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 September 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 October 31, 2000 the issuer had 13,854,228 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 nine
months ended September 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
September 30, 2000
<PAGE>
Versatech, Inc.
Consolidated Balance Sheets
ASSETS
------
September 30 December 31
2000 1999
------------- -------------
CURRENT ASSETS (unaudited)
Cash and Cash Equivalents $ 10,499 $ 24,609
Accounts receivable, Net of
Allowance $54,749 and $54,749 24,556 25,229
Other Receivables 3,869 3,886
Inventory 130,873 139,296
------------- -------------
Total Current Assets 169,797 193,020
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INVESTMENTS
Investments - Other 46,903 46,903
------------- -------------
Total Investments 46,903 46,903
------------- -------------
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 16,875 22,500
Deposits and Other Assets 6,450 6,450
Arts & Collectibles 1,422,396 1,422,396
------------- -------------
Net Other Assets 1,445,721 1,451,346
------------- -------------
TOTAL ASSETS $ 2,100,017 $ 2,140,465
============= =============
The accompanying notes are an integral part of these financial statements.
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<PAGE>
Versatech, Inc.
Consolidated Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30 December 31
2000 1999
------------- -------------
CURRENT LIABILITIES (unaudited)
Accounts Payable $ 116,564 $ 89,384
Sales Tax Payable 1,051 1,211
Accrued Wages 1,561 2,925
Accrued Expenses 497 235
Deferred Tax Liability 1,587 1,587
Current Obligations Under
Capital Lease 3,050 3,880
Current portion of Notes
Payable & Mortgage Payable 144,323 93,674
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Total Current Liabilities 268,633 192,896
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LONG-TERM DEBT
Mortgage Payable 288,070 293,332
Notes Payable - Related Party 131,679 81,030
Obligation Under Capital Lease 3,502 5,914
Less: Current Portion (147,373) (97,554)
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Total Long-Term Debt 275,878 282,722
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Total Liabilities 544,511 475,618
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 (7,699,715) (7,567,874)
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Total Stockholders' Equity 1,555,506 1,664,847
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,100,017 $ 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
<TABLE>
<CAPTION>
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30 September 30 September 30 September 30
2000 1999 2000 1999
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SALES $ 9,725 $ 320,723 $ 59,767 $ 961,897
COST OF GOODS SOLD 3,335 89,683 14,166 535,085
-------------- ------------- ------------- --------------
GROSS PROFIT 6,390 231,040 45,601 426,812
-------------- ------------- ------------- --------------
OPERATING EXPENSES
General And Administrative
Expenses 48,859 137,637 165,083 843,109
-------------- ------------- ------------- --------------
TOTAL OPERATING EXPENSES 48,859 137,637 165,083 843,109
-------------- ------------- ------------- --------------
OPERATING INCOME (LOSS) (42,469) 93,403 (119,482)
(416,297)
-------------- ------------- ------------- --------------
OTHER INCOME AND (EXPENSES)
Interest Expense (124) (395) (12,862)
(782)
Other Income - 352 - 5,417
Gain on Sale of Investments - - - 320
-------------- ------------- ------------- --------------
Total Other Income and
(Expenses) (124) (43) (12,862) 4,955
-------------- ------------- ------------- --------------
NET INCOME (LOSS) $ (42,593) $ 93,360 $ (132,344) $
(411,342)
============== ============= ============= ==============
NET INCOME (LOSS) PER SHARE $ (.003) $ .011 $ (.011) $
(.049)
============== ============= ============= ==============
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.
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<PAGE>
Versatech, Inc.
Consolidated Statements of Cash Flows
For the nine For the nine
months ended months ended
September 30 September 30
2000 1999
--------------- ---------------
Cash Flows From Operating Activities
Net income (loss) $ (132,344) $ (411,342)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Depreciation 11,600 42,037
Amortization 5,625 4,108
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable 673 (301,745)
Other Receivables 17 100
Inventory 8,423 65,053
Increase/(decrease) in:
Accounts Payable 27,180 (12,677)
Accrued Expenses (1,262) (123,520)
--------------- ---------------
Net Cash Provided (Used) by
Operating Activities (80,088) (737,986)
--------------- ---------------
Cash Flows from Investing Activities
Purchase of Property and Equipment - (6,415)
--------------- ---------------
Net Cash Provided (Used) by
Investing Activities - (6,415)
--------------- ---------------
Cash Flows from Financing Activities
Proceeds from sale of treasury stock 22,500 -
Proceeds from debt financing 50,649 29,900
Principal Payments on capital lease
obligations (1,909) (1,592)
Principal Payments on mortgage payable (5,262) -
Proceeds from stock subscriptions - 436,072
--------------- ---------------
Net Cash Provided (Used) by
Financing Activities 65,978 464,180
--------------- ---------------
Net Increase (Decrease) in Cash and
Cash Equivalents (Forwarded) (14,110) (280,221)
--------------- ---------------
Cash and Cash Equivalents
Beginning 24,609 308,838
--------------- ---------------
Ending $ 10,499 $ 28,617
=============== ===============
Supplemental Disclosures of Cash Flow
Information:
Cash payments for interest $ 12,862 $ 782
=============== ===============
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.
September 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 nine months
ended September 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.
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<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 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 and future plans regarding
the increase or decrease in the number of employees 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 9 mos for 9 mos
ending ending ending ending
9/30/00 9/30/99 9/30/00 9/30/99
Sales $ 9,725 $ 320,723 $ 59,767 $ 961,897
Cost of Goods Sold $ 3,335 89,683 14,166 535,085
Net Income $ (42,593) 93,360 (132,344) (411,342)
Net Income/Share $ (.003) .011 (.010) (.049)
Weighted Average 13,264,964 8,419,964 13,264,964 8,419,964
# Common Shares
Liquidity
---------
The Company posted a net loss of $42,593 for the third quarter
of 2000. The amount of net loss for the Company has continued to
reduce in size from the prior two quarters of 2000. The Company
has reduced operating expenses by 45% as compared to the third
quarter of 1999.
The Company has recorded Total Current Assets of $169,797 as of
September 30, 2000. This breakdown includes $10,499 in cash or
cash equivalents, $28,425 in accounts receivable and the balance
was held in inventory at $130,873. Total current assets reflect a
97% reduction as compared to the third quarter of 1999 where the
value at that time was $5,532,434. The Company numbers for the
year 2000 reflect the large inventory valuation adjustment that
was done at year end 1999.
Capital Resources
-----------------
As of September 30, 2000, the Total Stockholder Equity was
$1,555,506 as compared with $5,694,753 for the same period in
1999. This represents a 73% reduction in stockholders equity.
Cash Expenditures
-----------------
Total general and administrative expenses decreased from $137,637
on September 30, 1999 to $48,859 on September 30, 2000. The
Company has engaged a concerted effort to reduce operating
expenses to a bare minimum in order to rebuild its position in
the marketplace. The Company has been able to continue the trend
of reducing expenses by 20% or more in each quarter of 2000.
Long Term Debt/Current Liabilities
----------------------------------
The Company has outstanding liability in the area of Accounts
Payable which has $116,564. The Company has a minor capital lease
for office equipment in the amount of $3,502. The major
outstanding long term liability continues to be the mortgage on
the building located in Sarasota, Florida. In January, 1999, the
Company purchased this property and the present value on the
outstanding mortgage is $288,070.
Revenue
-------
Total revenue, less sales discounts has decreased from $320,723
on September 30, 1999 to $9,725 on September 30, 2000. The
Company is now focusing its direction towards the internet and
the development of its presence in that arena. Management
anticipates that the internet is the key to the future success of
the Company. The initial product introduced in 1999 was a dietary
supplement called UNItropin. The Company is in the process of
developing a new packaging for the product which will give it a
much longer shelf life. It is anticipated that this new packaging
will be introduced during the 4th quarter of 2000. The Company is
also researching some variations to UNItropin which could be
introduced in early 2001.
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 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 2. CHANGES IN SECURITIES
During the three months ended September 30, 2000 the Company
issued 200,000 shares of restricted common stock to one individual
for services rendered, which were valued at $100,000 or $.50 per
share. These shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, as
amended.
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 September 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
November 14, 2000 By: /s/MICHAEL J. DAILY
Date Michael J. Daily
President, Chief Executive Officer,
Secretary and duly authorized
officer
