U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0001058307
YSEEK, INC.
(Exact Name of Small Business Issuer in Its Charter)
Florida 65-078-3722
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) fication No.)
412 East Madison Street, Suite 1000, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 221-4429
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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
The number of shares of the registrant's common stock, par value $.0001 per
share, outstanding as of May 7, 2001 was 25,315,100.
Table of Contents to Form 10QSB
Part I - Financial Information Page
Item 1. Financial Statements (unaudited)
Balance Sheet March 31, 2001.........................................2
Statements of Operations - three Months
Ended March 31, 2001 and 2000 ......................................3
Statements of Cash Flows - three Months
Ended March 31, 2001 and 2000........................................4
Notes to Financial Statements........................................6
Item 2. Management's Discussion and Analysis or Plan of Operation............8
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds.............................
Item 6. Exhibits and Reports on Form 8-K.......................................
Signatures....................................................................8
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YSEEK, INC.
BALANCE SHEET
March 31, 2001
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(unaudited)
ASSETS
Current assets
Cash $ 926
Prepaid expenses 2,558,397
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Total current assets 2,559,323
Property and equipment, net 645,771
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Other assets
Deposits 30,000
Shareholder loan receivable 134,813
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Total other assets 164,813
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Total Assets $ 3,369,907
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses 76,902
Current maturities of long-term debt 4,413
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Total current liabilities 81,315
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Long-term debt, less current maturities 9,999
Commitments and contingencies --------------------
Stockholders' equity
Common stock; $.0001 par value; 50,000,000 shares
authorized; 25,315,100 shares issued and outstanding 2,531
Paid in capital 10,714,762
Accumulated deficit (7,438,700)
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Total stockholders' equity 3,278,593
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Total Liabilities and Stockholders' Equity $ 3,369,907
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The accompany notes are an integral part of the financial statements.
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YSEEK, INC.
STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
--------------------------------
2001 2000
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(unaudited) (unaudited)
Revenues $ - $ -
Expenses
Selling, general and administrative 976,358 113,965
Depreciation and amortization 33,991 86,350
Loss from impairment 2,368,201 -
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3,378,550 200,315
Total expenses
Other income (expense)
Interest income 3,215 37
Interest expense (562) -
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2,653 37
Total other income (expense --------------- ----------------
Loss from continuing operations (3,375,897) (200,278)
Discontinued operations
Loss from discontinued carwash and
quick-lube operations - (56,425)
Provision for loss on disposal of
property, equipment and related assets - (350,000)
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Loss from discontinued operations - (406,425)
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Net loss $ (3,375,897) $ (606,703)
================ ==============
Loss per common share
From continuing operations $ (.13) $ (.02)
Discontinued operations
Loss from operations - (.01)
Loss on disposal - (.03)
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Total loss per share $ (.13) $ (.06)
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Weighted average common shares outstanding 25,077,490 11,011,489
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The accompany notes are an integral part of the financial statements
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YSEEK, INC.
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
---------------------------------
2001 2000
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(unaudited) (unaudited)
Cash flows from operating activities
Net loss $ (3,375,897) $ (606,703)
---------------- ---------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Contributed services 8,750 15,000
Stock issued to consultants 104,688 -
Depreciation and amortization 33,991 101,722
Writedown of intangible asset and property
and equipment due to impairment 2,368,201 -
Increase in interest receivable (3,190) -
Decrease in prepaid expenses 791,072 19,504
Increase in accounts payable and
accrued expenses 44,627 20,437
Increase in accrued loss from
discontinued operations - 350,000
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Total adjustment 3,348,139 506,663
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Net cash used in operating activities (27,758) (100,040)
Cash flows from investing activities
Acquisition of property and equipment - (4,040)
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Cash flows from financing activities
Payments on notes payable (1,005) (14,460)
Net proceeds from issuance of stock - 34,524
Net advances from stockholders 28,639 49,320
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Net cash provided by financing activities 27,634 69,384
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Net decrease in cash (124) (34,696)
Cash, beginning of period 1,050 37,625
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Cash, end of period $ 926 $ 2,929
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The accompany notes are an integral part of the financial statements
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YSEEK, INC.
STATEMENTS OF CASH FLOWS
(Continued)
Supplemental disclosures of noncash investing and financing activities:
In March 2000, the Company issued 125,000 shares of stock for capitalized
software valued at $98,750.
Supplemental disclosure of cash flow information:
The Company paid approximately $562 and $15,000 in interest for the three months
ended March 31, 2001 and 2000, respectively.
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YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
The information presented herein as of March 31, 2001, and for the three-months
ended March 31, 2001 and 2000, is unaudited.
(1) Basis of Presentation:
The accompanying financial statements of Yseek, Inc. (the Company) have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal required adjustments) considered necessary for a fair presentation
have been included.
Operating results for the three month period ended March 31, 2001, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. For further information, refer to the financial statements
and footnotes included in the Company's annual report of Form 10-KSB for the
year ended December 31, 2000.
Net loss per common share is computed in accordance with the requirements of
Statement of Financial Accounting Standards No. 128 (SFAS 128). SFAS 128
requires net loss per share information to be computed using a simple weighted
average of common shares outstanding during the periods presented. In comput-
ing diluted loss per share, warrants exercisable into common shares were
excluded because the effect is antidilutive.
(2) Loss From Impairment of Assets:
In December 1999, the Company purchased all the outstanding stock of
Rankstreet.com, Inc. The total purchase price of $2,763,510 (including the value
of contingent shares issued in May, 2000 and February, 2001) was classified as
goodwill. The goodwill was being amortized over five years and as of December
31, 2000, accumulated amortization totaled $525,082.
Additionally, during 2000 the Company contracted with consultants to develop a
web site for Rankstreet. The web site was capitalized with a value of $206,250
and was being amortized over three years. Accumulated amortization as of
December 31, 2000 was $59,289.
In April 2001, the existing management and Board of Directors of the Company
resigned and were replaced by individuals with experience with internet based
businesses. The new Board of Directors evaluated the website and the goodwill
that was acquired in the purchase of Rankstreet.com, Inc. and deemed it to be
impaired and of no future value to the Company. Therefore the assets were
written down to zero resulting in a loss from impairment of $2,368,201. This
loss is reflected in the March 2001 statement of operations as loss from
impairment
(3) Stock Transactions:
During January and February of 2001, the Company issued 150,000 shares of common
stock to individuals and other entities for services performed during the first
quarter of 2001. The Company recognized an expense of $31,250, the market value
of the shares less a 50% discount because the shares are unregistered and the
Company stock is not easily marketable.
During January and February of 2001, the Company issued 200,000 and 125,000
shares of common stock under six month and one year consulting agreements,
respectively. The Company recorded a prepaid expense of $73,438 related to these
agreements, the market value of the shares less a 50% discount because the
shares are unregistered and the stock is not easily marketable. During the first
quarter of 2001, the Company expensed $30,859 utilizing the straight line method
over the life of the agreements. Additionally, options were granted to an
individual as part of one of the agreements. The option agreement allows for the
purchase of 75,000 shares of Company common stock for $.50 per share for a
period of three years. The other consulting agreement included issuance of
500,000 warrants at an exercise price of $.50 per share.
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(3) Stock Transactions: (Continued)
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During February 2001, the Company issued the final contingent 1,000,000 shares
related to the 1999 business acquisition. The Company capitalized goodwill of
$203,100, the market value of the shares less a 50% discount because the shares
are unregistered, are a significant block of stock and the Company stock is not
easily marketable. See Note 2 regarding goodwill.
(4) Subsequent Events:
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On April 9, 2001 the President of the Company resigned from all duties and
responsibilities.
On April 23, 2001, the Company borrowed $40,000 from a relative of an Board
member. The note calls for interest at a rate of 14% per annum. Interest and
principal are due in full on April 22, 2002. The note is uncollateralized.
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Item 2. Management's Discussion and analysis of Financial Condition and Results
of Operation
PLAN OF OPERATION
In the fourth quarter of 2000 and the first quarter of 2001, the Company entered
into strategic alliances with companies and individuals with substantial
experience in the Internet industry. The alliances allowed the Company to
acquire management and marketing expertise through consulting agreements.
Additionally, the Company acquired a ten-year software license for the use of a
keyword biddable search engine and related domain names. Lastly, the Company
entered into two traffic promotion agreements whereby each promoter will provide
an aggregate of 45,000,000 hits to the Company web site. The Company issued
stock in exchange for these agreements enabling the Company to move forward on
its plans without the use of any funds.
In April 2001, the Company's officers resigned. Individuals affiliated with the
consultants noted above were elected to the Board of Directors. These
individuals have substantial experience with profitable Internet companies and
web sites.
The Company's plans for the next twelve months include the launching of its
search engine, Yseek.com. With the traffic promotion agreements in place, the
Company believes there will be sufficient traffic to make the site a profitable
internet portal. Additionally the Company's expansion plans include acquiring
and developing other profitable business ventures.
In conjunction with planning the course of action for the next twelve months,
the new Board of Directors investigated the viability of Rankstreet.com.
Rankstreet was to be an all-in-one Web site including a directory, web counter
and business to business Internet advertising agency. The Board determined that
there was no value in pursuing the marketing and enhancement of the Rankstreet
web site and has abandoned any such plans.
The Companies plans to market the Yseek.com search engine and to acquire and
develop other profitable business ventures which will require additional funds.
As of March 31, 2001 the Company had no available funds. During April 2001, the
Company received a $40,000 loan from a relative of a Board member. The loan
bears interest at 14% per annum and is due in April 2002. The Company currently
is planning a private placement to raise $500,000. Two of the Company's board
members have guaranteed $100,000 of the private placement offering. Ultimately,
the Company believes it needs to raise an additional $2,000,000 to fully
implement its plans.
There is currently no expected purchase or sale of plant and equipment or
expected significant changes in the number of employees. However, if the Company
is successful in its fund raising efforts then the Company plans to hire staff
and acquire and develop other profitable business ventures.
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Item 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit Description Number
(2)Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession............................. ....None
(3)Articles of Incorporation and By-Laws............................. ...None
(10.1) Marshlack Promissory Note dated April 23, 2001......................11
(11)Statement re: computation of per share earnings......... ......Note 1 to
Financial
Statements
(15)Letter re: Unaduited Itnerim Financial Information..................None
(16)Letter regarding Changes in Certifying Accountant...................None
(18)Letter on change in accounting principles...........................None
(19)Report Furnished to Security Holders ...............................None
(22)Published report regarding matters submitted to vote................None
(23)Consents of Experts and Counsel.....................................None
(24)Power of Attorney...................................................None
(27)Financial Data Schedule.............................................None
(99)Additional Exhibits.................................................None
(b) REPORTS ON FORM 8-K:
On April 23, 2001, the Company filed a report on Form 8-K reprting the election
of a new board of directors under Item 1 Changes in Control and Item 6
Resignation of Registrants' Directors.
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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.
YSEEK, INC.
Dated: May 1, 2001 By: /s/ Bruce Hammil
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BRUCE HAMMIL, President
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EXHIBITS
PROMISSORY NOTE
TAMPA, FLORIDA
WITH BALLOON PAYMENT PROVISION
$40,000.00 April 23, 2001
FOR VALUE RECEIVED the undersigned Yseek, Inc., a Florida corporation,
"Maker" promises to pay to the order of Dan Marshlack, the principal sum of
Forty Thousand ($40,000.00) as follows:
With interest at the rate of 14% per annum payable in one balloon
payment of principal and accrued interest, of $46,500.00, due on April
22, 2002, payable at 825 Capri Boulevard, Treasure Island, Florida
33706.
Any payment hereunder shall be applied first to principal and then to
interest. In the event that a payment is not received when due, then this note
shall be in default. On a default in payment the holder of this note may without
notice or demand accelerate the balance due under this note and demand payment
in full. On a default in payment all persons liable herein, jointly and
severally waive, protest and agree to pay all expenses of collection with
reasonable attorney's fees, including appellate proceedings or bankruptcy
proceedings. The holder may forbear and enforce defaults and extend the time of
any payment without notice and without discharging or affecting the liability of
any person liable hereon. Upon default in payment of amounts due under this
note, all unpaid amounts shall bear interest at the maximum rate allowed by law.
Time is of the essence.
The Maker and all sureties, guarantors, and endorsers jointly and
severally waive demand and presentment for payment, notice of dishonor, notice
of nonpayment, notice of protest and protest; and all other notices or demands
in connection with the delivery, acceptance, performance, default, endorsement,
or guaranty of this Note.
Each party, including the Maker and any endorser, surety, or guarantor,
waives all right to trial by jury in any action or proceeding instituted in
respect to this Note.
Maker shall have the right to prepay said note at any time without
penalty.
Whenever used herein, the terms "holder", "maker", and "payee" shall be
construed in the singular or plural as the context may require or admit.
This Note shall be construed under the laws of the State of Florida,
including the Uniform Commercial Code, as enacted and in force in the State of
Florida. The Maker and endorser of this Note accept, submit, and consent to the
jurisdiction of the state and federal courts in the State of Florida in any
action arising out of or connected with the collection of the debt represented
by this Note.
The Maker and endorsers waive presentment, demand, notice of dishonor,
protest, and notice of nonpayment and protest.
/s/ Bruce C. Hammil
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Yseek, Inc.,- Maker
By its President, Bruce C. Hammil
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