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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
--------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission File Number: 33-25900
Virtual Academics.com, Inc.
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(Exact name of Small Business Issuer as specified in its Charter)
FLORIDA 75-2228820
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6421 Congress Avenue, Suite 201, Boca Raton, Florida 33432
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(Address of principal executive offices)
(561) 994-4446
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(Issuer's telephone number)
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(Former Name, former address and former fiscal year,
if changed since last Report.)
Check mark 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
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 [ ]
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
The Registrant had outstanding 6,346,733 shares of Common Stock as of
December 16, 1999.
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VIRTUAL ACADEMICS.COM, INC.
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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VIRTUAL ACADEMICS.COM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1999
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(Unaudited)
<S> <C>
ASSETS
CURRENT ASSETS
Cash and Equivalents $ 9,566
Tuition Receivable, Current, net of allowance for doubtful
accounts of $79,823 659,281
Prepaid Recruiting Fees, Current 153,749
----------
Total Current Assets 822,596
----------
PROPERTY AND EQUIPMENT
Computer Equipment 14,826
Furniture and Fixtures 43,060
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Sub-total 57,886
Less: Accumulated Depreciation 15,643
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Total Property and Equipment 42,243
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OTHER ASSETS
Tuition Receivable, Non-current, net of allowance for doubtful
accounts of $19,956 164,820
Prepaid Recruiting Fess, Non-current 31,015
Security Deposits 4,102
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TOTAL ASSETS $1,064,776
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 18,244
Unearned Revenue, Current 679,703
Accrued Recruiting Fees, Current 149,129
Income Taxes Payable 4,217
Other Accrued Expenses and Taxes Payable 10,765
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Total Current Liabilities 862,058
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OTHER LIABILITIES
Unearned Revenue, Non-current 137,113
Accrued Recruiting Fees, Non-current 37,278
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Total Other Liabilities 174,391
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STOCKHOLDERS' EQUITY
Common Stock, Authorized 50 million shares, par value $.00001
Issued and Outstanding 6,346,733 shares 63
Retained Earnings 28,264
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Total Stockholders' Equity 28,327
==========
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,064,776
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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VIRTUAL ACADEMICS.COM, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year to Date
Three Months Ended Six Months Ended
------------------------------- ------------------------------
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
REVENUE $ 290,998 $173,034 $ 556,309 $ 385,767
COSTS AND EXPENSES
Recruiting Fees 69,656 36,715 113,511 81,853
Other Cost of Delivering Services 25,325 16,584 46,262 36,973
General and Administrative Expenses 135,406 88,359 275,701 152,428
Interest - net -- 1,650 -- 1,650
Depreciation 1,492 1,335 2,631 2,670
---------- -------- ----------- -----------
Total Costs and Expenses 231,879 144,643 438,105 275,574
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INCOME BEFORE INCOME TAX 59,119 28,391 118,204 110,193
INCOME TAX EXPENSE 5,869 911 5,869 3,536
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NET INCOME $ 53,250 $ 27,480 $ 112,335 $ 106,657
========== ======== =========== ===========
Weighted Shares Outstanding 4,736,683 4,200,000 4,468,000 4,200,000
Net Income per Share $ 0.01 $ 0.01 $ 0.03 $ 0.03
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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VIRTUAL ACADEMICS.COM, INC.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year to Date
Six Months Ended
-----------------------------
Dec. 31, 1999 Dec. 31, 1998
(Unaudited) (Unaudited)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit $ 112,335 $ 106,657
Adjustment to Reconcile Net Profit to Net Cash Provided
by Operating Activities
Depreciation 2,631 2,670
(Increase) Decrease in:
Tuition Receivable, Current (102,740) (198,035)
Prepaid Recruiting Fees, Current (9,346) (85,477)
Other Assets
Tuition Receivable, Non-current (25,685) (49,509)
Prepaid Recruiting Fees, Current (16,704) (8,365)
Security Deposits 298 --
Increase (Decrease) in:
Accounts Payable 985 (11,723)
Unearned Revenue, Current 41,316 243,852
Accrued Recruiting Fees, Current 23,239 19,007
Income Taxes Payable (210) 171
Other Accrued Expenses and Taxes Payable 5,323 (3,067)
Other Liabilities
Unearned Revenue, Non-current 73,845 24,771
Accrued Recruiting Fees, Non-current 5,806 19,216
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Net Cash Provided by Operating Activities 111,093 60,168
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Fixed Assets (23,000) (1,418)
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Net Cash Used by Investing Activities (23,000) (1,418)
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CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to Members (88,249) (44,591)
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Net Cash Used by Financing Activities (88,249) (44,591)
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Net Decrease in Cash and Equivalents (156) 14,159
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CASH AND EQUIVALENTS
At Beginning of Period 9,722 9,863
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At End of Period $ 9,566 $ 24,022
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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VIRTUAL ACADEMICS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 1:
The consolidated balance sheet as of December 31, 1999, the consolidated
statement of operations and retained earnings for the three-months and the
six-months ended December 31, 1999 and 1998 and cash flows for the six-months
ended December 31, 1999 and 1998 have been prepared by Virtual Academics.com,
Inc. (the Company) without audit. In the opinion of management of the Company,
all adjustments necessary to present the financial position, the results of
operations and cash flows for the periods reported have been made. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These combined financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's annual report. The results for the six-month period ending December
31, 1999 are not indicative of the results that may occur for the fiscal year
ending June 30, 2000.
Note 2:
On December 8, 1999, Steven Bettinger and Robert Bettinger (the Bettingers)
acquired 4,200,000 shares of the common stock Donnebrooke Corp. Immediately
prior to this acquisition, Donnebrooke had 6,346,733 shares of common stock
outstanding (after cancellation of 5,274,383 shares). Accordingly, the
Bettingers owned 66% of Donnebrooke Corp.'s outstanding shares immediately after
this acqusition. In connection with the purchase of the Donnebrooke Corp.
shares, the Bettingers transferred to Donnebrooke Corp. their interests in
International Educational Group, LLC and its subsidiaries, Barrington
University, Inc., a Florida Corporation, Barrington University, Inc., an Alabama
Corporation, and Spanish University of America Foundation, Inc. Donnebrooke
Corp. then changed its name to Virtual Academics.com, Inc.
Note 3:
Reconciliation of Retained Earnings as of December 31, 1999:
Retained Earnings at beginning of Year $ 4,242
Net Income for the six months ended December 31, 1999 112,335
Less: Distributions to Members Prior to Reorganization (88,250)
Less: Retained Earnings Reclassified to Common Stock (63)
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Retained Earnings as of December 31, 1999 $ 28,264
Note 4:
Prior to the reverse merger with Donnebrooke Corp. and reorganization the
Company was organized as a Limited Liability Company. Net income was allocated
to the members and as a result the provision for income tax relates to earnings
for the period from December 8, 1999 through December 31, 1999 only.
5
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PART II. OTHER INFORMATION
Part I
ITEM 2 Management's Discussion and Analysis
The following discussion and analysis should be read in conjunction with the
financial statements appearing in this report. These financial statements
reflect consolidated operations of Virtual Academics.com, Inc. for the six-month
and the three-month periods ending December 31, 1999 and 1998 respectively. This
discussion may contain "forward-looking statements" within the meaning of
Private Securities litigation Reform Act 1995. These statements consist of any
statement other than a recitation of historical fact and can be identified by
the use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements. The Company
undertakes no obligation to update these forward-looking statements and the
reader should not assume that silence by the Company over time means that actual
events are bearing out as estimated in such forward-looking statements.
On December 8, 1999, Donnebrooke Corp. acquired the Company through a reverse
acquisition. In December 1999, the Company moved its operations from New York
City to Boca Raton, Florida. In January 2000, Donnebrooke Corp. changed its name
to Virtual Academics.com, Inc.
The Company is engaged in the business of distance learning over the Internet.
The Company currently offers degrees and training programs in six languages
(English, Spanish, Japanese, Chinese, Portuguese and Arabic) and has students
registered in 43 countries. The programs offer students the convenience of
completing their education and training from a laptop or home computer. The
Company is licensed by the State Education Department of the State of Alabama
and is recognized by education agencies of the governments of China, Egypt and
Canada. The Company's focus is on the national and international educational and
corporate training markets, in which markets the Company anticipates significant
growth.
For the six-month period ending December 31, 1999, the Company recognized
revenues of $556,309 as compared to $385,767 for the comparable period of 1998,
an increase of a 44%. For the three-month period ending December 31, 1999, the
Company recognized revenues of $290,998, as compared to $173,034 for the
comparable period of 1998, an increase of 68%. The increase for these periods is
due primarily to expansion in the number of students that have registered for
Company's educational programs. This expansion was accomplished solely through
word-of-mouth and referrals from the Company's clients. Additional revenue was
recognized in accordance with the income revenue recognition policies that the
Company maintains. The Company recognizes revenue based upon the obligation that
it has to provide services to its students. A twenty-four month period is used
for this calculation. Unearned revenue is the amount of tuition that has not yet
been recognized as revenue.
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Recruiting fees and other costs of delivering services to the students vary with
the revenue recognized from tuition. For the six-month period ending December
31, 1999 the Company experienced an increase of approximately 2% as a percentage
of revenue to $159,773 from $118,826 for the comparable period. For the
three-month period ending December 31, 1999 the Company also experienced
approximately a 2% increase as a percentage of revenue to $94,981 from $53,299
for the comparable period. Recruiting fees are paid when the Company receives
the tuition, recruiting fees are accrued for tuition receivable.
For the six-month period ending December 31, 1999 the Company experienced
approximately a 10% increase in general and administrative expenses as a
percentage of revenues to $275,701 from $152,428 for the comparable period. For
the three-month period ending December 31, 1999 the Company experienced
approximately a 5% decrease in general and administrative expenses as a
percentage of revenues to $135,406 from $88,359 for the comparable period. The
overall increase for the six-month period was primarily a result of increased
payroll and travel expenses related to the expansion of the business. The
Company also had additional expenses for changing and improving its web pages,
these are expensed in accordance with company accounting policies.
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 1999 the Company had $9,566 of cash and equivalents on hand to
meet its obligations, which was approximately the same amount that was on hand
at the beginning of the year. During the February 2000 the Company consummated a
sale of 2,200,000 shares of common stock through a private placement. This
private placement raised a total $990,000, $440,000 of which was payable in
cash, $550,000 of which was represented by a 7% promissory note due February
2001. All of the funds from this private placement will be used as working
capital. The Company believes that this infusion of additional working capital
will be sufficient to fund its current operations and to fund its anticipated
growth for the near future.
ITEM 5. OTHER INFORMATION
See Note 1 to Financial Statements.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by item 601 of Regulation S-B
The following exhibits are filed as part of this report:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On January 12, 2000 the Company filed a current report on Form 8-K disclosing
the reverse acquisition by Donnebrooke Corp.
7
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIRTUAL ACADEMICS.COM., INC.
BY: /s/ Steven Bettinger
-------------------------------------
Steven Bettinger
President and Chief Operating Officer
By: /s/ Robert Bettinger
-------------------------------------
Robert Bettinger, Chief Executive
Officer and Treasurer and Principal
Financial and Accounting Officer
DATED: February 23, 2000
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 9,566
<SECURITIES> 0
<RECEIVABLES> 739,104
<ALLOWANCES> 79,823
<INVENTORY> 0
<CURRENT-ASSETS> 822,596
<PP&E> 57,886
<DEPRECIATION> 15,643
<TOTAL-ASSETS> 1,064,776
<CURRENT-LIABILITIES> 862,068
<BONDS> 0
0
0
<COMMON> 63
<OTHER-SE> 28,264
<TOTAL-LIABILITY-AND-EQUITY> 1,064,776
<SALES> 0
<TOTAL-REVENUES> 556,309
<CGS> 0
<TOTAL-COSTS> 438,105
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 118,204
<INCOME-TAX> 5,869
<INCOME-CONTINUING> 112,335
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,335
<EPS-BASIC> .025
<EPS-DILUTED> .025
</TABLE>
