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 March 31, 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.
(formerly D.H. MARKETING & CONSULTING, 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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(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 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 March 31, 2000 the
issuer had 11,850,964 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 three months ended March 31, 2000 may not be
indicative of the results that may be expected for the year ending
December 31, 2000.
<PAGE>
Versatech, Inc.
And Subsidiaries
(Formerly D H Marketing & Consulting, Inc.)
Consolidated Financial Statements
March 31, 2000
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Versatech, Inc. (formerly DH Marketing & Consulting, Inc.)
Hawley, Pennsylvania
We have reviewed the accompanying condensed consolidated balance
sheet of Versatech, Inc. (formerly D H Marketing & Consulting,
Inc.) and subsidiaries as of March 31, 2000 and the related
condensed consolidated statements of income and cash flows for
the period then ended. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December
31, 1999, and the related consolidated statements of income,
retained earnings, and cash flows for the year then ended (not
presented herein); and in our report dated February 11, 2000, we
expressed an unqualified opinion on those financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1999, is
fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
The accompanying statements of operations and cash flows for the
period ended March 31, 1999 were not audited or reviewed by us
and, accordingly, we do not express an opinion on them.
/s/ CROUCH, BIERWOLF & CHISHOLM
Crouch, Bierwolf & Chisholm
May 7, 2000
<PAGE>
Versatech, Inc.
Consolidated Balance Sheets
ASSETS
March 31 December 31
2000 1999
------------- -------------
CURRENT ASSETS (Unaudited)
Cash and Cash Equivalents $ 21,049 $ 24,609
Accounts receivable, Net
of Allowance of $54,749
and $54,749 23,824 25,229
Other Receivables 3,869 3,886
Inventory 137,843 139,296
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Total Current Assets 186,585 193,020
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INVESTMENTS
Investments - Other 46,903 46,903
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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 (184,228) (175,628)
------------- -------------
Net Property & Equipment 440,596 449,196
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OTHER ASSETS
Software Development Costs,
Net 20,625 22,500
Deposits and Other Assets 6,450 6,450
Arts & Collectibles 1,422,396 1,422,396
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Net Other Assets 1,449,471 1,451,346
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TOTAL ASSETS $ 2,123,555 $ 2,140,465
============= =============
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE>
Versatech, Inc.
Consolidated Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31 December 31
2000 1999
------------- -------------
CURRENT LIABILITIES (Unaudited)
Accounts payable $ 105,270 $ 89,384
Sales Tax Payable 1,371 1,211
Accrued Wages 2,839 2,925
Accrued expenses 347 235
Deferred tax liability 1,587 1,587
Current Obligations Under
Capital Lease 3,780 3,880
Current portion of Notes
Payable & Mortgage Payable 103,674 93,674
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Total Current Liabilities 218,868 192,896
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LONG-TERM DEBT
Mortgage payable 293,332 293,332
Notes payable - related party 91,030 81,030
Obligation Under Capital Lease 4,406 5,914
Less: Current Portion (107,454) (97,554)
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Total Long-Term Debt 281,314 282,722
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Total Liabilities 500,182 475,618
STOCKHOLDERS' EQUITY
Common stock, $.0003 Par
Value, Authorized 75,000,000
Shares; issued and
outstanding 11,850,964
shares 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 (7,631,848) (7,567,874)
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Total Stockholders' Equity 1,623,373 1,664,847
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,123,555 $ 2,140,465
============= =============
The accompanying notes are an integral part of these financial
statements.
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<PAGE>
Versatech, Inc.
Consolidated Statements of Operations
For the three For the three
months ended months ended
March 31 March 31
2000 1999
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SALES $ 27,838 $ 343,323
COST OF GOODS SOLD 6,296 249,809
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GROSS PROFIT 21,542 93,514
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OPERATING EXPENSES
General And Administrative
Expenses 85,428 344,093
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TOTAL OPERATING EXPENSES 85,428 344,093
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OPERATING INCOME (LOSS) (63,886) 250,579
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OTHER INCOME AND (EXPENSES)
Interest Expense (88) (247)
Other Income - 3,645
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Total Other Income and
(Expenses) (88) 3,398
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NET INCOME (LOSS) $ (63,974) $ (247,181)
============= =============
NET INCOME (LOSS) PER SHARE $ (.01) $ (.03)
============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 11,850,964 8,419,964
============= =============
The accompanying notes are an integral part of these financial
statements.
-5-
<PAGE>
Versatech, Inc.
Consolidated Statements of Cash Flows
For the three For the three
months ended months ended
March 31 March 31
2000 1999
------------- -------------
Cash Flows From Operating
Activities
Net income (loss) $ (63,974) $ (247,181)
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Used in Operating Activities:
Depreciation & Amortization 10,475 10,767
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable - -
Other Receivables 17 (1,969)
Inventory 1,453 (96,879)
Increase/(decrease) in:
Accounts Payable 15,886 109,595
Accrued Expenses 1,591 (119,864)
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Net Cash Provided (Used)
by Operating Activities (34,552) (345,531)
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Cash Flows from Investing
Activities
Purchase of Property and
Equipment - (5,296)
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Net Cash Provided (Used)
by Investing Activities - (5,296)
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Cash Flows from Financing
Activities
Proceeds from sale of treasury
stock 22,500 -
Proceeds from debt financing 10,000 -
Principal payments on capital
lease obligations (1,508) (990)
Proceeds from stock
subscriptions - 376,072
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Net Cash Provided (Used)
by Financing Activities 30,992 375,082
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Net Increase (Decrease) in Cash
and Cash Equivalents (3,560) 24,255
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Cash and Cash Equivalents
Beginning 24,609 308,838
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Ending $ 21,049 $ 333,093
============= =============
Supplemental Disclosures of
Cash Flow Information:
Cash payments for interest $ 88 $ 247
============= =============
Cash payments for income taxes $ - $ -
============= =============
Supplemental Schedule of Noncash
Investing and Financing Activities
Common shares issued for services $ - $ -
============= =============
The accompanying notes are an integral part of these financial
statements.
-6-
<PAGE>
Versatech, Inc.
March 31, 2000
NOTES TO FINANCIAL STATEMENTS
Versatech, Inc. (the "Company") has elected to omit substantially
all footnotes to the financial statements for the three months
ended March 31, 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.
NAME CHANGE
On March 15, 2000, D. H. Marketing & Consulting, Inc, changed its
name to Versatech, Inc.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
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, any statements herein regarding the new
marketing plan's impact on sales for the upcoming quarter 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 and future plans regarding the increase or decrease in
the number of employees are forward-looking statements. These 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.
("UNAI"), a direct sales organization distributing various tangible asset
collectibles through Independent Distributors. UNAI is based in Sarasota,
Florida and operates through its subsidiary Universal Network, Inc. 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 expand the range of health issues and features.
This led to the eventual incorporation of Longer Living, 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 approved at the
special stockholder's meeting on March 15, 2000 that the Company officially
change its name from D.H. Marketing & Consulting, Inc. to Versatech, Inc. In
an announcement made on March 28, 2000, Universal Network, Inc. had 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 the resulting relationships.
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Selected Financial Data
for 3 mos for 3 mos
ending ending
03/31/00 03/31/99
---------- ----------
Sales $ 27,838 $ 343,323
Cost of Goods $ 6,296 $ 249,809
Sold
Net Income $ ( 63,974) $ (247,181)
Net Income/Share (.005) (.03)
Weighted Average 11,850,964 8,419,964
# Common Shares
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Liquidity
The Company posted a net loss for the first quarter of $63,886 as compared
with the first quarter of 1999 when the Company posted a net loss of $247,181.
The Company has recorded Total Current Assets of $186,585 as of 3/31/00 as
compared to $5,699,166. This significant reduction is due to the year end
inventory devaluation and reassignment. Total Stockholder's Equity as of
3/31/00 was $1,623,373.
Capital Resources
The Company's recorded Total Current Assets of $186,585 were divided into
$48,742 in cash and cash equivalents and $137,843 in inventory held at cost.
These figures compare much lower with reference to the 1999 cash and cash
equivalents of $340,997 and inventory of $5,358,169. The reduction in
inventory valuation and reduced sales figures are the reasons for the declined
results.
Cash Expenditures
Total general and administrative expenses have continued to decline. The
amount of operating expenses as of 3/31/00 was reduced to $85,428 as compared
with $344,093 for the same period in 1999. This figure represents a 75.2%
reduction in expenses to go along with a larger than expected reduction in
sales.
Long-Term Debt/Current Liabilities
The Company has satisfactorily retired all Long-Term Debt with the exception
of two(2) Capital Leases for Office Equipment that totaled approximately
$9,936 in current and long-term debt. Universal Network, Inc. now has
outstanding long term debt in the amount of $281,314. This figure is
represented in majority by the mortgage on the office building in Florida.
Revenue
Total revenue less sales discounts was reduced significantly to $27,838 as of
3/31/00 as compared with $343,323 as of 3/31/99. Management realizes that the
change in the marketing plan in the middle of 1999 is the contributing factor
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.
Items that can be purchased include jewelry, authentic leafs from the First
Edition Noah Webster's American Dictionary of the English Language; authentic
leafs from the original issue of the King James Bible and collectible
numismatic Morgan Silver Dollars. Representatives then earn commissions
corresponding to the sales volume generated at their portion of the network.
Universal Network, Inc. introduced a line of consumable health and beauty
products in 1998 and that was followed up late in the year by the introduction
of UNItropin, an anti-aging human growth hormone like dietary supplement. It
is within these markets of consumables that management still feels is the best
direction for the Company.
Plan of Operation
Versatech, Inc. (formally D.H. Marketing & Consulting, Inc.) was incorporated
in Nevada in 1994. The Company was involved in several distinct operations in
recent years but has divested itself of these 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. is the sole component in the network marketing division. The
company originally focused on wealth building products with intrinsic value
such as gold coins, jewelry and lithographs. In 1998, the focus of Universal
turned towards the health sector when it introduced an aloe vera based product
line of skin care products. The initial success of this product line enticed
Universal to expand in the health sector and in late 1998, it introduced
UNItropin, a human growth hormone like dietary supplement. The product in the
existing marketing plan was not an overwhelming success so in conjunction with
the Company, Universal has redefined the marketing plan in hopes of a better
response to the product. In conjunction with Commission Junction, a web based
e-commerce organization located in California, the Company anticipates that it
will greatly increase the presence of UNItropin in the market place.
LongerLiving.com, Inc.
Longer Living.com, Inc., was established in December of 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
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 2. CHANGES IN SECURITIES
The Company has not sold any securities during the first quarter of 2000 that
have not been registered under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 15, 2000, the Company held a special meeting of the shareholders for
the purpose of approving the name change from D.H. Marketing & Consulting,
Inc. to Versatech, Inc. Of the 11,850,964 shares authorized to vote,
7,524,339 shares voted for the name change, 10,580 shares voted against the
name change, and 4,316,045 shares abstained from voting.
ITEM 5. OTHER INFORMATION
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with or
incorporated by reference in this report.
Exhibit No. Description and Method of Filing
- ----------- ----------------------------------------------
23 Consent of Accountant
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
During the quarter ended March 31, 2000, the Company did not file any
Forms 8-K.
Items 2, 3 4 and 5 are not applicable and have been omitted.
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
May 19, 2000 By: /s/ GARY STAFFORD
- -------------- -----------------------------------
Date Gary Stafford
Chief Financial Officer
and duly authorized officer
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report, dated May 7, 2000, in this
quarterly report on Form 10-Q for Versatech, Inc.
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
May 7, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS DATED MARCH 31, 2000 (UNAUDITED) AND
DECEMBER 31, 1999 (AUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 21,049
<SECURITIES> 0
<RECEIVABLES> 78,573
<ALLOWANCES> (54,749)
<INVENTORY> 137,843
<CURRENT-ASSETS> 186,585
<PP&E> 624,824
<DEPRECIATION> (184,228)
<TOTAL-ASSETS> 2,123,555
<CURRENT-LIABILITIES> 218,868
<BONDS> 0
0
0
<COMMON> 3,555
<OTHER-SE> 1,619,818
<TOTAL-LIABILITY-AND-EQUITY> 2,123,555
<SALES> 27,838
<TOTAL-REVENUES> 27,838
<CGS> 6,296
<TOTAL-COSTS> 6,296
<OTHER-EXPENSES> 85,428
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> (63,974)
<INCOME-TAX> 0
<INCOME-CONTINUING> (63,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,974)
<EPS-BASIC> (.005)
<EPS-DILUTED> (.005)
</TABLE>
