SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act
of 1934 for Quarterly Period Ended March 31, 2000
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities And
Exchange Act of 1934 for the transaction period from _________ to________
Commission File Number 33-55254-10
Seair Group, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0438825
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6831 Edgewater Commerce Parkway, Suite 1110, Orlando, FL 32810
- --------------------------------------------------------------------------------
(Address of principal executive offices, Zip Code)
(407) 445-1035
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) 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 [ ] No [ X ]
The number of outstanding shares of the registrant's common stock, par value
$.001 as of May 18, 2000 is 1,873,101.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
SEAIR GROUP, INC.
(A DEVELOPMENT STAGE ENTITY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
(NOTE 1) (NOTE 1)
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 100,545 $ --
Accounts receivable 555 6,435
Inventory, net 55,298 40,992
Prepaid expenses 5,113 1,667
----------- -----------
Total current assets 161,511 49,094
----------- -----------
Property and equipment, net 5,826 7,551
Other assets:
Deposits 5,140 5,140
----------- -----------
$ 172,477 $ 61,785
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ -- $ 2,418
Accounts payable 8,245 21,149
Accrued liabilities 80,130 70,129
Customer deposits 2,500 2,500
Notes payable -- 15,000
Deposits on unissued stock 24,000 24,000
Due to stockholder 5,541 5,541
Reserve for repurchase of boats 190,000 190,000
----------- -----------
Total liabilities 310,416 330,737
----------- -----------
Stockholders' equity:
Common stock, par value $.001, 25,000,000 shares
authorized, 1,744,531 and 1,380,177 shares issued
and outstanding at March 31, 2000 and
December 31, 1999, respectively 1,745 1,380
Additional paid-in capital 1,506,437
1,281,802
Deficit accumulated during the development stage (1,641,121) (1,552,134)
----------- -----------
Total stockholders' equity (137,939) (268,952)
----------- -----------
$ 172,477 $ 61,785
=========== ===========
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
2
<PAGE>
SEAIR GROUP, INC.
(A DEVELOPMENT STAGE ENTITY)
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED July 9, 1986
MARCH 31, (Date of Inception)
2000 1999 to March 31, 2000
---- ---- -----------------
<S> <C> <C> <C>
REVENUES: $ 373 $ 80,573 $ 365,581
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales -- 90,230 389,631
Selling, general & administrative 94,360 153,631 1,380,427
----------- ----------- -----------
94,360 243,861 1,770,058
----------- ----------- -----------
OPERATING LOSS (93,987) (163,288) (1,404,477)
----------- ----------- -----------
OTHER EXPENSES:
Interest -- -- (85,000)
Other -- -- (156,644)
----------- ----------- -----------
-- -- (241,644)
-----------
NET LOSS $ (93,987) $ (163,288) $(1,646,121)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,544,374 1,046,722
=========== ===========
NET LOSS PER SHARE $ (.06) $ (.16)
=========== ===========
</TABLE>
Unaudited -- See accompanying notes to condensed financial statements.
3
<PAGE>
SEAIR GROUP, INC.
(A DEVELOPMENT STAGE ENTITY)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
July 9, 1986
(Date of
Three Months Ended Inception to
2000 1999 March 31, 2000
---- ---- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (93,987) $ (163,288) $(1,646,121)
Adjustments to reconcile net loss to
net cash flows used in operating activities:
Depreciation and amortization 1,725 1,725 8,067
Bad debt expense -- -- 25,000
Obsolete inventory write downs -- -- 23,144
Issuance of stock for interest -- -- 100,000
Issuance of stock for services -- 24,300 79,300
Reserve for repurchase of boat -- -- 190,000
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 5,880 (17,362) (555)
Increase in inventory (14,306) (70,036) (78,442)
(Increase) decrease in prepaid expenses (3,446) 9,041 (5,113)
Increase in customer deposits -- 43,160 2,500
(Decrease) increase in accounts payable (12,904) 17,090 8,245
Increase in accrued expenses 10,001 29,710 80,130
----------- ----------- -----------
Net cash flows used in operating activities (107,037) (125,660) (1,213,845)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in notes receivable -- 12,500 (37,500)
Payments on Notes Receivable from Shareholders -- -- 12,500
Purchase of property and equipment -- (1,875) (13,893)
Increase in deposits -- -- (5,140)
----------- ----------- -----------
Net cash provided by investing activities -- 10,625 (44,033)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 225,000 66,249 1,003,982
Issuance of notes payable -- 24,900 473,900
Deposits on unissued stock -- 29,000 24,000
Increase in due from Shareholders -- -- 5,541
Payments on notes payable (15,000) -- (149,000)
----------- ----------- -----------
Net cash flows from financing activities 210,000 120,149 1,358,423
----------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 102,963 5,114 100,545
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD (2,418) 21,081 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 100,545 $ 26,195 $ 100,545
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid during the period $ -- $ -- $ --
Conversion of debt to common stock $ -- $ -- $ 324,900
----------- ----------- -----------
</TABLE>
Unaudited-See accompanying notes to condensed financial statements.
4
<PAGE>
SEAIR GROUP, INC.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1-BASIS OF PRESENTATION:
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete statements. Management believes that all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. If such differences prove significant and material, Seair Group, Inc.
(the "Company") will file an amendment to this report on Form 10-QSB.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Loss Per Share
- --------------
During 1998, the Company adopted SFAS No. 128, "Earnings per Share," which
requires presentation of basic loss per share ("Basic LPS") and diluted loss per
share ("Diluted LPS"). The computation of Basic LPS is computed by dividing loss
available to common stockholders by the weighted average number of outstanding
common shares during the period. Diluted LPS gives effect to all diluted
potential common shares outstanding during the period. The computation of
Diluted LPS does not assume conversion, exercise or contingent exercise of
securities that would have an anti-dilutive effect on earnings.
NOTES 3 - GOING CONCERN
The Company's financial statements are prepared using the generally accounting
principles applicable to a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. However,
the Company has no current source of revenue. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern. It
is management's plan to seek additonal capital through a merger with an existing
operating company.
NOTE 4 - STOCKHOLDERS' EQUITY:
On March 16, 2000, the Company's previously approved one for seven reverse stock
split of the common stock issued and outstanding took effect. These financial
statements have been retroactively adjusted to reflect the reverse stock split.
During the three months ended March 31, 2000, the Company raised $200,000 though
the issuance of 285,715 shares of post-split common stock at $.70 per post-split
share.
NOTE 5 - SUBSEQUENT EVENTS
On May 4, 2000, the Company entered into a non-binding memorandum of
understanding with FX BestRates.com, Inc. ("FX") to acquire, substantially, all
the assets of FX, subject to the liabilities of FX in exchange for the issuance
of approximately 16,343,623 shares (approximately 90%) of the Company's common
stock. FX has developed an Internet-based marketplace for currency exchange. The
site will enable small to medium-range exchange brokers to offer a reduced rate
for conversion. It will also afford local brokers the opportunity to work with
larger banks and foreign exchange brokers that they have not had access to in
the past.
Subsequent to March 31, 2000, the Company raised an additional $110,000 through
private placements of post-split shares of its common stock.
5
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
PLAN OF OPERATION
The Company is in the process of consummating two transactions to
change the focus of its business. First, the Company is planning to spin off the
assets of the Seair Ultralite Flying Inflatable Boat business into its
wholly-owned subsidiary and sell the product line, assets, and limited
liabilities to SeaGliders LLC. At that point, the Company will once again be
considered a "blank check" company, having no business or operations. Management
then intends to enter into a business combination with a target company in
exchange for its securities. As of the filing date of this report, the Company
had entered into a memorandum of understanding with FXBestRates.com, Inc.
The Company currently has two (2) full time employees, one of whom is
the president and the other a principal of SeaGliders. Upon the anticipated
consummation of the SeaGliders transaction, the Company's president has agreed
to allocate a portion of his time to the Company's activities, without
compensation. The president anticipates that the Company's business plan can be
implemented by his devoting no more than approximately 40 hours per month to the
Company's business affairs and, consequently, conflicts of interest may arise
with respect to the limited time commitment by such officer.
The Company's Articles of Incorporation provide that it may indemnify
its officers and/or directors for its liabilities, which can include liabilities
arising under the securities laws. Therefore, the Company's assets could be used
or attached to satisfy any liabilities subject to such indemnification.
RESULTS OF OPERATIONS
Three months ended March 31, 2000 compared to the three months ended March 31,
1999
During the three months ended March 31, 2000, the Company was in the
process of winding down operations in the Seair Ultralite Flying Boat business,
and pursuing a candidate for a business combination. There were no sales in the
first quarter of 2000, compared to sales of $81,000 in the first quarter of
1999. Correspondingly, there were no cost of sales in the first quarter of 2000,
compared to $90,000 in the first quarter of 1999.
Selling, general and administrative costs for the three months ended
March 31, 2000 were $94,000 as compared to $154,000 for 1999. This decrease was
primarily attributable to a reduction in salaries and related expenses as the
company was winding down operations.
Liquidity and Capital Resources
During the three months ended March 31, 2000, the Company raised
$225,000 through the sale of its restricted common stock to several accredited
investors. These funds will primarily be used to buy back the previously sold
Flying Boats in the United States due to structural defects which were
discovered in the hulls of the Flying Boats and to fund operations. Subsequent
to the quarter end, the Company raised an additional $110,000 which will also be
used for the same purposes.
General Business Plan
The Company's plan is to acquire an interest in a business entity which
desires to seek the perceived advantages of a corporation which has a class of
securities registered under the Securities Exchange Act of 1934 (the "Exchange
Act"). As of the filing date of this report, the Company had entered into a
memorandum of understanding with FXBestRates.com, Inc. ("FX"). FX has developed
an Internet-based marketplace for currency exchange. The site will enable small
to medium-range exchange brokers to offer a reduced rate for conversion. It will
also afford local brokers the opportunity to work with larger banks and foreign
exchange brokers that they have not had access to in the past.
The Exchange Act requires that any merger or acquisition candidate
comply with certain reporting requirements, which include providing audited
financial statements to be included in the reporting filings made under the
Exchange Act. The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained at or within the required period
of time after closing of the proposed transaction.
6
<PAGE>
Management, which in all likelihood will not be experienced in matters
relating to the business of a target company, will rely upon its own efforts in
accomplishing the Company's business purposes. Following a business combination
the Company may benefit from the services of others in regard to accounting,
legal services, underwriting and corporate public relations. If requested by a
target company, management may recommend one or more underwriters, financial
advisors, accountants, public relations firms or other consultants to provide
such services.
The acquisition of FXBestRates.com, Inc. calls for the issuance of
16,343,622 shares of newly issued common stock. As a result, the present
management and the Company's stockholders will no longer be in the Company's
control. In addition, it is likely that the Company's sole officer and director
will, as part of the terms of the acquisition transaction, resign and be
replaced by one or more new officers and directors. The Company's stockholders
will hold a substantially lesser percentage ownership interest in the Company
following the acquisition.
It is anticipated that any securities issued in the reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, it will be undertaken
by the surviving entity after the Company has entered into an agreement for a
business combination or has consummated a business combination and the Company
is no longer considered a "blank check" company. The issuance of additional
securities and their potential sale into any trading market which may develop in
the Company's securities may depress the market value of the such securities in
the future if such a market develops, of which there is no assurance.
While the definitive terms of a business transaction to which the
Company may be a party cannot be predicted, it is expected that the parties to
the business transaction will desire to avoid the creation of a taxable event
and thereby structure the acquisition in a tax-free reorganization under
Sections 351 or 368 of the Internal Revenue Code of 1986, as amended.
Undertakings and Understandings Required of Target Company
As part of a business combination agreement, the Company intends to
obtain certain representations and warranties from a target company as to its
conduct following the business combination. Such representations and warranties
may include (i) the agreement of the target company to make all necessary
filings and to take all other steps necessary to remain a reporting company
under the Exchange Act, (ii) imposing certain restrictions on the timing and
amount of the issuance of additional free-trading stock, including stock
registered on Form S-8 or issued pursuant to Regulation S, and (iii) giving
assurances of ongoing compliance with the Securities Act of 1933, as amended,
the Exchange Act, the General Rules and Regulations of the SEC, and other
applicable laws, rules and regulations.
A prospective target company should be aware that the market price and
volume of its securities, when and if listed for secondary trading, may depend
in great measure upon the willingness and efforts of successor management to
encourage interest in the Company within the United States financial community.
The Company does not have the market support of an underwriter that would
normally follow a public offering of its securities. In addition, certain market
makers may take short positions in the Company's securities, which may result in
a significant pressure on the market price of such securities. Management may
consider the ability and commitment of a target company to actively encourage
interest in its securities following a business combination in deciding whether
to enter into a transaction with such company.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
Future Operating Results - Future operating results may be impacted by a number
of factors that could cause actual results to differ materially from those
stated herein, which reflect management's current expectations. These factors
include worldwide economic and political conditions, industry specific factors,
the Company's ability to maintain access to external financing sources and its
financial liquidity, and the Company's ability to manage expense levels.
Need for Additional Capital - As of Mach 31, 2000, the Company had approximately
$101,000 of cash. The Company raised an additional $110,000 subsequent to the
quarter. The Company has experienced negative cash flow since inception and
expects to sell the business as described above.
7
<PAGE>
Forward Looking Statements - This report contains certain forward-looking
statements that are based on current expectations. In light of the important
factors that can materially affect results, including those set forth above and
elsewhere in this report, the inclusion of forward-looking information herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. The Company may
encounter competitive, technological, financial and business challenges making
it more difficult than expected to continue to market its products and services;
competitive conditions within the industry may change adversely; the Company may
be unable to retain existing key management personnel; the Company's forecasts
may not accurately anticipate market demand; and there may be other material
adverse changes in the Company's operations or business. Certain important
factors effect the forward looking statements made herein include, but are not
limited to (i) accurately forecasting capital expenditures and (ii) obtaining
new sources of external financing.
Assumptions relating to budgeting, marketing, product development and other
management decisions are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause the Company to alter its capital
expenditure or other budgets, which may in turn affect the Company's financial
position and results of operations.
8
<PAGE>
Part II
ITEM 1 - LEGAL PROCEEDINGS
Not applicable.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 16, 2000, the Company's previously approved one for seven reverse stock
split of the common stock issued and outstanding took effect. These financial
statements have been retroactively adjusted to reflect the reverse stock split.
During the three months ended March 31, 2000, the Company raised $200,000 though
the issuance of 285,715 shares of post-split common stock.
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
Not applicable.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed herewith:
Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
(1) The Company filed a report on Form 8-K dated December
29, 1999 on February 23, 2000.
(2) The Company filed a report on Form 8-K dated March 6,
2000 on March 15, 2000.
9
<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.
SEAIR GROUP, INC.
Dated: May 22, 2000 By: /s/ Steven H. Kerr
--------------------------
Steven H. Kerr
Chairman of the Board of
Directors and President
(duly authorized
officer of the registrant and
principal financial officer
of the registrant)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 100,545
<SECURITIES> 0
<RECEIVABLES> 555
<ALLOWANCES> 5,113
<INVENTORY> 55,298
<CURRENT-ASSETS> 161,511
<PP&E> 13,893
<DEPRECIATION> 8,067
<TOTAL-ASSETS> 172,477
<CURRENT-LIABILITIES> 310,416
<BONDS> 0
0
0
<COMMON> 1,745
<OTHER-SE> (134,684)
<TOTAL-LIABILITY-AND-EQUITY> 172,477
<SALES> 373
<TOTAL-REVENUES> 373
<CGS> 0
<TOTAL-COSTS> 94,360
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (93,987)
<INCOME-TAX> 0
<INCOME-CONTINUING> (93,987)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,987)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
