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 SEPTEMBER 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.
---------------------------
(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
incorporation or organization) Identification No.)
7710 Hazard Center Drive, Suite E-415, San Diego, California, 92108
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(Address of principal executive offices)
619.990.0976
------------
(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 November 12, 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
SEPTEMBER 30, 2002
(UNAUDITED)
ASSETS
------
Current assets
Cash $ 111,796
Accounts receivable, net ---
--------------
Total current assets 111,796
Investment in yacht 25,000
--------------
Total assets $ 136,796
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 4,625
--------------
Total current liabilities 4,625
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 189,228
Accumulated deficit (58,974)
--------------
Total stockholders' equity 132,171
--------------
Total liabilities and stockholders' equity $ 136,796
==============
See accompanying notes to consolidated financial statements.
2
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues $ 16,741 $ 7,361 $ 53,436 $ 20,236
Cost of revenues 3,623 8,265 13,890 12,265
----------- ----------- ----------- -----------
Gross margin 13,118 (904) 39,546 7,971
Operating expenses
Legal and professional fees 22,644 9,025 48,185 14,910
Occupancy 585 585 1,755 1,405
Office supplies and expense 609 991 2,365 4,375
Outside services 1,500 1,500 4,500 3,000
Telephone and utilities 390 704 1,267 896
----------- ----------- ----------- -----------
Total operating expenses 25,728 12,805 58,072 24,586
----------- ----------- ----------- -----------
Loss from operations (12,610) (13,709) (18,526) (16,615)
Other income --- 29 4 38
----------- ----------- ----------- -----------
Loss before provision for income taxes (12,610) (13,680) (16,577) (18,522)
Provision for income tax expense (benefit) --- --- 800 ---
----------- ----------- ----------- ----------
Net loss/comprehensive loss $ (12,610) $ (13,680) $ (19,322) $ (16,577)
=========== =========== =========== ===========
Net loss/comprehensive loss per common
share --- basic and diluted $ --- $ (.01) $ --- $ (.01)
=========== =========== =========== ===========
Weighted average of common shares --- basic
and diluted 1,917,277 1,282,777 1,615,000 1,165,051
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
3
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FEBRUARY 21, 2001 (INCEPTION) THROUGH SEPTEMBER 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 --- --- 1,405 --- 1,405
Net loss/comprehensive loss --- --- --- (16,577) (16,577)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 2001 1,282,777 1,283 60,622 (16,577) 45,328
----------- ----------- ---------- ----------- -----------
Cost of occupancy
contributed by officer --- --- 585 --- 585
Net loss/comprehensive loss --- --- --- (23,075) (23,075)
----------- ----------- ----------- ----------- -----------
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 --- --- 1,755 --- 1,755
Net loss/comprehensive loss --- --- --- (19,322) (19,322)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 2002 1,917,277 $ 1,917 $ 189,228 $ (58,974) $ 132,171
=========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
4
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (19,322) $ (16,577)
Adjustments to reconcile net income to net cash used in operating
activities
Occupancy costs contributed by officer 1,755 1,405
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable --- ---
Increase (decrease) in accounts payable and accrueds 1,336 1,750
------------- -------------
Net cash provided/(used) by operating activities (16,231) (13,422)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in yacht (25,000) ---
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Net cash provided/(used) by investing 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 85,669 47,078
CASH AND CASH EQUIVALENTS, beginning of period 26,127 ---
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CASH AND CASH EQUIVALENTS, end of period $ 111,796 $ 47,078
============= =============
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
SEPTEMBER 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 nine months ended September 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 September 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 three months ended September 30, 2002.
----------------------------------------------
Results of Operations.
Revenue. For the three months ended September 30, 2002, we realized revenues of
$16,741, compared to revenues of $7,361 generated through the three months ended
September 30, 2001. Our cost of revenues were $3,623 for the three months ended
September 30, 2002, compared to $8,265 for the three months ended September 30,
2001. Therefore, our gross margin for the three months ended September 30, 2002
was $13,118, compared to a loss of $904 for the three months ended September 30,
2001. We hope to generate more revenues as we expand our customer base.
Operating Expenses. For the three months ended September 30, 2002, our total
operating expenses were approximately $25,728, compared to $12,805 for the three
months ended September 30, 2001. For the three months ended September 30, 2002,
the majority of our total operating expenses were represented by legal and
professional fees of $22,644. Our operating expenses for the three months ended
September 30, 2001 totaled $12,805, most of which were represented by legal and
professional fees of $9,025. For the three months ended September 30, 2002, we
experienced a net loss of approximately $12,610, compared to a net loss of
$13,680 for the three months ended September 30, 2001.
For the nine months ended September 30, 2002.
---------------------------------------------
Results of Operations.
Revenue. For the nine months ended September 30, 2002, we realized revenues of
$53,236, compared to revenues of $20,236 generated from our inception on
February 21, 2001 through the period ended September 30, 2001. Our cost of
revenues were $13,890 for the nine months ended September 30, 2002, compared to
$12,265 for the period the prior year from our inception through September 30,
2001. Therefore, our gross margin for the nine months ended September 30, 2002
was $39,546, compared to $7,971 for the period ended September 30, 2001. We hope
to generate more revenues as we expand our customer base.
Operating Expenses. For the nine months ended September 30, 2002, our total
operating expenses were approximately $58,072, compared to $24,586 for the
period from our inception on February 21, 2001 through September 30, 2001. For
the nine months ended September 30, 2002, the majority of our total operating
expenses were represented by legal and professional fees of $48,185. We also had
occupancy expenses of $1,755, office supplies and expense of $2,365, outside
services expenses of $4,500, and $1,267 for telephone and utilities. Our
operating expenses for the period from our inception on February 21, 2001
through September 30, 2001 totaled $24,586, most of which were represented by
legal and professional fees of $14,910. We also had occupancy expenses of
$1,405, office supplies and expense of $1,405, outside services expenses of
$3,000, and $896 for telephone and utilities. For the nine months ended
September 30, 2002, we experienced a net loss of approximately $18,526, compared
to a net loss of $16,615 for the period from our inception on February 21, 2001
through September 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.
Liquidity and Capital Resources. Our total assets were approximately $136,796 as
of September 30, 2002. Of those assets, cash was $111,796 as of September 30,
2002. Therefore, our total current assets were $111,796 as of September 30,
2002. We believe that our available cash is sufficient to pay our day-to-day
expenditures. We also had $25,000 as an investment in a yacht as of September
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 $4,625 as of September 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 September 30,
2002.
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 $111,796 as of September 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.
Item 3. Controls and Procedures
-------------------------------
(a) Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission. Based upon
their evaluation of those controls and procedures performed within 90 days of
the filing date of this report, our chief executive officer and the principal
financial officer concluded that our disclosure controls and procedures were
adequate.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
--------------------------
None.
Item 2. Changes in Securities.
------------------------------
None.
Item 3. Defaults Upon Senior Securities
----------------------------------------
None.
Item 4. Submission of Matters to Vote of Security Holders
----------------------------------------------------------
None.
Item 5. Other Information
--------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
On November 11, 2002, the Registrant's Board of Directors, voted to replace its
independent accountant, Quintanilla Accountancy Corporation ("Quintanilla").
Effective as of November 11, 2002, the Registrant's new independent accountant
is Hall & Company, certified public accountants ("Hall & Company"). The
Registrant retained the accounting firm of Hall & Company on November 11, 2002,
as the principal accountants to audit the Registrant's financial statements. The
Registrant authorized Quintanilla to respond fully to any inquiries from Hall &
Company and to make its work papers available to Hall & Company. A
correspondence from Quintanilla dated November 11, 2002, specifying that
Registrant's disclosures regarding the change in accountants are true and
correct was attached to the Report on Form 8-K as Exhibit 16.1.
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
November 12, 2002 By: /s/ Mitch Keeler
----------------------------
Mitch Keeler
Its: president, principal
executive officer, director
10
CERTIFICATIONS
--------------
I, Mitch Keeler, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2002
/s/ Mitch Keeler
----------------------
Mitch Keeler
Chief Executive Officer
11
CERTIFICATIONS
--------------
I, Melissa Day, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2002
/s/ Melissa Day
----------------------
Melissa Day
Chief Financial Officer
12