UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
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Commission File Number: 000-49616
Global Yacht Services, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0488686
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7710 Hazard Center Drive, Suite E-415, San Diego, California, 92108
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(Address of principal executive offices)
619.990.0976
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(Issuer's Telephone Number)
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 practical date. As of August 19, 2002, there were
1,917,277 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2002
(UNAUDITED)
ASSETS
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Current assets
Cash $ 122,283
Accounts receivable, net 238
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Total current assets 122,521
Investment in yacht 25,000
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Total assets $ 147,521
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 3,325
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Total current liabilities 3,325
Stockholders' Equity
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 1,917,277 1,917
Additional paid-in-capital 188,643
Accumulated deficit (46,364)
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Total stockholders' equity 144,196
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Total liabilities and stockholders' equity $ 147,521
==============
See accompanying notes to consolidated financial statements.
2
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues $ 7,827 $ 12,875 $ 36,695 $ 12,875
Cost of revenues 7,472 4,000 10,267 4,000
----------- ----------- ----------- ----------
Gross margin 355 8,875 26,428 8,875
Operating expenses
Legal and professional fees 15,396 5,885 25,541 5,885
Occupancy 585 820 1,170 820
Office supplies and expense 680 3,384 1,756 3,384
Outside services 1,500 1,500 3,000 1,500
Telephone and utilities 468 192 877 192
----------- ------------ ----------- ----------
Total operating expenses 18,629 11,781 32,344 11,781
----------- ------------ ----------- ----------
Loss from operations (18,274) (2,906) (5,916) (2,906)
Other income --- 9 4 9
----------- ------------ ----------- ----------
Loss before provision for income taxes (18,274) (2,897) (5,912) (2,897)
Provision for income tax expense (benefit) (2,200) --- 800 ---
----------- ------------ ----------- ----------
Net loss/comprehensive loss $ (16,074) $ (2,897) $ (6,712) $ (2,897)
=========== ============ =========== ==========
Net loss/comprehensive loss per common
share --- basic and diluted $ --- $ --- $ --- $ ---
=========== ============ =========== ==========
Weighted average of common shares --- basic
and diluted 1,638,400 1,080,300 1,461,600 1,080,300
=========== ============ =========== ==========
See accompanying notes to consolidated financial statements.
3
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FEBRUARY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2002
(UNAUDITED)
Common Stock Additional
-------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
---------- ---------- ----------- ----------- -----------
Balance, February 21, 2001 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
February 22, 2001 1,000,000 1,000 9,000 --- 10,000
Issuance of common stock,
May 4, 2001 5,000 5 495 --- 500
Issuance of common stock,
May 25, 2001 277,777 278 49,722 --- 50,000
Cost of occupancy
contributed by officer --- --- 820 --- 820
Net loss/comprehensive loss --- --- --- (2,897) (2,897)
---------- ---------- ----------- ----------- -----------
Balance, June 30, 2001 1,282,777 1,283 60,037 (2,897) 58,423
---------- ---------- ----------- ----------- -----------
Cost of occupancy
contributed by officer --- --- 1,170 --- 1,170
Net loss/comprehensive loss --- --- --- (36,755) (36,755)
---------- ---------- ----------- ----------- -----------
Balance, December 31, 2001 1,282,777 1,283 61,207 (39,652) 22,838
---------- ---------- ----------- ----------- -----------
Issuance of common stock,
May 10, 2002 634,500 634 126,266 --- 126,900
Cost of occupancy
contributed by officer --- --- 1,170 --- 1,170
Net loss/comprehensive loss --- --- (6,712) (6,712)
---------- ---------- ----------- ----------- -----------
Balance, June 30, 2002 1,917,277 $ 1,917 $ 188,643 $ (46,364) $ 144,196
=========== ========== =========== =========== ==========
See accompanying notes to consolidated financial statements.
4
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
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2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,712) $ (2,897)
Adjustments to reconcile net income to net cash used in operating
activities
Occupancy costs contributed by officer 1,170 820
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable (238) (600)
Increase (decrease) in accounts payable and accrueds 36 5,606
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Net cash provided/(used) by operating activities (5,744) 2,929
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in yacht (25,000) ---
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Net cash used by operating activities (25,000) ---
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 126,900 60,500
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Net cash provided by financing activities 126,900 60,500
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 96,156 63,429
CASH AND CASH EQUIVALENTS, beginning of period 26,127 ---
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CASH AND CASH EQUIVALENTS, end of period $ 122,283 $ 63,429
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 800 $ ---
=============== ===============
Interest paid $ --- $ ---
=============== ===============
See accompanying notes to consolidated financial statements.
5
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)
NOTE 1 - PRINCIPLES OF CONSOLDIATION AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of the Global Yacht Services, Inc. and its majority owned
subsidiary, Global Yacht Services, Ltd. All significant intercompany
transactions have been eliminated, if any. The unaudited consolidated financial
statements included herein have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 301(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 recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 2002 and 2001 are not
necessarily indicative of the results that may be expected for the years ended
December 31, 2002 and 2001. These statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-KSB.
NOTE 2 - COMMON STOCK
On February 22, 2001, the Company issued 1,000,000 shares of its common
stock to its president and founder for $10,000 cash to initially capitalize the
Company. Since there was no readily available market value at the time the
shares were issued, the value of $0.01 per share was considered as a reasonable
estimate of fair value between the officer and the Company.
On May 4, 2001, the Company issued 5,000 shares of its common stock to
an officer for $500 cash. Since there was no readily available market value at
the time the shares were issued, the value of $0.10 per share was considered as
a reasonable estimate of fair value between the office and the Company.
On May 31, 2001, the Company completed a "best efforts" offering of its
common stock pursuant to the provisions of Section 5 of the Securities Act of
1933 and Regulation S promulgated by the Securities and Exchange Commission. In
accordance with the Private Placement Memorandum Offering, the Company issued
277,777 shares of its common stock at $0.18 per share for a total of $50,000.
On May 10, 2002, the Company issued 634,500 shares of its common stock
at a selling price of $0.20 per share pursuant to its prospectus as filed with
its registration statement on Form SB-2.
NOTE 3 - RELATED PARTY TRANSACTIONS
On February 22, 2001 and May 4, 2001, the Company issued 1,000,000 and
5,000 shares of its common stock, respectively to it current officers for cash
as described in Note 2.
The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying consolidated statement of operations for
the three-month period ended June 30, 2002 and from February 21, 2001
(inception) through March 31, 2001 and are considered additional contributions
of capital by the officer and the Company.
6
Item 2. Plan of Operation
---------------------------
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
We provide a broad range of yacht services in the global marketplace. Our
services include yacht rental and charter, yacht sales and yacht services, such
as the provision of captain, crew, supplies, maintenance, delivery as well as
full-scale contracted care of yachts. Our president, Mitch Keeler, is an
experienced captain and possesses a captain certification from the U.S. Coast
Guard. Mr. Keeler provides professional advice and consultation for all aspects
of yacht lease, purchase and ownership and is available for on site assistance
anywhere in the world.
We currently generate revenues from our charter services, which range from day
charters to full week charters. We currently offer private yacht charters in San
Diego, usually of up to one week in duration as well as corporate charters,
which are typically 3 to 5 hours and short range. We have very few charters that
are longer than one week, however, they do occur. Our officers act as captain
and crew for our charter services, but we often utilize outside businesses for
services such as catering and bartending.
We have also generated revenues from our yacht management services and our
delivery services. Yacht management services include managing the yacht for the
owners including routine maintenance, repairs and electronics installation.
Regular maintenance includes services such as exterior and interior cleaning,
bottom cleaning, waxing and zinc replacement. Delivery services include
delivering newly purchased yachts to various locations around the world.
For the six months ended June 30, 2002.
---------------------------------------
Liquidity and Capital Resources. Our total assets were approximately $147,521 as
of June 30, 2002. Of those assets, cash was $122,283 as of June 30, 2002, and
net accounts receivable were $238 as of June 30, 2002. Therefore, our total
current assets were $122,521 as of June 30, 2002. We believe that our available
cash is sufficient to pay our day-to-day expenditures. We also invested $25,000
in a yacht as of June 30, 2002.
7
In February 2002, our registration statement on Form SB-2 to register 750,000
shares of common stock we are offering for sale at $0.20 per share, and 50,000
shares of common stock held by our shareholders was declared effective by the
Securities and Exchange Commission. As of June 30, 2002, we had accepted
subscriptions for 634,500 shares of our common stock, raising a total of
$126,900 from the offering. We hope to sell additional shares in the near
future, although we cannot guaranty that we will be able to sell those shares.
Our current liabilities were $3,325 as of June 30, 2002, and were represented
solely by accounts payable and accrued expenses. We had no other liabilities and
no long term commitments or contingencies as of June 30, 2002.
Results of Operations.
Revenue. For the six months ended June 30, 2002, we realized revenues of
$36,695, compared to revenues of $12,875 generated from our inception on
February 21, 2001 through the period ended June 30, 2001. Our cost of revenues
were $10,267 for the six months ended June 30, 2002, compared to $4,000 for the
period the prior year from our inception through June 30, 2001. Therefore, our
gross margin for the six months ended June 30, 2002 was $26,428, compared to
$8,875 for the period ended June 30, 2001. We hope to generate more revenues as
we expand our customer base.
Operating Expenses. For the six months ended June 30, 2002, our total operating
expenses were approximately $32,344, compared to $11,781 for the period from our
inception on February 21, 2001 through June 30, 2001. For the six months ended
June 30, 2002, the majority of our total operating expenses were represented by
legal and professional fees of $25,541. We also had occupancy expenses of
$1,170, office supplies and expense of $1,756, outside services expenses of
$3,000, and $877 for telephone and utilities. For the six months ended June 30,
2002, we experienced a net loss of approximately $5,916, compared to a net loss
of $2,906 for the period from our inception on February 21, 2001 through June
30, 2001. We anticipate that we will continue to incur significant general and
administrative expenses, but hope to continue generating income as we expand our
operations.
Our Plan of Operation for the Next Twelve Months. In our management's opinion,
to effectuate our business plan in the next twelve months, the following events
should occur or we should reach the following milestones in order for us to
become profitable:
1. We must conduct marketing activities to promote our services and obtain
additional customers to increase our customer base. We currently market
our business primarily through referrals and our website. Our
president, Mitch Keeler, had a large foundation of business and a
strong reputation in the industry, which we believe has been
transferred to us. We believe that referrals comprise approximately 70%
of our business and business generated from our website is
approximately 30% of our business. Future marketing will include
articles and advertisements in industry publications, such as:
Yachting, Motor Boating, and Sea. Within six months, we should have
increased our customer base.
2. We must develop relationships with various parties including yacht
owners, sellers, brokers, lessors, charter agents, maintenance
suppliers, industry professionals and specialists, captains, crew,
engineers, designers, insurance agents, legal advisors, and government
agents. We believe that these parties will help supply some of our
services and they may become sources of referrals. Within six to twelve
months, we should have developed relationships with several of those
parties who provide some of the services that we offer as well as be
sources of referrals.
8
3. We must develop our website so that it will function as a means for
global clients to access our range of services and communicate with us
for support services as well as for use as a marketing tool to inform
and persuade customers to engage our services. We intend to develop our
website so that we utilize a database set up on the backend, which will
capture customer information and allow us to process information
concerning our clients and potential clients. One objective for our
website is to interact with clients in "real time" so that they feel
that their needs are being taken care of professionally and on a
personal level. Within six to twelve months, we should have developed
our website to provide those services.
We have cash of $122,283 as of June 30, 2002, in part due to our recent sale of
shares of our common stock, which provided us with significant additional funds.
In the opinion of management, available funds will satisfy our working capital
requirements for the next twelve months. Our forecast for the period for which
our financial resources will be adequate to support our operations involves
risks and uncertainties and actual results could fail as a result of a number of
factors. In order to expand our operations, we do not currently anticipate that
we will need to raise additional capital in addition to the funds raised in this
offering. If we do not raise adequate funds from this offering, then we may not
be able to conduct marketing activities and expand our operations.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. In the event that we expand our customer base,
then we may need to hire additional employees or independent contractors as well
as purchase or lease additional equipment.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
--------------------------
None.
Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities
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None.
Item 4. Submission of Matters to Vote of Security Holders
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None.
Item 5. Other Information
--------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
None.
9
SIGNATURES
In accordance with 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.
Global Yacht Services, Inc.,
a Nevada corporation
August 19, 2002 By: /s/ Mitch Keeler
-----------------------------------
Mitch Keeler
Its: president, principal executive officer,
director
10
CERTIFICATIONS
I, Mitch Keeler, certify that:
1. I have read this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.;
2. To my knowledge, the information in this report is true in all
important respects as of June 30, 2002; and
3. This report contains all information about the company of which I am
aware that I believe is important to a reasonable investor, in light of
the subjects required to be addressed in this report, as of June 30,
2002.
For purposes of this certification, the information is "important to a
reasonable investor" if:
(a) There is substantial likelihood that a reasonable investor would view
the information as significantly altering the total mix of information
in the report; and
(b) The report would be misleading to a reasonable investor if the
information was omitted from the report.
Date: August 19, 2002
By: /s/ Mitch Keeler
-----------------------
Mitch Keeler
Its: Chief Executive Officer
11
CERTIFICATIONS
I, Melissa Day, certify that:
4. I have read this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.;
5. To my knowledge, the information in this report is true in all
important respects as of June 30, 2002; and
6. This report contains all information about the company of which I am
aware that I believe is important to a reasonable investor, in light of
the subjects required to be addressed in this report, as of June 30,
2002.
For purposes of this certification, the information is "important to a
reasonable investor" if:
(c) There is substantial likelihood that a reasonable investor would view
the information as significantly altering the total mix of information
in the report; and
(d) The report would be misleading to a reasonable investor if the
information was omitted from the report.
Date: August 19, 2002
By: /s/ Melissa Day
------------------------
Melissa Day
Its: Chief Financial Officer