SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
ValuSALES.com, Incorporated
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(Exact name of registrant as specified in this charter)
Florida 65-1001686
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(State of other jurisdiction (IRS Employer
of incorporation) Identification No.)
4101 Ravenswood Road, Suite 209, Fort Lauderdale, FL 33312
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Address of principal executive offices
954-792-3773
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Registrant's telephone number, including area code
Check whether the issuer (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. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
As of September 30, 2000 there were 10,000,000 shares of the Issuer's Common
Stock outstanding.
<PAGE>
ValuSALES.com, Inc.
FORM 10-QSB
<TABLE>
<CAPTION>
INDEX
PART I. FINANCIAL INFORMATION PAGE(S)
<S> <C>
Item 1. Financial Statements
Balance Sheets as of September 30, 2000 and December 31, 1999
Statement of Operations for the Nine Months Ended
September 30, 2000
Statements of Operations for the Three Months Ended
September 30, 2000 and From Inception (July 20, 1999)
to September 30, 1999
Statement of Shareholder's Equity for the Nine Months
Ended September 30, 2000 and From Inception (July 20, 1999)
To September 30, 1999
Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and From Inception (July 20, 1999)
to September 30, 1999
Notes to Financial Statements for September 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Qualitative and Quantitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 27.1 Financial Data Schedule
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
VALUSALES.COM., INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
2000 1999
--------- ---------
UNAUDITED
<S> <C> <C>
Current Assets
Cash $ 107,901 $ 83,935
Accounts receivable 381,995 143,360
Inventories 106,070 92,578
--------- ---------
Total current assets 595,966 319,873
Property and equipment, net of accumulated depreciation of
$8,914 at September 30, 2000 and $2,962 at December 31, 1999 44,415 37,038
Other 6,343 --
--------- ---------
$ 646,724 $ 356,911
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 407,653 $ 106,104
Due to shareholder 56,602 11,000
--------- ---------
Total current liabilities 464,255 117,104
--------- ---------
Shareholders' Equity
Common stock-par value $.001; 50,000,000 shares authorized,
10,000,000 issued and outstanding at
September 30, 2000 and December 31, 1999 10,000 10,000
Additional paid-in capital 391,923 391,923
Deficit (219,454) (162,116)
--------- ---------
Total shareholders' equity 182,469 239,807
--------- ---------
$ 646,724 $ 356,911
========= =========
</TABLE>
3
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VALUSALES.COM., INC.
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2000 (Unaudited)
YTD 2000
September 30,
2000
------------
UNAUDITED
Revenues
Product Sales $ 920,598
Services 1,059,468
------------
Total 1,980,066
------------
Cost of sales
Product 659,226
Services 685,110
------------
Total 1,344,336
------------
Gross profit 635,730
------------
Expenses
Personnel Costs and related expenses 254,753
General and administrative 438,315
------------
693,068
------------
Net profit (loss) ($ 57,338)
============
Profit (loss) per share-basic ($ 0.006)
============
Weighted - average common shares outstanding 10,000,000
============
4
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VALUSALES.COM., INC.
STATEMENTS OF OPERATIONS
July 20, 1999 (Inception) to September 30, 1999
Three Months Ended September 30, 2000 (Unaudited)
3rd Qtr 2000 3rd Qtr 1999
September 30, September 30,
2000 1999
------------ ------------
UNAUDITED UNAUDITED
Revenues
Product Sales $ 263,346 $ 160,242
Services 465,855 37,748
------------ ------------
Total 729,201 197,990
------------ ------------
Cost of sales
Product 147,394 122,794
Services 196,545 16,204
------------ ------------
Total 343,939 138,998
------------ ------------
Gross profit 385,262 58,992
------------ ------------
Expenses
Personnel Costs and related expenses 150,184 44,785
General and administrative 224,413 30,304
------------ ------------
374,597 75,089
------------ ------------
Net profit (loss) $ 10,665 ($ 16,097)
============ ============
$ 0.001 ($ 0.002)
============ ============
Profit (Loss) per share-basic
Weighted - average common shares outstanding 10,000,000 7,598,600
============ ============
5
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STATEMENT OF SHAREHOLDERS' EQUITY
July 20, 1999 (Inception) to December 31, 1999
Nine Months Ended September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-in
Shares Amount Capital (Deficit)
<S> <C> <C> <C>
Sale of common stock for cash-net 375,000 375 $ 293,235
Stock issued for services 1,052,000 1,052 101,361
Stock issued under employment agreements 900,000 900
Sale of common stock for cash 2,673,000 2,673 172,327
Purchase of September Project II, Corp. 5,000,000 5,000 (175,000) ($ 5,000)
(Loss) for period July 20, 1999 (inception) to December 31, 1999 ($ 157,116)
------------ ------------ ------------ ------------
Balance December 31, 1999 10,000,000 10,000 391,923 (162,116)
(Loss) for the nine months ended September 30, 2000 (57,338)
------------ ------------ ------------ ------------
Balance September 30, 2000 (Unaudited) 10,000,000 $ 10,000 $ 391,923 ($ 219,454)
============ ============ ============ ============
</TABLE>
6
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VALUSALES.COM, INC.
STATEMENTS OF CASH FLOWS
July 20, 1999 (Inception) to December 31, 1999
Nine Months Ended September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -------------
UNAUDITED
<S> <C> <C>
Cash flows from operating activities
Net Profit (loss) ($ 57,338) ($157,116)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities
Stock issued for services -- 102,413
Depreciation 5,952 2,962
(Increase) in accounts receivable (238,635) (143,360)
(Increase) in inventories (13,492) (57,578)
(Increase) in other (6,343) --
Increase in accounts payable 301,549 106,104
--------- ---------
Total adjustments 49,031 10,541
--------- ---------
Net cash (used) by operating activities (8,307) (146,575)
--------- ---------
Cash flows from investing activities
Purchase of assets (13,329) (75,000)
Purchase of ValuSales.Com, Inc. -- (175,000)
--------- ---------
Net cash (used) by investing activities (13,329) (250,000)
--------- ---------
Cash flows from financing activities
Loan from shareholder 45,602 11,000
Sale of common stock -- 469,510
--------- ---------
Net cash provided by financing activities 45,602 480,510
--------- ---------
Net change in cash 23,966 83,935
Cash - beginning 83,935 --
--------- ---------
Cash - end $ 107,901 $ 83,935
========= =========
Supplemental disclosures of cash flow information:
Interest paid $ -- $ --
========= =========
Taxes paid $ -- $ --
========= =========
</TABLE>
7
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VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Unaudited
Note 1. Summary of Significant Accounting Policies
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted in this Form 10-QSB in compliance with the Rules
and Regulations of the Securities and Exchange Commission. However, in the
opinion of ValuSALES.com, Inc. the disclosures contained in this Form 10-QSB are
adequate to make the information fairly presented. See Form 10SB for the year
end December 31, 1999 and the six months ended June 30, 2000 for additional
information relevant to significant accounting policies followed by the Company.
Note 2. Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary to
present fairly the financial position as of September 30, 2000 and the results
of operations for the nine month period ended September 30, 2000 and July 20,
1999 (Inception) to September 30, 1999. The results of operations for the nine
months ended September 30, 2000 are not necessarily indicative of the results
which may be expected for the entire year.
8
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VALUSALES.COM, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
September 30, 2000 (Unaudited)
Note 3. Business Segments
The Company is organized into four business segments. Summarized
financial information concerning the Company's reportable segments is shown in
the following table. Corporate related items not allocated to reportable
segments are included in the reconciliation to the Statements of Operations.
<TABLE>
<CAPTION>
Valu Odyssey Web Valu
Computers Advertising Odyssey Mortgages Total
--------- ----------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
Inception (July 20, 1999) to
September 30, 1999
---------------------------
Revenue-Product $ 160,242 $ 160,242
Revenue-Services $ 37,748 37,748
-----------
Total 197,990
Operating earnings (loss) 9,418 (17,707) (8,289)
Depreciation 375 420 795
Nine months ended
September 30, 2000
-------------------------
Revenue-Product 920,598 920,598
Revenue-Services 577,853 $ 419,224 $62,391 1,059,468
-----------
Total 1,980,066
Operating earnings (loss) 55,673 (82,304) 99,798 (47,142) 26,025
Depreciation 1,752 3,930 240 5,922
Reconciliation to Statements of Operations:
YTD 07/20/99 to
2,000 09/30/99
-------- --------
Unaudited Unaudited
========= =========
Operating results
Totals for reportable segments $ 26,025 ($ 8,289)
Corporate (83,363) (7,808)
-------- --------
Total ($57,338) ($16,097)
======== ========
</TABLE>
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
-----------------------------------------------------------------------
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
Financial Statements, including the Notes thereto, of the Company included
elsewhere in this report.
OVERVIEW
ValuSALES provides Internet and Technology solutions for clients
ranging from small to medium sized customers. We have practices in the following
areas: e-business strategy, interactive marketing and advertising, technology
products and integration, and Internet mortgage banking. We utilize our
knowledge base and professional talent from these practice areas to provide our
clients with various solution offerings.
o E-BUSINESS STRATEGY - WWW.WEBODYSSEY.CC
In April 2000, ValuSALES expanded its
OdysseyAdvertising.com group and created WebOdyssey. There
were no significant startup costs and no related commitments
when we established this group because the Company used
existing internal resources.
We help our clients evaluate and formulate e-business
strategies that will result in a competitive advantage. Our
services include strategy formulation, conception and design
of Internet-based business models, qualitative and
quantitative market research, competitive analyses, business
process design and implementation, and delivery of streaming
video and development of proprietary software.
o INTERACTIVE MARKETING AND ADVERTISING -
WWW.ODYSSEYADVERTISING.COM
We help clients identify their online customers and
other target audiences, define the processes and venues for
communicating with these audiences and analyze the results of
their marketing efforts. We use our understanding of customer
preferences to develop interactive content and to create brand
value that enhance and extend our clients' relationships with
their customers. Our services are intended to optimize a
customer's experience with our clients' web sites.
o TECHNOLOGY PRODUCTS AND INTEGRATION - WWW.VALUCOMPUTERS.COM
We help our clients build e-businesses by providing a
set of technology skills that include architecture, design,
custom application, and product integration. We believe our
deep understanding of third party e-business software and
hardware and our ability to modify and integrate these
applications into existing hardware environments
differentiates us from our competitors. This understanding is
most critical in the deployment of business-to-business
hardware networks.
We also focus on how emerging technologies in the
wireless and broadband area will continue to impact the
architecture, devices and infrastructure requirements of our
clients.
10
<PAGE>
o INTERNET MORTGAGE BANKING - WWW.VALUMORTGAGES.COM
In January 2000, ValuSALES created its
ValuMortgages.com group. There were no significant startup
costs and no related commitments when we established this
group because the Company used existing internal resources.
ValuMORTGAGES.com is what the Company believes to be
a next generation Internet mortgage banking firm. Combining
Internet technology with our role as a mortgage banker allows
Realtors, builders, and brokers to service their clients more
efficiently saving time and money. Our services offer
innovative financing solutions for purchasing, refinancing, or
leveraging the equity in a property.
ValuSALES derives substantially all of its revenues from fees and
product sales for services and products generated on a project-by-project basis.
ValuSALES services and products are provided on both a fixed-time, fixed-price
basis and on a time and material basis. Historically, ValuSALES has not operated
on a retainer basis; however, in the future, ValuSALES may utilize such
arrangements.
Agreements and purchase orders entered into in connection with time and
materials projects and product sales are generally terminable by the client upon
30-days' prior written notice, and clients are required to pay ValuSALES for all
time, materials and expenses incurred by ValuSALES through the effective date of
termination. Agreements and purchase orders entered into in connection with
fixed-time, fixed-price projects, are generally terminable by the client upon
payment for work performed and the next progress payment due. If clients
terminate existing agreements and purchase orders or if ValuSALES is unable to
enter into new engagements, ValuSALES' business, financial condition, and
results of operations could be materially and adversely affected. In addition,
because a proportion of ValuSALES' expenses is relatively fixed, a variation in
the number of client engagements can cause significant variations in operating
results from quarter to quarter.
ValuSALES' projects vary in size and scope; therefore, a client that
accounts for a significant portion of ValuSALES' revenues in one period may not
generate a similar amount of revenue in subsequent periods. No client accounted
for more than 10.0% of ValuSALES' revenues in the periods ended December 31,
1999 or September 30, 2000.
ValuSALES does not believe that it will derive a significant portion of
its revenues from a limited number of clients in the near future. However, there
is a risk that the source of ValuSALES' revenues may be generated from a small
number of clients. These clients may not retain ValuSALES in the future. Any
cancellation, deferral, or significant reduction in work performed for these
principal clients or a significant number of smaller clients could have a
material adverse affect on ValuSALES' business, financial condition, and results
of operations.
Quarter-to-quarter fluctuations in margins
The Company's operating results and quarter-to-quarter margins may fluctuate in
the future as a result of many factors, some of which are beyond the Company's
control. Historically, the Company's quarterly margins have been impacted by:
. the number of client engagements undertaken or completed;
11
<PAGE>
. a change in the scope of ongoing client engagements;
. seasonality;
. a shift from fixed-fee to time and materials-based contracts;
. the number of days during the quarter;
. utilization rates of employees;
. marketing and business development expenses;
. charges relating to strategic acquisitions;
. pricing changes in the information technology services market; and
. economic conditions generally or in the information technology services
market.
The Company expects this trend to continue.
Results of Operations:
--------------------------------------------------------------------------------
The following table sets forth certain statements of operations data of the
Company both in actual dollars and as a percentage of revenue for the period
indicated:
<TABLE>
<CAPTION>
3rd Qtr 2000 3rd Qtr 1999
9/30/00 9/30/99
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
Revenues
Product Sales $ 263,346 36.1% $ 160,242 80.9%
Services 465,855 63.9% 37,748 19.1%
--------- ---------
Total 729,201 100.0% 197,990 100.0%
--------- ---------
Cost of sales
Product 147,394 20.2% 122,794 62.0%
Services 196,545 27.0% 16,204 8.2%
--------- ---------
Total 343,939 47.2% 138,998 70.2%
--------- ---------
Gross profit 385,262 52.8% 58,992 29.8%
--------- ---------
Expenses
Personnel Costs and related expenses 150,184 20.6% 44,785 22.6%
General and administrative 224,413 30.8% 30,304 15.3%
--------- ---------
374,597 51.4% 75,089 37.9%
--------- ---------
Net profit (loss) $ 10,665 1.5% ($ 16,097) (8.1%)
========= =========
</TABLE>
Three Months Ended September 30, 2000 Compared to Inception (July 20, 1999) to
September 30, 1999
REVENUES
Net Revenues are comprised of product and services revenues, net of
returns and allowances. Net Revenues increased 268%, or $531,211, to $729,201
for the three months ended September 30, 2000 from $197,990 for the comparable
period in 1999. Product revenues increased 64%, or $103,104, while service
revenues increased 1134%, or $428,107 over the comparable period in 1999. This
increase was due to the expansion of products and practice areas of business.
GROSS PROFIT
Gross Profit increased 553%, or $326,270, to $385,262 for the three
months ended September 30, 2000 from $58,992 for the comparable period in 1999.
As a percentage of revenue gross profit increased to 52.8% for the three months
ended September 30, 2000 from 29.8% in the comparable period in 1999. The
increase in gross profit was primarily due to increased billing rates to our
customers.
PERSONNEL COSTS AND EXPENSES
Personnel costs and expenses consist primarily of salaries, benefits,
and compensation for consultants. Personnel cost and expenses increased 235%, or
12
<PAGE>
$105,399, to $150,184 for the three months ended September 30, 2000 from $44,785
for the comparable period in 1999. As a percentage of revenue personnel costs
and expenses decreased to 20.6% for the three months ended September 30, 2000
from 22.6% in the comparable period in 1999 due to increased billing rates of
the Company's employees creating higher gross margins.
GENERAL AND ADMINISTRATIVE
General and administrative expense includes administrative expenses,
general office expenses, depreciation expenses, advertising costs, and
professional fees. General and administrative expenses increased 641%, or
$194,109, to $224,413 for the three months ended September 30, 2000 from $30,304
for the comparable period in 1999. As a percentage of revenue general and
administrative expenses increased to 30.8% for the three months ended September
30, 2000 from 15.3% in the comparable period in 1999. The increase in general
and administrative expenses as a percentage of revenue was a result of the
increase in the number of non-billable employees and an increase in other types
of general and administrative expenses such as salaries, rent expense, equipment
expenditures and depreciation.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Company had cash and net working capital
of $107,901 and $131,711, respectively. The Company believes that its current
working capital, and cash generated from operations will be sufficient to meet
the Company's cash requirements for the next twelve months. The Company's
capital requirements will depend on numerous factors, including the rates at
which the Company expands its personnel and infrastructure to accommodate growth
and invests in new technologies. In addition, as part of its strategy, the
Company evaluates potential alliances with businesses that extend or complement
the Company's business. Future alliances may be funded with alliance financing,
institutional financing, or additional equity offerings. There can be no
assurance that future alliances, if identified, will be consummated by the
Company.
Management believes that based upon the current operating plan,
existing cash and cash equivalents, and cash generated from operations will be
sufficient to fund operating activities, capital expenditures and other
obligations for the next twelve months. However, if the Company is not
successful in generating sufficient cash flow from operations or in raising
additional capital when required in sufficient amounts and on acceptable terms,
these failures could have a material adverse effect on the Company's business,
results of operations and financial condition. If additional funds are raised
through the issuance of equity securities, the percentage ownership of the
Company's then-current stockholders would be diluted.
There can be no assurance that the Company will be able to raise any
required capital necessary to achieve its targeted growth rates and future
continuance on favorable terms or at all.
The Company expects to continue with its current revenue growth plan as
experienced in the first three quarters of 2000 and believes that with current
available funds and funds generated from operations during the next twelve
months, there will be sufficient capital resources to allow the Company to
continue in existence as a going concern.
13
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Year 2000
The "Year 2000 Issue" refers to the problem of many computer programs
using the last two digits to represent a year rather than four digits (i.e.,
"99" for 1999). As of the date of this filing, our systems have functioned
properly with respect to dates starting in the year 2000 and, to date, our
clients have not informed us of any Year 2000 problems associated with the
solutions we developed for them. However, we may incur significant costs if
unanticipated internal or external Year 2000 compliance problems arise. The cost
associated with these unanticipated problems, or our failure to correct any
unanticipated Year 2000 problems in a timely manner, could have a material
adverse effect on our business, financial condition, results of operations and
prospects for growth. As of November 14, 2000, we are not aware of any
significant issues as a result of Year 2000 problems and do not anticipate
incurring material incremental costs in future periods due to such issues.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to one lawsuit by a former employee who is
suing it for wrongful discharge. The Company is vigorously defending the suit
and does not believe that it is material to its operations.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
14
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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 thereunto duly authorized.
ValuSALES.com, Inc.
Date: November 14, 2000 By: /s/ V. JEFFREY HARRELL
--------------------------
V. Jeffrey Harrell, President & CEO
