SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended July 31, 1999 oTransition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the
transition period from to .
Commission file number 000-7633
VISIONQUEST WORLDWIDE HOLDINGS CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 75-1449332
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7674 W. Lake Mead Blvd., Suite 150, Las Vegas Nevada 89128
(Address of principal executive offices) (Zip Code)
(702) 307-2000
(Issuer's telephone number, including area code)
CONTINENTAL HERITAGE CORPORATION
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the (issuer) (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or such
shorter period that registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes[X] No [ ]
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
6,928,860 as of July 31, 1999.
Transitional Small Business Disclosure Format
Yes [ ] No [X]
CONTINENTAL HERITAGE CORPORATION
INDEX
Part I - Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheet - July 31, 1999 F-1
Consolidated Statement of Operations for the three months and
nine months ended July 31, 1998 and 1999 F-2
Consolidated Statements of Cash Flows for the nine months ended
July 31, 1998 and 1999 F-3
Notes to Consolidated Financial Statements F-4
Item 2. Management's Discussion and Analysis or Plan of Operation 1
Part II - Other Information
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Page No.
Consolidated Balance Sheet as of July 31, 1999 F-1
Consolidated Statements of Operations
for the three months and nine months ended
July 31, 1998 and 1999 F-2
Consolidated Statements of Cash Flows
for the nine months ended July 31, 1998 and 1999 F-3
Notes to Consolidated Financial Statements F-4
VISIONQUEST WORLDWIDE
HOLDINGS CORPORATION AND SUBSIDIARIES
Formerly Continental Heritage Corporation
(A Development Stage Company)
Consolidated Balance Sheet (Unaudited)
July 31, 1999
ASSETS
Current assets:
Cash $ 129,182
Inventory 371,214
Due from stockholder 16,840
Prepaid expenses and other receivables 17,965
------
Total current assets 535,201
Property assets, at cost less
accumulated depreciation of $14,245 269,762
Other assets 37,788
-------
Total assets $ 842,751
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Notes payable $ 38,133
Accounts payable and accrued expenses 308,075
Current portion of long-term debt 1,075,937
---------
Total current liabilities 1,422,145
Long-term debt, less current portion 526,814
Commitments and contingencies
Stockholders' deficiency:
Common stock, $.001 par value; 150,000,000 shares
authorized; 6,928,860 shares issued and outstanding 6,929
Preferred stock, $.50 par value,
2,000,000 shares authorized;
- 0 - shares issued and outstanding -
Additional paid-in capital 732,355
Deficit accumulated during the development stage (1,196,809)
Accumulated deficit (648,683)
---------
Total stockholders' deficiency (1,106,208)
---------
Total liabilities and stockholders' deficiency $ 842,751
=========
See notes to consolidated financial statements.
VISIONQUEST WORLDWIDE
HOLDINGS CORPORATION AND SUBSIDIARIES
Formerly Continental Heritage Corporation
(A Development Stage Company)
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Cumulative
Three Months Ended Nine Months Ended from Inception
July 31, July 31 to
1998 1999 1998 1999 July 31, 1999
Development stage activities:
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 45,623 $ - $ 45,623 $ 45,623
Cost of goods sold - 25,971 - 25,971 25,971
Gross profit - 19,652 - 19,652 19,652
------ -------- ------ ------- --------
Operating expenses:
Professional fees 24,056 43,263 24,056 164,343 200,382
General and administrative 27,838 312,193 117,548 685,942 944,119
Depreciation 400 13,045 400 13,445 14,245
Interest - 51,838 - 57,715 57,715
------ ------- ------- ------- -------
Total operating expenses 52,294 420,339 142,004 921,445 1,216,461
Loss from development
stage activities (52,294) (400,687) (142,004) (901,793) $ (1,196,809)
------ ------- ------- ------- ---------
Discontinued operations:
Income (loss) from discontinued
operations (11,880) - (4,584) 13,370
Gain on disposal of
discontinued operations
(net of income taxes
of $31,000) - - - 96,978
------ ------- ------- ------
Income (loss) from
discontinued operations (11,880) - (4,584) 110,348
------ ------- ----- -------
Net loss $ (64,174) $ (400,687) $(146,588) $(791,445)
====== ======= ======= =======
Net loss per common share
Loss from development stage
activities $ (0.01) $ (0.06) $ (0.02) $ (0.13)
Discontinued operations:
Income (loss) from
discontinued operations - - - -
Gain on disposal of
discontinued operations - - - .01
------ ------- ------- --------
Net (loss) $ (0.01) $ (0.06) $ (0.02) $ (0.12)
====== ======= ======= ========
</TABLE>
Weighted average of common
shares outstanding: 6,873,860 6,928,860 6,873,860 6,898,439
See notes to consolidated financial statements.
VISIONQUEST WORLDWIDE
HOLDINGS CORPORATION AND SUBSIDIARIES
Formerly Continental Heritage Corporation
(A Development Stage Company)
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended July 31, 1998 and 1999
1998 1999
Development stage activities:
Net loss $ (146,588) $ (791,445)
Adjustments to reconcile net loss
to net cash used in development
stage activities:
(Income) loss from
discontinued operations 4,584 (110,348)
Depreciation 400 13,445
(Increase) in inventory - (343,214)
Due from shareholder - (16,840)
(Increase) in prepaid expenses - (17,965)
(Increase) in other assets - (36,787)
Increase in accounts payable
and accrued expenses 19,071 208,663
------- -------
Net cash used in development
stage activities (122,533) (1,094,491)
------- ---------
Investing activities:
Purchase of property assets (5,467) (278,540)
------- ---------
Net cash used in investing activities (5,467) (278,540)
------- ---------
Financing activities:
Issuance of common stock 1,000 5,500
Proceeds from borrowings 127,000 1,526,464
Payments on long-term debt - (43,713)
------- ---------
Net cash provided by financing activities 128,000 1,488,251
======= =========
Cash provided by (used in) discontinued operations 11,614 (26,710)
------- ---------
Increase in cash 11,614 88,510
Cash, beginning of period 36,308 40,672
====== ======
Cash, end of period $ 47,922 $ 129,182
====== =======
Supplementary cash flow disclosure:
Interest paid - development stage activities $ - $ 7,170
====== =======
Interest paid - discontinued operations $ 2,450 $ 913
====== =======
See notes to consolidated financial statements.
3
VISIONQUEST WORLDWIDE
HOLDINGS CORPORATION AND SUBSIDIARIES
Formerly Continental Heritage Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
July 31, 1999
Note 1 - General
The consolidated interim financial statements are unaudited and include the
accounts of the Company and its wholly-owned subsidiaries. Material
intercompany items and transactions have been eliminated in consolidation.
Such financial statements have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission and,
accordingly, do not include all information and footnote disclosures required
by generally accepted accounting principles for complete financial statements.
These financial statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto for the year ended October
31, 1998 and the quarters ended January 31, and April 30, 1999.
In the opinion of management, the unaudited interim consolidated financial
statements include all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation. The results of operations for
the nine months and three months ended July 31, 1999 are not necessarily
indicative of results for the year ending October 31, 1999.
Note 2 - Change in Name; Nature of Business
On August 5, 1999 the Company amended its Certificate of Incorporation to
change its name to VisionQuest Worldwide Holdings Corporation. In addition, it
increased its authorized common stock to 150,000,000 shares with a par value of
$0.001. The company will engage in the wholesale and retail distribution of
nutri-ceutical and homeopathic products.
Note 3 - Discontinued Operations
Prior to November 20, 1998, the Company was engaged in the business of
operating and developing real estate. On that date, the Company effectively
terminated its previously conducted real estate operations by transferring all
its operating assets and substantially all related liabilities to its then
principal stockholder in satisfaction of an indebtedness owing to him. The
transaction resulted in a gain of approximately $97,000, net of related income
taxes of approximately $31,000.
Summarized operating data for the discontinued real estate operations are as
follows:
Nine Months Ended Three Months Ended
July 31, July 31,
1998 1999 1998 1999
Rental income $ 56,691 $ - $167,256 $ 16,818
Income (loss) before
provision for income taxes $ (14,356) $ - $ (5,772) $ 13,370
Income (loss) from
discontinued operations $ (11,880) $ - $ (4,584) $ 13,370
Note 4 - Long-Term Debt
Long-term debt at July 31, 1999 consisted of the following:
Notes payable to several investors of $1,000,000 (Note A)
and $200,000 (Note B); interest will accrue at 10% per annum
and will be paid monthly starting on September 30, 1999 for
Note A and March 31, 2000 for Note B; six consecutive equal
monthly payments of principal will be paid starting March 31,
2000 for both notes. All unpaid principal and interest is due
and payable on August 31, 2000. The loan agreement grants
the Company the rights to borrow additional amounts not to
exceed a maximum of $300,000 which was borrowed from the
investors subsequent to July 31, 1999. Note B is secured by
the Company's inventory. In connection with the loans, the
lenders received warrants to purchase an aggregate
2,400,000 of the Company's common shares at $.3125 per
share. Two other individuals received warrants to purchase
an aggregate 351,250 common shares under similar terms. $1,200,000
Note payable to AWC, Inc. Retirement Trust; interest will
accrue at 10% per annum and will be paid monthly starting
January 31, 2000, monthly payments of $16,667 of principal
starting on July 31, 2000. In connection with the loan
agreement, the lender received a warrant to purchase 200,000
shares of the Company's common stock at $.3125 per share.
The note is subordinated in right of payment to the notes
payable referred to above. 100,000
Notes payable to stockholders, interest at 10% per
annum, due August 31, 2000. The payment of principal
and interest is subordinated to all payments of principal
and interest due on the note obligations referred to above.
In connection with the financing, the stockholders
received warrants to purchase an aggregate of 224,000 of
the Company's common shares at $.3125 per share through
February 8, 2004. 112,000
Capital lease obligations with interest at 6.5% to
33% per annum. 190,751
1,602,751
Current maturities 1,075,937
--------
$ 526,814
=========
Note 5 - Commitments and Contingencies
The Company occupies office space in Las Vegas, Nevada under a non-cancelable
operating lease that is guaranteed by a shareholder and requires monthly
rentals of $19,569 through June 30, 2004. The Company also leases equipment
and furniture under capital leases. Such capitalized equipment amounted to
$113,382 at July 31, 1999.
Minimum future rental payments under the leases are tabulated as follows:
Operating Capital
Years Ending July 31, Leases Leases
2000 $ 242,000 $ 90,400
2001 259,000 75,774
2002 266,000 62,530
2003 273,000 5,219
2004 185,000 3,984
------- ------
Total minimum rentals $1,225,000 237,907
Less interest and
other costs 47,156
------
Present value of minimum
lease payments 190,751
Less: current portion 59,270
-------
Long-term portion $ 131,481
Item 2. Management's Discussion and Analysis or Plan of Operation
Forward Looking Statement
This Quarterly Report on Form 10-QSB contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, the
Company's ability to establish an adequate client base, its ability to develop
and continue its marketing strategies, and those set forth below in this
Registrant's Quarterly Report on Form 10-QSB under the caption "Certain
Factors That May Affect Future Results."
The following discussion of the Company's results of operations and financial
condition should be read in conjunction with the Company's condensed
consolidated unaudited Financial Statements listed in Part I, Item 1 and the
Notes thereto appearing elsewhere in this Form 10-QSB, and the Company's
audited Financial Statements appearing in the Company's 1998 Annual Report on
Form 10-KSB.
During the fiscal year ended October 31, 1998, including the first three months
of that fiscal year ended January 31, 1999, all of Registrant's revenues were
from the rentals derived from the operation of its Hurst, Texas office
building. The revenues from the Hurst, Texas office building were only
sufficient to pay the expenses and mortgage debt service related to that
building, which mortgage debt was paid off April 1, 1998. All other funding
requirements of the Registrant were provided by advances made to it by its then
principal shareholder. Other than the payment to be made to such person out of
the proceeds of a $150,000 mortgage loan secured by the two properties which
Registrant obtained in the last quarter of fiscal 1998, the Registrant was
unable to make payments of interest or principal on this debt. Accordingly,
unless the Registrant had been able to sell off its real estate holdings or
find another source of capital, it would not have been able to pay its debt to
its principal stockholder or to acquire other properties or assets to produce
revenues.
Management of the Registrant had for three years prior to October 31, 1998 been
engaged in a search for an acquisition that would add a viable business to
Registrant so as to place it in a position to be able to continue as a going
concern. Taking that need into consideration, on November 27, 1998 Registrant
entered into the Stock Exchange Agreement with the shareholders of Encore
International, Inc. ("Encore") and acquired all of the outstanding shares of
Encore, a development stage company, which intended to engage in the wholesale
and retail distribution of nutri-ceutical and homeopathic products. Effective
February 9, 1999, the Registrant entered into a loan agreement to provide it
with up to $1,500,000 in financing, which has allowed it to begin the business
operations of its new subsidiary.
After consummation of the Stock Exchange Agreement with Encore and Encore's
subsequent merger with VisionQuest Worldwide, Inc. ("VisionQuest"), a
subsidiary of the Registrant, the Registrant has initiated its marketing
program (the "VisionQuest Marketing Program") though a national network of
independent distributors. The VisionQuest Marketing Program has been developed
by the officers of the Registrant who believe that the program illustrates a
comprehensive understanding of the network marketing industry. The Registrant
has aligned its product line with future health and business trends, as those
trends are identified through research and other means.
Initial Products
The natural health and nutritional supplement industry is a $30 billion plus a
year business. The Registrant, through VisionQuest, intends to provide access
to this large market through innovative, effective and high demand
life-enhancing products.
VisionQuest's initial product line is composed of historically proven,
life-enhancing health remedies as well as new health discoveries from around
the world including a variety of breakthrough products derived from the sea.
Through high potency nutri-ceutical products and formulations developed using
sound principles and time proven therapies such as homeopathy and ayurvedic
medicine, the VisionQuest product line is designed to promote consumer
confidence and results. These proprietary products are sold person to person
or through convenient and consumer direct programs.
VisionQuest's cornerstone product philosophy is based on a three pronged
approach to achieving optimum health: (i) cleanse the body of toxins, (ii)
boost the body's immune system, and (iii) provide the body with comprehensive
nutritional protection.
VisionQuest has engaged the services of Leonard Haimes, M.D., a medical doctor
with 40 years experience in internal and bariatric medicine. Dr. Haimes is
nationally recognized in the field of alternative health care and is a
specialist in homeopathy. VisionQuest has been actively working with Dr.
Haimes in the development of its Initial Products, and on March 25, 1999,
VisionQuest entered into a five-year agreement with Dr. Haimes to perform
consulting and support services relative to both the company's current product
line and in the development of new products. Through this alliance,
VisionQuest has secured his services as the company's Medical Director and his
endorsement of the products. The products have been formulated according to
strict standards for quality and performance, and then electro-magnetically
balanced to assure the formulas to be toxin free and effective.
VisionQuest's initial product line ("Initial Products") consists of four
exclusive products: (i) LiveRx, a homeopathic formulation designed to cleanse
the liver and kidneys; (ii) Ocean Gold, a high potency shark liver oil designed
to enhance the body's immune system; (iii) Pro Algaen Omega, a comprehensive
marine nutri-ceutical formulation containing special anti-oxidants and omega 3
fish oils; and (iv) SlenderQuest, a homeopathic weight management system.
To retain these products, VisionQuest has entered into an agreement with Marine
Biologics, Inc., which is a broker for third party suppliers of the components
of VisionQuest's Initial Products, whereby VisionQuest will have exclusive
distribution rights for these specific formulations. This contract is for a
term of five years and automatically renews for an additional term at the end
of five years, provided that neither party provides written notification of its
intention not to renew.
The Initial Products will be periodically and strategically followed with a
variety of additional proprietary leading-edge products which will compliment
the VisionQuest marketing program.
VisionQuest Marketing Program
VisionQuest markets its products through a network of independently contracted
distributors called "Team Members." These Team Members purchase the product
directly from VisionQuest at wholesale and then resell the product to
end-users, making a retail profit. In addition, through a comprehensive,
state-of-the-art "multi-level" commission structure, Team Members have the
opportunity to earn bonuses on their membership organization which they build
at their own pace. The Team Members are supported through an array of
marketing and training tools provided by the Registrant including
voice-activated and online systems the Registrant calls "VisionWorks Voice" and
"VisionWorks Online" services."
In developing and launching the VisionQuest marketing program unexpected
delays in acquiring funding and further delays in delivery of its Initial
Products prevented the Registrant from seriously beginning the development of
its membership network and sales of products until July 1, 1999. Since that
time VisionQuest has begun selling its products through key independently
contracted sales people with backgrounds in sales and network marketing. Sales
during the quarter ended July 31, 1999 amounted to $45,623.
VisionQuest intends, through this initial group of distributors as well as
through additional future alliances to recruit many more independent
distributors into its membership network in a relatively short amount of time.
1999 Private Financing
Effective February 9, 1999, the Registrant entered into a Loan Agreement with
seven individual investors (the "Investors"), pursuant to which the Investors
agreed to lend $1,000,000 (the "Loan") to the Registrant, with the right for
the Registrant to borrow up to an additional $500,000 from the Investors, which
the Registrant has now done. The loan proceeds were placed into an escrow
account, which the Registrant accessed for advances through application to a
Disbursement Agent. The Disbursement Agent, Gerald M. Holland, is a
shareholder of the Registrant and one of the Investors.
In return for their agreement to loan funds to the Registrant, the Investors
received Promissory Notes for $1,500,000 plus Class A Warrants for the purchase
of an aggregate of 3,000,000 shares of the Registrant's common stock. The
Promissory Notes bear interest at the rate of 10% per annum and mature on
August 31, 2000. The Class A Warrants have an exercise price of $.3125 per
share and expire on February 8, 2004. Class A Warrants for the purchase of an
aggregate of 351,250 shares of the Registrant's common stock were also issued
to Gerald M. Holland and Damaso W. Saavedra, two individuals who represented
the Investors in the negotiations with the Registrant, which were Warrants
those Investors would have otherwise received.
As additional collateral for the Loan, Steve Gould, Lee Kaplan, Robert Bray and
Gerald Holland executed a Non-Recourse Pledge Agreement and an Irrevocable
Proxy in favor of the Investors. The Pledge Agreement provides that Messrs.
Gould, Kaplan, Bray and Holland pledge as collateral security for payment of
the Loan an aggregate of 4,978,264 shares of the Registrant's Common Stock
which they hold to the Investors. In addition, repayment of the Promissory
Notes evidencing the additional loans of $500,000 are secured by a lien on the
Registrant's inventory of products.
The Investors at any time prior to repayment of the initial loan and/or the
additional loans may use the Irrevocable Proxy to vote on major decisions
presented to the Registrant's shareholders, provided however, that the Proxy
may not be used by the Investors to vote to remove any director or officer from
the Registrant for reasons other than gross negligence, theft, or legal
incompetency. Further, the Investors may not vote to elect any person as a
director of the Registrant other than those persons currently holding that
position. The Proxy terminates upon repayment of the loan to the Investors.
Under similar terms the Registrant has acquired additional financing in the
amount of $100,000 on June 4, 1999, from a private party. The lender of the
$100,000 received Class A Warrants to purchase 200,000 shares of Registrant's
Common Stock on the same terms and conditions as the Class A Warrants issued to
the Investors. This loan is subordinate in payment to the $1,500,000 in loans
made under the Investors' Loan Agreement.
On October 1, 1998, prior to the Registrant's acquisition of Encore
International, Inc., Encore executed and delivered promissory notes in the
amount of $56,000 each to Steve Gould and Lee Kaplan in payment for funds
advanced by them to initiate the business of Encore. Such notes bore interest
at the rate of 6% per annum and matured on September 30, 1999. In connection
with the Registrant's 1999 private financing, both Messrs. Gould and Kaplan
agreed to accept replacement notes dated February 9, 1999 which provided that
no payment of interest or principal may be made to them until such time as all
payments of principal and interest due on the promissory notes delivered to the
Investors shall have been made. The replacement notes delivered by the
Registrant to Messrs. Gould and Kaplan bear interest at a rate of 10% per annum
and mature August 31, 2000. In addition to the replacement notes, Messrs. Gould
and Kaplan each received Class A Warrants to purchase 112,000 shares of
Registra nt's Common Stock. Such Class A Warrants are on the same terms and
conditions as the Class A Warrants issued to the Investors in the 1999 Private
Financing.
Use of Proceeds of 1999 Private Financing
The majority of the proceeds of the 1999 private financings has been utilized
for deposits and payments on product inventory and sales and marketing
materials as well as operating capital during VisionQuest's pre-launch phase.
Additional funding will be required to support the Registrant's projected
operational overhead during this delayed start-up period as well as to develop
and acquire additional new product lines which are in line with the
Registrant's marketing philosophy. These additional products will provide a
more comprehensive marketing opportunity for its Team Members as well as
generate additional revenues for the Registrant. The Registrant is currently
in negotiations to secure additional funding.
The Registrant intends to pursue a moderately aggressive approach to building
inventory and expanding its product line during the next twelve months, while
maintaining some funds in reserve so that it can support the needs of the
Registrant's Team Members in a timely manner.
Certain Factors Which May Affect Future Results
The Registrant may be considered a development stage company because of its
entry into a new line of business and there is a significant risk that the
Registrant may not be able to obtain the volume of business necessary to become
a going concern. The Registrant believes that the VisionQuest business plan
provides a comprehensive approach in assembling all the essential parts that
will make up a successful network marketing company; however, there can be no
assurance that the Registrant will be able to generate projected revenues or
achieve profitable operations.
The Registrant's capital requirements in connection with its VisionQuest
business activities have been and will continue to be significant. To date, it
has been dependent upon the proceeds of sales of its securities to private
investors to fund its development activities. The Registrant anticipates that
its available cash plus proceeds of the sale of product will be sufficient to
satisfy its contemplated cash requirements for at least the period ending
December 31, 1999. The Registrant has no current arrangements to secure
additional financing and there is no assurance that additional financing which
the Registrant is currently seeking will be secured by the Registrant on
commercially reasonable terms, or at all. The inability to obtain additional
financing, when needed, would have a material adverse effect on the Registrant,
including possibly requiring the Registrant to curtail or cease operations. To
the extent that any future financing involves the sale of the Registrant's
equity securities, the Registrant's then existing stockholders could be
substantially diluted.
The Registrant does not contemplate that it will directly manufacture any of
its products. It intends to contract with third party developers and
manufacturers to supply its products. Although management believes it will be
able to negotiate satisfactory manufacturing and supply agreements, the failure
to do so would have a material adverse effect on the Registrant. Furthermore,
there can be no assurance that such manufacturers will dedicate sufficient
production capacity to satisfy the Registrant's requirements within scheduled
delivery times or at all. Failure or delay by the Registrant's suppliers in
fulfilling its anticipated needs would adversely affect the Registrant's
ability to develop and market its products. While management believes that it
has or will be making satisfactory arrangements for supply of its products, it
anticipates that the Registrant will obtain certain of them from a single
source, or limited number of sources, of supply. In the event that certain of
such suppliers are unable or unwilling to provide the Registrant with the
products on commercially reasonable terms, or at all, delays in securing
alternative sources of supply would result and could have a material adverse
effect on the Registrant's operations.
The markets that the Registrant has entered are characterized by intense
competition. The Registrant's products directly compete with similar products
of numerous well-established companies. The ability of the Registrant to
compete in these markets is dependent upon the Registrant significantly
expanding its membership network. Certain of the competitors dominate their
industries and may have the necessary financial resources to enable them to
withstand substantial price competition or downturns in the market for the
products. Although the Registrant anticipates establishing its own market
share and consumer loyalty, in its current stage of development the Registrant
may be at risk of not being able to withstand such adverse market
circumstances.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of the Shareholders of Registrant was held on August 5,
1999. At such meeting, the shareholders voted on the following amendments to
the Certificate of Incorporation of the Registrant:
1. Change of name of the Registrant to VisionQuest Worldwide Holdings
Corporation.
2. Increase in the number of authorized shares of Common Stock to 150,000,000
of such shares with a change in the par value to $.001 per share.
The vote on the amendment to change the name of Registrant was 5,610,283 shares
in favor, 100 shares against and 500 shares abstaining. The vote on the
amendment to increase the Common Stock was 5,609,783 in favor, 100 shares
against and 1,000 shares abstaining. There were no broker "non-votes" on either
of the matters voted on by the shareholders.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
27. Financial Data Schedule (for SEC use only)
Reports of Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchanges
Act of 1934, the Registrant has duly caused this Quarterly Report on Form
10-QSB to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: September 24, 1999.
VISIONQUEST WORLDWIDE HOLDINGS CORPORATION
BY: /s/Steve Gould
Steve Gould, President, Chief Executive
Officer, Treasurer,
Chief Financial Officer and Director
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] JUL-31-1999
[CASH] 129,182
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 371,214
[CURRENT-ASSETS] 535,201
[PP&E] 284,007
[DEPRECIATION] 14,245
[TOTAL-ASSETS] 842,751
[CURRENT-LIABILITIES] 1,442,145
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 6,929
[OTHER-SE] 1,845,492
[TOTAL-LIABILITY-AND-EQUITY] 842,751
[SALES] 45,623
[TOTAL-REVENUES] 45,623
[CGS] 25,971
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 921,445
[LOSS-PROVISION] (901,793)
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (901,793)
[INCOME-TAX] 0
[INCOME-CONTINUING] (901,793)
[DISCONTINUED] 110,348
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (791,445)
[EPS-BASIC] (.12)
[EPS-DILUTED] 0
</TABLE>
