Funding during the three months ended
October 31, 2000 was for infrastructure such as communication and computer
systems. There are no formal contractual commitments between the Company and
these parties for capital, lines of credit or similar short-term borrowings.
<PAGE>
It is anticipated that the year 2001 should expand current sales and
increase associates membership through the introduction of new products and
associate services which should exceed the Company's working capital
requirements for the next fiscal year.
The Company generates and uses cash flows through three activities:
operating, investing, and financing. During 2000, operating activities used cash
of $90,000 as compared to net cash used of $104,000 for 1999.
Cash flows used in investing activities is primarily due to the acquisition
of $31,000 of computer equipment and office furniture for 2000 compared to $500
for 1999.
Financing activities provided $317,000 for 2000 compared to $100,000 for
1999. The increase in cash flow from financing activities was primarily from the
sale of Series F Convertible Preferred Shares and shareholder loans from an
officer and a shareholder of the Company in the form of promissory notes.
Management believes that its current cash balances, the available line of
credit and cash provided by operations will be sufficient to cover its needs in
the ordinary course of business for the next 12 months. If the Company
experiences unusual capital requirements to complete the new infra structure and
communication systems, additional financing may be required. However, no
assurance can be given that additional financing, if required, would be
available on favorable terms. The Company may attempt to raise additional
financing through the sale of its equity securities in the form of preferred
stock or loans to finance future growth of the Company. Any financing, which
involves the sale of equity securities and loans in the form of short-term
instruments convertible into such securities, could result in immediate dilution
to existing shareholders.
Inflation
The Company does not believe that inflation has had or will have a material
effect on its historical operations or profitability.
Regulation
The Company is not of aware of any recently enacted, presently pending or
proposed state or federal legislation, which would have a material adverse
effect on its results of operations.
Outlook -Forward Looking Statements
According to the Nutrition Business Journal, the nutritional industry in
the United States will grow at an annual rate of approximately 10% over the next
three years. This does represent a slower rate of industry growth than in prior
years. Management believes the Company's products offer opportunities for rapid
expansion.
The statements contained in this Report on Form 10-QSB that are not purely
historical are considered to be "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act. These statements represent the Company's expectations,
hopes, beliefs, anticipations, commitments, intentions and
<PAGE>
strategies regarding the future. They may be identified by the use of words or
phrases such as "believes," "expects," "anticipates," "should," "plans,"
"estimates," and "potential," among others. Forward-looking statements include,
but are not limited to, statements contained in Management's Discussion and
Analysis of Financial Condition and Results of Operations regarding the
Company's financial performance, revenue and expense levels in the future and
the sufficiency of its existing assets to fund future operations and capital
spending needs. Readers are cautioned that actual results could differ
materially from the anticipated results or other expectations expressed in such
forward- looking statements for the reasons detailed in the Company's Annual
Report on Form 10-K under the headings "Description of Business" and "Risk
Factors. " The fact that some of the risk factors may be the same or similar to
the Company's past reports filed with the Securities and Exchange Commission
means only that the risks are present in multiple periods. The Company believes
that many of the risks detailed here and in the Company's SEC filings are part
of doing business in the industry in which the Company operates and competes and
will likely be present in all periods reported. The fact that certain risks are
endemic to the industry does not lessen their significance. The forward-looking
statements contained in this Report are made as of the date of this Report and
the Company assumes no obligation to update them or to update the reasons why
actual results could differ from those projected in such forward-looking
statements. Among others, risks and uncertainties that may affect the business,
financial condition, performance, development, and results of operations of the
Company include:
o The Company's dependence upon a network marketing system to distribute
its products;
o Activities of its independent distribution Associates;
o Rigorous government scrutiny of network marketing practices;
o Potential effects of adverse publicity regarding nutritional supplements
or the network marketing industry;
o Reliance on key management personnel;
o Extensive government regulation of the Company's products and
manufacturing;
o The possible adverse effects of increased distributor incentives as a
percentage of net sales;
o The Company's reliance on information technology;
o The loss of product market share or independent distribution Associates
to competitors;
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings other than the ordinary
routine litigation incidental to its business operations, which the Company does
not believe, in the aggregate, will have a material adverse effect on the
Company, or its operations.
<PAGE>
Item 2. Changes in Securities
During the quarter, the Company sold 3,883 shares of Series F Convertible
Preferred Stock for $75.00 per share or $291,225. The shares were sold under
Rule 506 of the Securities Act.
On October 16, 2000 the Board of Directors authorized 10 to 1 reverse stock
split for the Company's common stock. All references in the accompanying
financial statements to the number of common shares and per-share amounts have
been restated to reflect the reverse stock split.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are included as part of this report:
Exhibit
Number Exhibit
3.1 Certificate of Incorporation The Voyager Group, Inc.(1)
3.2 Corporate By-Laws of The Voyager Group Inc.(1)
3.3 Amended and Restated Certificate of Incorporation of The
Voyager Group, Inc.(1)
27.1 Financial Data Schedule
(b) The Company did not file a report on Form 8-K during the
three months ended October 31, 2000.
(1) Incorporated by reference to the Company's Form 10-KSB filed on
December 14, 2000.
<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.
The Voyager Group, Inc.
(Registrant)
DATE: December 21, 2000 By: /S/ Marvin Higbee
--------------------
Marvin Higbee, President, C.E.O. and
Chairman of the Board
DATE: December 21, 2000 By: /S/ Peter Powderham
-----------------------
Peter Powderham, Executive President,
Business Development, Secretary and
Director
