U. S. Securities and Exchange Commission
Washington, D.C., 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ________
Commission file number 000-22729
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VERSATECH, INC.
(Exact name of small business issuer as specified in its charter)
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Nevada
(State or other jurisdiction of incorporation or organization)
88-0330263
(IRS Employer Identification No.)
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300 Keystone Street, Hawley, PA 18428
(Address of principal executive offices)
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(570) 226-8515
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As
of July 28, 2000 the issuer had 13,321,218 shares of common
stock outstanding.
Transitional Small Business Disclosure Format (Check one);
Yes [ ] No [X]
<PAGE>
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited consolidated financial statements presented herein
have been prepared by the Company in accordance with the
instructions to Form 10-QSB and do not include all of the
information and note disclosures required by generally accepted
accounting principles. These consolidated financial statements
should be read in conjunction with the audited financial
statements and notes thereto for the period ended December 31,
1999 included in the Company's Form 10-KSB for the period ended
December 31, 1999. The accompanying financial statements have not
been examined by independent accountants in accordance with
generally accepted auditing standards, but in the opinion of
management such financial statements include all adjustments
necessary to present fairly the Company's financial position and
results of operations. The results of operations for the six
months ended June 30, 2000 may not be indicative of the results
that may be expected for the year ending December 31, 2000.
<PAGE>
Versatech, Inc.
(Formerly D H Marketing & Consulting, Inc.)
And Subsidiaries
Consolidated Financial Statements
June 30, 2000
<PAGE>
Versatech, Inc.
Consolidated Balance Sheets
ASSETS
------
June 30 December 31
2000 1999
------------- ------------
CURRENT ASSETS (unaudited)
Cash and Cash Equivalents $ 10,088 $ 24,609
Accounts receivable, Net of
Allowance
$54,749 and $54,749 23,973 25,229
Other Receivables 3,869 3,886
Inventory 134,217 139,296
------------- ------------
Total Current Assets 172,147 193,020
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INVESTMENTS
Investments - Other 46,903 46,903
------------- ------------
Total Investments 46,903 46,903
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PROPERTY & EQUIPMENT
Office Furniture and Fixtures 20,184 20,184
Equipment 188,976 188,976
Leasehold Improvements 17,668 17,668
Building 200,000 200,000
Land 197,996 197,996
Accumulated Depreciation (187,228) (175,628)
------------- ------------
Net Property & Equipment 437,596 449,196
------------- ------------
OTHER ASSETS
Software Development 18,750 22,500
Deposits and Other Assets 6,450 6,450
Arts & Collectibles 1,422,396 1,422,396
------------- ------------
Net Other Assets 1,447,596 1,451,346
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TOTAL ASSETS $ 2,104,242 $ 2,140,465
============= ============
The accompanying notes are an integral part of these financial
statements.
-2-
<PAGE>
Versatech, Inc.
Consolidated Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30 December 31
CURRENT LIABILITIES 2000 1999
------------- ------------
(unaudited)
Accounts Payable $ 111,669 $ 89,384
Sales Tax Payable 1,491 1,211
Accrued Wages 2,011 2,925
Accrued Expenses 347 235
Deferred Tax Liability 1,587 1,587
Current Obligations Under
Capital Lease 3,200 3,880
Current portion of Notes
Payable & Mortgage Payable 110,240 93,674
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Total Current Liabilities 230,545 192,896
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LONG-TERM DEBT
Mortgage Payable 288,070 293,332
Notes Payable - Related Party 97,596 81,030
Obligation Under Capital Lease 3,875 5,914
Less: Current Portion (113,440) (97,554)
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Total Long-Term Debt 276,101 282,722
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Total Liabilities 506,646 475,618
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STOCKHOLDERS' EQUITY
Common stock, $.0003 Par
Value, Authorized 75,000,000
Shares; issued and
outstanding 11,850,964 and
11,850,964 shares,
respectively 3,555 3,555
Additional Paid-In Capital 9,527,682 10,255,182
Treasury Stock (36,016) (786,016)
Stock subscription receivable (240,000) (240,000)
Retained earnings (7,657,625) (7,567,874)
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Total Stockholders' Equity 1,597,596 1,664,847
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,104,242 $ 2,140,465
============= ============
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE>
Versatech, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30 June 30 June 30 June 30
2000 1999 2000 1999
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
SALES $ 22,204 $ 316,887 $ 50,042 $ 660,210
COST OF GOODS SOLD 4,535 195,593 10,831 445,402
-------------- ------------- ------------- ------------
GROSS PROFIT 17,669 121,294 39,211 196,452
-------------- ------------- ------------- ------------
OPERATING EXPENSES
General And Administrative
Expenses 30,796 361,059 116,224 705,472
-------------- ------------- ------------- ------------
TOTAL OPERATING EXPENSES 30,796 361,059 116,224 705,472
-------------- ------------- ------------- ------------
OPERATING INCOME (LOSS) (13,127) (239,765) (77,013) (509,021)
-------------- ------------- ------------- ------------
OTHER INCOME AND (EXPENSES)
Interest Expense (12,650) (140) (12,738) (387)
Other Income - 1,420 - 5,065
Gain on Sale of Investments - - - 320
-------------- ------------- ------------- ------------
Total Other Income and
(Expenses) (12,650) 1,280 (12,738) 4,998
-------------- ------------- ------------- ------------
NET INCOME (LOSS) $ (25,777) $ (238,485) $ (89,751) $ (504,022)
============== ============= ============= ============
NET INCOME (LOSS) PER SHARE $ (.00) $ (.03) $ (.01) $ (.06)
============== ============= ============= ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 11,850,964 8,419,964 11,850,964 8,419,964
============== ============= ============= ============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
-4-
<PAGE>
Versatech, Inc.
Consolidated Statements of Cash Flows
For the six For the six
months ended months ended
June 30 June 30
2000 1999
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Cash Flows From Operating Activities
Net income (loss) $ (89,751) $ (504,022)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Used in Operating
Activities:
Depreciation 11,600 21,019
Amortization 3,750 2,054
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable 1,256 (76,764)
Other Receivables 17 12
Inventory 5,079 (167,295)
Increase/(decrease) in:
Accounts Payable 22,285 135,943
Accrued Expenses (522) (124,257)
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Net Cash Provided (Used) by
Operating Activities (46,286) (713,310)
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Cash Flows from Investing Activities
Purchase of Property and Equipment - (6,415)
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Net Cash Provided (Used) by
Investing Activities - (6,415)
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Cash Flows from Financing Activities
Proceeds from sale of treasury stock 22,500 -
Proceeds from debt financing 16,566 6,500
Principal Payments on capital lease
obligations (2,039) (1,327)
Principal Payments on mortgage payable (5,262) -
Proceeds from stock subscriptions - 436,072
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Net Cash Provided (Used) by
Financing Activities 31,765 441,245
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Net Increase (Decrease) in Cash and
Cash Equivalents (Forwarded) (14,521) (278,480)
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Cash and Cash Equivalents
Beginning 24,609 308,838
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Ending $ 10,088 $ 30,358
============= ============
Supplemental Disclosures of Cash
Flow Information:
Cash payments for interest $ 12,738 $ 387
============= ============
Cash payments for income taxes $ - $ -
============= ============
Supplemental Schedule of Noncash
Investing and Financing Activities
Purchase of Inventory through
Issuance of Company Stock $ - $ -
============= ============
The accompanying notes are an integral part of these financial
statements.
-5-
<PAGE>
Versatech, Inc.
June 30, 2000 and December 31, 1999
NOTES TO FINANCIAL STATEMENTS
Versatech, Inc. (the "Company") has elected to omit
substantially all footnotes to the financial statements for
the six months ended June 30, 2000, since there have been no
material changes (other than indicated in other footnotes)
to the information previously reported by the Company in
their Annual Report filed on Form 10-KSB for the Fiscal year
ended December 31, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books
and records of the Company without audit. However, such
information reflects all adjustments which are, in the
opinion of management, necessary to properly reflect the
results of the period presented. The information presented
is not necessarily indicative of the results from operations
expected for the full fiscal year.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION.
Management's Discussion and Analysis
This Form 10-QSB includes, without limitation, certain statements
containing the words "believes", "anticipates", "estimates",
"expects" and words of a similar nature which constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. This Act provides a
"safe harbor" for forward-looking statements to encourage
companies to provide prospective information about themselves so
long as they identify these statements as forward looking and
provide meaningful, cautionary statements identifying important
factors that could cause actual results to differ from the
projected results. All statements other than statements of
historical fact made in this Form 10-QSB are forward-looking. In
particular, the statements herein regarding the new marketing
plan's impact on sales for the upcoming third and fourth quarters
and beyond, the impact that management's familiarity with the
marketing plan will have on sales figures in the future, future
plans regarding the purchase or sale of significant equipment,
future plans regarding the increase or decrease in the number of
employees, and year 2000 issues are forward-looking statements.
Forward-looking statements reflect management's current
expectations and are inherently uncertain. The Company's actual
results may differ significantly from management's expectations.
Overview
--------
The Company is a 100% equity owner of Universal Network of
America, Inc.("UNIA"), a direct sales organization distributing
various health building products such as aloe based skin care
products and UNItropin hGH Formula Plus, an all natural dietary
supplemental tablet. These products are distributed both in the
wholesale and retail markets via sales representatives and the
increasing presence on the internet.
In April, 1999, the Company introduced LongerLiving.com as a new
domain. The intent of the new website is to become the leading
provider of quality content covering anti-aging advances and
health on the Internet. The website was expanded in September of
1999 in order to enhance the range of health issues and features.
This led to the eventual incorporation of LongerLiving.com, Inc.
in December of 1999 as a subsidiary of the Company. In the coming
months, it is anticipated that revenues will be generated by
sponsorships, banner advertising and co-branding.
In an effort to boost sales and stockholder confidence, it was
announced at the shareholder's meeting on March 15, 2000 that the
Company was officially changing its name from D. H. Marketing &
Consulting, Inc. to Versatech, Inc.
In an announcement made on March 28, 2000, Universal Network,
Inc. has reached an agreement with Commission Junction to launch
an affiliate program for UNItropin. Commission Junction is a web
based, e-commerce network that matches online merchant's products
and services to online content providers and provides management
services from these resulting relationships.
Versatech, Inc. has almost completed a management consulting
agreement with Rapid Release, LLC and Rapid's affiliate, Jacob
International, Inc. It is expected that both companies will
assist the Company in the development and implementation of
distribution and marketing programs for their anti-aging
products. They will also provide guidance for the Company as it
develops its short and long term business plans and objectives.
Rapid Release will also work with the Company to develop investor
awareness and to make the investment community aware of new
developments. With the assistance of these 2 entities, the
Company will pursue strategies to increase capitalization in
order to expand business activities and to complete financing
that will enable the Company to broaden the distribution of
UNItropin and further the development of LongerLiving.
Selected Financial Data
-----------------------
for 3 mos for 3 mos for 6 mos for 6 mos
ending ending ending ending
6/30/00 6/30/99 6/30/00 6/30/99
Sales $ 22,204 $ 316,887 $ 50,042 $ 660,210
Cost of Goods Sold 4,535 195,593 10,831 445,402
Net Income $ (25,777) (238,485) (89,751) (504,022)
Net Income/Share $ (.002) (.028) (.007) (.059)
Weighted Average 11,850,964 8,419,964 11,850,964 8,419,964
# Common Shares
Liquidity
---------
The Company posted a net loss of $25,777 for the second quarter
of 2000. This represents a 89% reduction as compared to the loss
during the same period in 1999. The Company has reduced operating
expenses by 90% as compared to the second quarter of 1999.
The Company has recorded Total Current Assets of $172,147 as of
June 30, 2000 of which $10,088 was held in cash or cash
equivalents, $27,842 was held in accounts receivable and the
balance of $134,217 was held in inventory. This reduction in
assets is reflective of the year end inventory devaluation and
reassignment. The Company still maintains Other Assets in excess
of $1,447,596.
Long Term Debt/Current Liabilities
----------------------------------
The Company has current liabilities in excess of $113,000 of
which $111,669 is in Accounts Payable. The Company has
satisfactorily retired Long Term Debt with the exception of two
(2) Capital Leases for Office Equipment that total $3,200.
Universal Network, Inc. has an outstanding long term debt in the
amount of $288,070. This amount represents the mortgage on the
office building in Florida.
Capital Resources
-----------------
The Company has issued and outstanding a total of 11,850,964
shares of stock which as of June 30, 2000 represents stockholder
equity of $ 1,597,596.
Revenue
-------
Total revenue less sales discounts was reduced significantly to
$50,042 as of 6/30/00 as compared with $660,210 for the first six
months of 1999. Management realizes that the change in the
marketing plan in the middle of 1999 and the devotion to building
the presence on the Internet are the contributing factors to the
dramatic decline in sales.
In the network marketing division, operated and governed by the
Company's subsidiary Universal Network, Inc., representatives
earn commissions based upon the value of the products sold.
Universal Network, Inc. introduced a line of consumable health
and beauty products in 1998 and that was followed up later in
that year by the introduction of UNItropin, an anti-aging human
growth hormone dietary supplement tablet. Management believes
that the consumables market holds the key to success for the
Company. Universal Network, Inc. is preparing to pre-launch a
brand new exciting year 2000 aggressive marketing plan through
its website at uninetwork.com. The Company's affiliate Commission
Junction has seen significant growth in the number of affiliates
that are promoting UNItropin. This gives the product a
significant presence on the Internet where it is expected that
sales growth will be stimulated in the third and fourth quarters
of 2000.
Cash Expenditures
-----------------
Total general and administrative expenses have to continued to
decline. The amount of operating expenses as of 6/30/00 is
$116,224 as compared to $705,472 for the first six months of
1999. This represents an 84% reduction in operational expenses
which goes hand in hand with the significant reduction in sales.
It is anticipated that expenses will not increase dramatically
with the Internet marketing strategy.
Plan of Operation
-----------------
Versatech, Inc. (formerly D.H. Marketing & Consulting, Inc.) was
incorporated in Nevada in 1994 and has divested itself of all
operations to turn its focus towards its two subsidiaries,
Universal Network, Inc. and LongerLiving.com, Inc.
Universal Network, Inc.
-----------------------
Universal Network, Inc. was acquired by the Company in 1997.
Universal Network, Inc. originally focused on wealth building
products with intrinsic value such as gold coins, jewelry
lithographs and other collectible items. In 1998, the focus of
Universal turned towards the health sector when it engaged in an
aloe vera based product line of skin care items. The initial
success of this product enticed Universal to expand in the health
sector and in late 1998, it introduced UNItropin hGH Formula
Plus, a human growth hormone all natural dietary supplemental
tablet. The product in the existing marketing plan was not an
overwhelming success so Universal Network has been working over
the past several months to overhaul the plan. Universal Network
is about to unveil an aggressive, powerful marketing plan that is
Internet driven. In conjunction with Commission Junction, a web
based e-commerce organization located in California, the Company
will be significantly enhancing its presence on the website. With
the additional assistance of the new consulting firms on board,
the Company will attain the financing and guidance needed to
return the Company to the successful level of business it
achieved a few years ago.
LongerLiving.com, Inc.
----------------------
LongerLiving.com, Inc. was established in 1999. This subsidiary
will be the information provider for the health sector for the
future. This site will provide the viewer a wide range of health
related topics and features on the most up to the minute
information in the health sector. It is anticipated that
significant revenues will be generated from this subsidiary
through sponsorships, the co-branding of products and especially
from banner advertising.
PART II- OTHER INFORMATION
Items 2, 3, 4 and 5 are not applicable and have been omitted.
ITEM 1. LEGAL PROCEEDINGS
The United States Securities and Exchange Commission is
conducting a formal investigation of the Company, with which the
Company's management is cooperating. The outcome of such
investigation is not known at this time. The Company is not a
party to any material pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company
has been threatened.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits and Reports on Form 8-K (including related comments
thereto) filed as part of this report are listed below:
(a) Exhibits. The following exhibits are filed with this report.
Exhibit No. Description
----------- --------------------------------------------
27.0 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the
quarter ended June 30, 2000.
<PAGE>
SIGNATURES
In Accordance to the requirements of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Versatech, Inc.
A Nevada Corporation
August 14, 2000 By: /s/ GARY E. STAFFORD
Date Gary E. Stafford
Treasurer and Chief Financial
Officer and duly authorized
Officer
