UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2002
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
---------- ----------.
Commission File Number: 000-49616
Global Yacht Services, Inc.
---------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0488686
------ ----------
(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
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
619.990.0976
------------
(Registrant's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act:
Title of each class registered: Name of each exchange on which registered:
------------------------------- -----------------------------------------
None None
---- ----
Securities registered under Section 12(g) of the Act:
Common Stock, Par Value $.001
-----------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $87,769.
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of April 29, 2003, approximately $228,068.
As of April 29, 2003, there were 1,917,277 shares of the issuer's $.001 par
value common stock issued and outstanding.
Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.
Transitional Small Business Disclosure format (check one):
[ ] Yes [ ] No
1
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
--------------------------------
Our Background. We were incorporated in Nevada on February 21, 2001.
Our Business. 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.
For those charter services, Mr. Keeler did not get paid or reimbursed for
providing the use of his yacht. We do not believe that there are limitations on
our use of Mr. Keeler's yacht in the future, although Mr. Keeler has not made
any formal commitment to provide us with the use of his yacht at no charge. We
anticipate that Mr. Keeler will not expect to be paid or reimbursed for
providing the use of his yacht as long as he is our president and maintains a
significant equity interest in us.
We also have arrangements with four yacht charter companies, which provide that
we may use their yachts for our charter services. Those arrangements provide
that we can rent those companies' yachts for fixed daily and hourly rental fees
ranging from $300 per hour to $3000 per day depending on the size of the yacht.
We cannot guaranty that those yachts will be available in the event that we need
to rent those yachts to provide our services.
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.
We use subcontractors on a per job basis for various services that we provide.
Those subcontractors are paid by us when we are paid by the client.
Subcontractors for our charter services may include, but are not limited to, the
following: captains, deckhands, stewards, cooks, caterers, entertainment, and
bartenders. Other subcontractors that we use include yacht repair persons and
skilled electronics installers.
Our Products and Services. We intend to be a professional source that the yacht
owner or enthusiast will utilize for all their yachting requirements, including
brokering sales or providing consulting services for yacht purchases, overseeing
delivery to a foreign destination, recruiting captain and crew, procuring and
supervising quality subcontract repairs and routine maintenance, and providing
yacht charter cruises. We intend to provide high quality customer service, which
we hope will result in repeat and referral business.
We currently provide the following services:
o yacht services such as the provision of captains, engineers and crew, from
a list of qualified prospects and also supplies and maintenance;
o deliveries of yachts to worldwide destinations;
o full-scale contracted care yachts, including interior and exterior cleaning
twice monthly, exterior waxing twice yearly, bottom cleaning once monthly,
and routine maintenance;
o brokering traditional face-to-face yacht sales, of vessels in the $1 -
$1.5 million range, and;
o advice and consultation to clients with regard to all aspects of yacht
lease, purchase, custom construction and ownership, such as consultation at
a boat show by contract, although we have not generated any revenues from
theses services.
2
We are currently equipped to provide all of the above services those services
only require the manpower of our officers and directors and the use of
subcontractors.
We intend to provide the following services:
o yacht sales or lease by means of the website, of vessels in the $500,000
range; and
o custom yacht design and construction.
In order to provide the above services, we need to develop our website. We also
intend to establish 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. In the high-end yachting
industry, reputation of the company and its personnel is very important to the
customers. Our president, Mitch Keeler has extensive contacts and experience in
all aspects of the yachting industry due to his 20 years in the field as a
licensed yacht captain. We believe that a significant portion of our customers
will be generated by referral from Mr. Keeler's contacts.
Our facilities are located in San Diego, California, giving us a presence in
what we believe is one of the world's largest luxury yacht markets. We also
intend to conduct operations to the eastern Caribbean market through Global
Yacht Services (BVI) Limited, our wholly owned subsidiary. We anticipate that
our subsidiary will establish an office in Tortola, British Virgin Islands, so
that we provide services to that market. Our subsidiary has not conducted any
operations to date.
We anticipate that we will develop our website so that it will function as a
means for global clients to access our range of services and communicate with
us. In California, the chief means of contact will be in person, by mail,
e-mail, phone or fax, although we anticipate that a significant portion of our
business will be conducted away from the office or at the client's location. We
believe that we must be accessible via multiple types of communication systems,
such as cellular phone and email, so that prospects and clients can always reach
us.
We anticipate that we will rely upon effective business systems to grow our
business. We intend to develop an information database to capture client data
for future business development, which will cue our management follow-up calls
to brokers and clients for a regular check up to ensure they are satisfied with
current services. As with many other luxury purchases, luxury yacht purchases
are often cyclical with some clients upgrading to new models every 2 or 3 years.
We hope to serve these clients in making these upgrade purchases. However, we
expect that other clients will maintain their original yacht, but make use of
relevant maintenance services through us.
Our business, as well as the entire recreational boating industry, is highly
seasonal, with seasonality varying in different geographic markets. We expect to
realize significantly lower sales and operations in winter months in climates
that are characterized by cold temperatures or severe weather. However, we
anticipate activity to generally fluctuate with seasonal changes. Our business
could become substantially more seasonal as we expand operations into colder
regions of the United States. In addition, weather conditions adversely impact
our operating results. For example, drought conditions, reduced rainfall levels,
and excessive rain may force boating areas to close or render boating dangerous
or inconvenient, thereby curtailing customer demand for our products. In
addition, unseasonably cool weather and prolonged winter conditions may lead to
shorter selling seasons in certain locations. Hurricanes and other storms could
result in the disruption of our proposed Caribbean operations or damage to our
proposed boat inventories and facilities. As a result, our operating results in
some future quarters could be below our expectations.
Our Website www.gysi-online.com. Our current website, which is hosted by a local
provider in San Diego, California, displays our corporate logo and contact
information and provides a general description of our staff, the services that
we provide as well as links to resources of interest to yacht owners. We believe
that there is a need in the global yacht industry for clients to obtain timely
and comprehensive services. We hope to fulfill this need by means of our
website, which we intend to further develop to provide one-stop shopping and
support for clients and prospective clients.
3
Our Target Markets and Marketing Strategy. We do not believe that our current
operations depend on one or a limited number of customers. We intend to serve
the global high-end luxury yachting market through relationship marketing and
our website. We will begin by providing service in the San Diego region, central
to the southern California yacht market, by approaching existing yacht owners to
act as charter agents. Yacht services such as care-taking or maintenance, making
travel arrangements and brokering captains and crew, yacht delivery world-wide,
yacht sales and general yachting related services will be provided initially in
San Diego, Orange, and Los Angeles counties. The southern California region is
second only to Florida in the U.S. market for luxury yachts and services.
We intend to be competitive in price to satisfy those clients who are price
shoppers. However, we intend to provide high quality services, which we believe
will attract loyal clients for whom price will be a secondary consideration. We
will promote our services primarily by means of our website, but also by
relationship-building with yacht brokers, articles and advertisements in trade
publications such as Yachts International, duPont Registry, Yachting, Yachting
World, Sea Magazine and Motor Yachting Magazine, as well as by reputation and
word-of-mouth. Additionally, we anticipate that attendance at a number of boat
shows will be necessary, often in a contract capacity to assist a client to find
a new vessel.
Our Growth Strategy. Our objective is to establish our reputation of providing
preeminent services to luxury yacht owners and users of yacht services initially
in San Diego, Orange and Los Angeles counties. Our strategy is to provide
clients with exceptional personal service and access to products and services.
Key elements of our strategy include:
o cultivate relationships with existing and potential clients;
o increase our relationships with third party providers of maintenance and
repair products and services;
o continue to promote our website and expand its capabilities; and
o expand operations in the southern California and eastern Caribbean markets.
Our Competition. The market for luxury yacht sales and services is very
competitive. We compete primarily with single-location boat dealers and yacht
brokers with respect to brokering sales or providing consulting services for
yacht purchases and overseeing delivery to a foreign destination. We also
compete with national specialty marine parts and accessories stores, catalog
retailers, sporting goods stores, and mass merchants with respect to sales of
marine parts, accessories, services and equipment.
We also compete with other providers of yacht charter services and with cruise
ship lines and other forms of vacation choices and types of recreation. In
addition, several of our competitors, especially those selling marine equipment
and accessories, are large international, national or regional businesses that
have substantial financial, marketing, and other resources. Private boat
charters are additional competition.
We intend to compete on the basis of price and quality of service and by
offering a complete range of services. We intend to utilize the experience and
contacts of Mitch Keeler to provide high quality services at a reasonable price.
We believe that Mr. Keeler's experience and contacts in the industry will allow
us to pay less for the services that we subcontract. We also believe that we can
compete by providing a complete range of services, from assisting clients with
purchase, delivery maintenance and sale of their yacht. We can also teach the
client how to operate the boat and understand the systems. We believe that by
offering a total range of services to the yacht owner we can compete effectively
with those competitors that only offer one of the services that we provide.
Additionally, the market for similar products and services offered over the
Internet is highly competitive. There are no substantial barriers to entry in
these markets, and we expect that competition will continue to intensify. Our
yacht purchasing and maintenance services compete against a variety of Internet
and traditional boat and other recreational equipment purchasing services as
well as boat manufacturers, yacht brokers and yacht maintenance companies.
Therefore, the competitive factors faced by both Internet commerce companies as
well as traditional, offline companies within the boating equipment and service
industries affect us. To compete successfully in the global marketplace as an
Internet-based commercial entity, we must significantly increase awareness of
our services and brand name.
4
We anticipate we will compete with other entities which maintain similar
commercial websites including buymarine.com, yachtworld.com, boating.com,
boattraderonline.com, boatowners.com and boat-yachts.com. In addition, all major
cruise companies, yacht manufacturers and other boating industry players have
their own websites and many have recently launched or announced plans to launch
online buying services. For example, Campers & Nicholsons, or C&N, which is
based overseas with a long-established history and reputation, uses traditional
means such as relying on referrals, direct mail and high-end catalogue to
generate leads. However, C&N also has a website, cnconnect.com, but mostly
relies upon this means of communication to generate calls to brokers. On the
other hand, Yachtstore generates the majority of its business from its website,
where a buyer can conduct transactions from yacht purchases to charter
arrangements without speaking to a live broker. We also compete with yacht
charter or maintenance companies, as well as yacht manufacturers and dealers.
Such companies may already maintain or may introduce websites which compete with
ours.
Many of these competitors have greater financial resources than we have,
enabling them to finance acquisition and development opportunities, to pay
higher prices for the same opportunities or to develop and support their own
operations. In addition, many of these companies can offer bundled, value-added
or additional services not provided by us, and may have greater name
recognition. These companies might be willing to sacrifice profitability to
capture a greater portion of the market for yacht sales, service or charters, or
pay higher prices than we would for the same expansion and development
opportunities. Consequently, we may encounter significant competition in our
efforts to achieve our internal growth objectives.
Our Intellectual Property. We do not presently own any patents, trademarks,
copyrights, licenses, concessions or royalties. Our success may depend in part
upon our ability to protect our trade name, preserve our trade secrets, obtain
and maintain patent protection for our technologies, products and processes, and
operate without infringing the proprietary rights of other parties. However, we
may rely on certain proprietary technologies, trade secrets, and know-how that
are not patentable. Although we may take action to protect our unpatented trade
secrets and our proprietary information, in part, by the use of confidentiality
agreements with our employees, consultants and certain of our contractors, we
cannot guaranty that
o these agreements will not be breached;
o we would have adequate remedies for any breach; or
o our proprietary trade secrets and know-how will not otherwise become known
or be independently developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products or services by others or prevent others from
claiming violations of their trade secrets and proprietary rights.
We own the Internet domain name www.gysi-online.com. Under current domain name
registration practices, no one else can obtain an identical domain name, but
someone might obtain a similar name, or the identical name with a different
suffix, such as ".org", or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our domain names.
Government Regulation. Our yacht sales, maintenance and charter operations are
subject to extensive regulation, supervision, and licensing under various
federal, state, and local statutes, ordinances, and regulations. For example,
broker services require sales licenses in most states, and boats under charter
must adhere to U.S. Coast Guard standards, including safety regulations such as
those for life-saving equipment, and are subject to various vessel inspection
and testing requirements. Also, vessel manufacturers must certify yachts and all
recreational powerboats sold in the U.S. meet U.S. Coast Guard standards. These
certifications specify standards for the design and construction of yachts and
other powerboats. In addition, yacht safety is subject to federal regulation
under the Boat Safety Act of 1971. The Boat Safety Act requires boat
manufacturers to recall products for replacement of parts or components that
have demonstrated defects affecting safety. In addition, boats manufactured for
sale in other countries must be certified to meet standards in those
jurisdictions.
5
Certain states have required or are considering requiring a license to operate a
recreational boat. These licensing requirements are not expected to be unduly
restrictive. They may, however, discourage potential first-time buyers, which
could hinder our ability to generate revenues. In addition, certain state and
local governmental authorities are contemplating regulatory efforts to restrict
boating activities on certain inland bodies of water. While the scope of these
potential regulations is not yet known, their adoption and enforcement could
significant reduce our revenues.
Changes in federal and state tax laws, such as an imposition of luxury taxes on
new boat purchases, also could influence consumers' decisions to purchase
products we offer and could have a negative effect on our sales. For example,
during 1991 and 1992, the federal government imposed a luxury tax on new
recreational boats with sales prices in excess of $100,000, which coincided with
a sharp decline in boating industry sales from the late 1980s compared to 1992.
Our business or that of our subcontractors may involve the use, handling,
storage, and contracting for recycling or disposal of hazardous or toxic
substances or wastes, including environmentally sensitive materials, such as
motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon,
waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing
agents, gasoline, and diesel fuels. Accordingly, we could be subject to
regulation by federal, state, and local authorities establishing investigation
and health and environmental quality standards, and liability related thereto,
and providing penalties for violations of those standards.
In particular, the Comprehensive Environmental Response, Compensation and
Liability Act, or CERCLA or Superfund, imposes joint, strict, and several
liability on:
o owners or operators of facilities at, from, or to which a release of
hazardous substances has occurred;
o parties who generated hazardous substances that were released at such
facilities; and
o parties who transported or arranged for the transportation of hazardous
substances to such facilities.
A majority of states have adopted Superfund statutes comparable to and, in some
cases, more stringent than CERCLA. In addition, operations conducted on
waterways are subject to federal or state laws regulating navigable waters
(including oil pollution prevention), fish and wildlife, and other matters.
Additionally, Internet access and online services are not subject to direct
regulation in the United States. Changes in the laws and regulations relating to
the telecommunications and media industry, however, could impact our business.
For example, the Federal Communications Commission could begin to regulate the
Internet and online services industry, which could result in increased costs for
us. The laws and regulations applicable to the Internet and to our services are
evolving and unclear and could damage our business. There are currently few laws
or regulations directly applicable to access to, or commerce on, the Internet.
Due to the increasing popularity and use of the Internet, it is possible that
laws and regulations may be adopted, covering issues such as user privacy,
defamation, pricing, taxation, content regulation, quality of products and
services, and intellectual property ownership and infringement. Such legislation
could expose us to substantial liability as well as dampen the growth in use of
the Internet, decrease the acceptance of the Internet as a communications and
commercial medium, or require us to incur significant expenses in complying with
any new regulations. The European Union has recently adopted privacy and
copyright directives that may impose additional burdens and costs on
international operations.
Our Research and Development. 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.
Employees. As of April 29, 2003, we have no employees other than our officers.
We anticipate that we will not hire any employees in the next six months, unless
we generate significant revenues. From time-to-time, we anticipate that we will
use the services of independent contractors and consultants for the various
services that we provide.
Facilities. Our executive, administrative and operating offices are located 7710
Hazard Center Drive, Suite E-415, San Diego, California 92108.
6
ITEM 2. DESCRIPTION OF PROPERTY.
---------------------------------
Property held by us. As of the date specified in the following table, we held
the following property:
==================================== ======================================
Property December 31, 2002
------------------------------------ --------------------------------------
Cash $97,249
==================================== ======================================
Our Facilities. Our executive, administrative and operating office is
approximately 150 square feet and is located in the personal residence of Mitch
Keeler, our president and one of our directors. We have complete ownership of
this office and we do not share this office with any other business. We believe
that our facilities are adequate for our needs and that additional suitable
space will be available on acceptable terms as required. We do not own any real
estate. Mitch Keeler, our president and director, currently provides office
space to us at no charge. We do not have a written lease or sublease agreement
and Mr. Keeler does not expect to be paid or reimbursed for providing office
facilities. Our financial statements reflect, as occupancy costs, the fair
market value of that space, which is approximately $193 per month. That amount
has been included in the financial statements as additional capital contribution
by Mr. Keeler.
ITEM 3. LEGAL PROCEEDINGS.
---------------------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
----------------------------------------------------------
Not applicable.
PART II
ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
------------------------------------------------------------------------
Reports to Security Holders. We are a reporting company with the Securities and
Exchange Commission, or SEC. The public may read and copy any materials filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov.
Prices of Common Stock. We participate in the OTC Bulletin Board, an electronic
quotation medium for securities traded outside of the Nasdaq Stock Market, and
prices for our common stock are published on the OTC Bulletin Board under the
trading symbol "GYHT". This market is extremely limited and the prices quoted
are not a reliable indication of the value of our common stock. As of April 29,
2003 our common stock has not traded.
We are authorized to issue 50,000,000 shares of $.001 par value common stock,
each share of common stock having equal rights and preferences, including voting
privileges. As of December 31, 2002, 1,917,277 shares of our common stock were
issued and outstanding.
There are 12,827 shares that can be sold pursuant to Rule 144 promulgated
pursuant to the Securities Act of 1933. There are no outstanding options or
warrants to purchase, or securities convertible into, shares of our common
stock. There are no outstanding shares of our common stock that we have agreed
to register under the Securities Act for sale by security holders. The
approximate number of holders of record of shares of our common stock is four.
In February 2002, our registration statement on Form SB-2 to register 750,000
shares of common stock to be offered for sale by us, and 50,000 shares of common
stock held by our shareholders was declared effective by the SEC. We sold
634,500 shares of our common stock pursuant to that offering, which resulted in
proceeds to us of $126,900.
7
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and of the
rights and remedies available to the customer with respect to violation to
such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including "bid"
and "ask" prices for penny stocks and the significance of the spread
between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form (including language, type, size
and format), as the Securities and Exchange Commission shall require by
rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
o monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR 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 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. No assurance can be
given 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.
CRITICAL ACCOUNTING POLICY AND ESTIMATES. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The most significant accounting estimates inherent in
the preparation of our financial statements include estimates as to the
appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources. These accounting policies are described at
relevant sections in this discussion and analysis and in the notes to them
consolidated financial statements included in our Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2002.
8
Liquidity and Capital Resources. We had cash of $97,249 as at December 31, 2002.
We believe that our available cash is sufficient to pay our day-to-day
expenditures. Our total current assets and total assets were approximately
$97,249 as at December 31, 2002. In February 2002, our registration statement on
Form SB-2 to register 750,000 shares of common stock to be offered for sale by
us at $0.20 per share, and 50,000 shares of common stock held by our
shareholders was declared effective by the SEC. As of April 29, 2003, we have
sold 634,500 shares of common stock for proceeds of $126,900, and we have
terminated the offering.
Our current liabilities were $10,434 as at December 31, 2002, and were
represented by accounts payable and accrued expenses. We had no other
liabilities and no long term commitments or contingencies as at December 31,
2002.
Results of Operations.
Revenue. For the year ended December 31, 2002, we realized revenues of $87,769.
This is in comparison to the period from February 21, 2001, our date of
inception, to December 31, 2001, when we realized revenues of approximately
$24,685 from providing charter and yacht management services. We hope to
continue to generate more revenues as we expand our customer base. Our cost of
revenues for the year ended December 31, 2002 was $49,674, making our gross
operating margin $38,095. This is in comparison to our cost of revenues which
were $15,857 from the period from February 21, 2001, our date of inception, to
December 31, 2002. Therefore, our gross operating margin from February 21, 2001,
our date of inception, through December 31, 2002, was $8,828. Because we
increased the scope and volume of our operations, we had greater costs of
generating revenues, but increased our gross operating margin as well.
Operating Expenses. For the year ended December 31, 2002, we had $77,482 in
total operating expenses, compared to the period from February 21, 2001, our
date of inception, through December 31, 2002, where our total operating expenses
were approximately $48,534. For the year ended December 31, 2002, the majority
of those expenses were represented by legal and professional fees of $64,768. We
also had advertising expenses of $350, occupancy expenses of $2,340, office
supplies and expense of $2,112, outside services expenses of $6,000, and $1,912
for telephone and utilities. Therefore, for the year ended December 31, 2002,
our loss from operations was $39,387. We also had $25,076 in other expenses,
which resulted in a net loss of $64,463 before provision for income taxes and
our net loss a total of $65,263. By comparison, for the period from our
inception on February 21, 2001 through December 31, 2002, we experienced a net
loss of approximately $39,706, plus $54 in other income, for a net loss of
$39,652. We anticipate that we will continue to incur significant general and
administrative expenses.
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.
9
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 anticipate that we will use the funds raised from our offering and revenues
generated to fund marketing activities and for working capital. Our failure to
market and promote our services will hinder our ability to increase the size of
our operations and generate additional revenues.
We have cash of $97,249 as of December 31, 2002. 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.
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 7. Financial Statements
-----------------------------
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002
10
GLOBAL YACHT SERVICES, INC.
CONTENTS
PAGE
----
Consolidated Financial Statements
Independent Auditors' Report 12
Consolidated Balance Sheet 13
Consolidated Statements of Operations 14
Consolidated Statements of Changes in Stockholders' Equity 15
Consolidated Statements of Cash Flows 16
Notes to Consolidated Financial Statements 17
11
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Stockholders of
Global Yacht Services, Inc.
We have audited the accompanying consolidated balance sheet of Global Yacht
Services, Inc. and subsidiary as of December 31, 2002, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit. The financial statements of
Global Yacht Services, Inc. and subsidiary for the period February 21, 2001
(inception) through December 31, 2001, were audited by other auditors whose
report dated February 8, 2002, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Yacht Services, Inc. and
subsidiary as of December 31, 2002 and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
HALL & COMPANY
Irvine, California
12
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
ASSETS
------
Current assets
Cash $ 97,249
-------------
Total current assets 97,249
-------------
Total assets $ 97,249
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 10,434
-------------
Total current liabilities 10,434
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 189,813
Accumulated deficit (104,915)
-------------
Total stockholders' equity 86,815
-------------
Total liabilities and stockholders' equity $ 97,249
=============
See accompanying notes to consolidated financial statements
13
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
THROUGH DECEMBER 31, 2001
2002 2001
------------- -------------
REVENUES $ 87,769 $ 24,685
COST OF REVENUES 49,674 15,857
------------- -------------
GROSS MARGIN 38,095 8,828
OPERATING EXPENSES
Advertising 350 1,121
Legal and professional fees 64,768 29,578
Occupancy 2,340 1,990
Office supplies and expense 2,112 4,063
Outside services 6,000 10,550
Telephone and utilities 1,912 1,232
------------- -------------
Total operating expenses 77,482 48,534
------------- -------------
LOSS FROM OPERATIONS (39,387) (39,706)
OTHER INCOME (EXPENSE) (25,076) 54
------------- -------------
LOSS BEFORE PROVISION FOR INCOME TAXES (64,463) (39,652)
PROVISION FOR INCOME TAX EXPENSE (BENEFIT) 800 ---
------------- -------------
NET LOSS/COMPREHENSIVE LOSS $ (65,263) $ (39,652)
============= =============
NET LOSS/COMPREHENSIVE LOSS PER COMMON SHARE--
BASIC AND DILUTED
$ (.04) $ (.03)
============= =============
WEIGHTED AVERAGE OF COMMON SHARES-- BASIC AND
DILUTED
1,691,300 1,199,450
============= =============
See accompanying notes to consolidated financial statements
14
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
THROUGH DECEMBER 31, 2001
COMMON STOCK
--------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ ------------ ------------- ------------- -------------
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 --- --- 2,340 --- 2,340
Net loss/comprehensive loss --- --- --- (65,263) (65,263)
------------ ------------ ------------- ------------- -------------
Balance, December 31, 2002 1,917,277 $ 1,917 $ 189,813 $ (104,915) $ 86,815
============ ============ ============= ============= =============
See accompanying notes to consolidated financial statements
15
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
THROUGH DECEMBER 31, 2001
2002 2001
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (65,263) $ (39,652)
Adjustments to reconcile net income to net cash used in operating
activities
Occupancy costs contributed by officer 2,340 1,990
Changes in operating assets and liabilities
Increase in accounts payable and accrued expenses 7,145 3,289
------------- -------------
Net cash provided/(used) by operating activities (55,778) (34,373)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 126,900 60,500
------------- -------------
Net cash provided by financing activities 126,900 60,500
------------- -------------
NET INCREASE IN CASH 71,122 26,127
CASH, beginning of period 26,127 ---
------------- -------------
CASH, end of period $ 97,249 $ 26,127
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 800 $ ---
============= =============
Interest paid $ --- $ ---
============= =============
See accompanying notes to consolidated financial statements
16
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description - Global Yacht Services, Inc. and its subsidiary (the
"Company") provides chartering, delivery, maintenance and consulting services to
luxury yacht owners and manufacturers. The Company's President is a United
States Coast Guard certified captain. The Company was incorporated in the state
of Nevada on February 21, 2001 and is headquartered in San Diego, California.
Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Global Yacht Services, Inc. and its majority owned
subsidiary Global Yacht Services, Ltd. (collectively, the "Company"). All
significant intercompany accounts and transactions have been eliminated, if any.
Cash Equivalents - For purposes of the balance sheet and statement of cash
flows, the Company considers all highly liquid debt instruments purchased with
maturity of three months or less to be cash equivalents.
Receivables - Receivables, if any, represent valid claims against debtors for
sales or other charges arising on or before the balance-sheet date and are
reduced to their estimated net realizable value. An allowance for doubtful
accounts is computed as a percentage (%) of sales.
Fair Value of Financial Instruments - The carrying amount of the Company's
financial instruments, which includes cash and accounts payable and accrued
expenses approximate their fair value due to the short period to maturity of
these instruments.
Recognition of Revenue - The Company records revenues of its services when they
are complete, fee is fixed and determinable, and collectibility is reasonably
assured. The Company will also provide an allowance for returns when experience
is established. Cost of goods sold consists of fuel, docking fees, supplies and
cost of services and related expenses of personnel used.
Advertising Costs - The Company expenses all advertising costs as incurred.
Income Taxes - The Company recognizes deferred tax assets and liabilities based
on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. The Company provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.
Net Loss per Common Share - The Company has adopted the provisions of Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
SFAS 128 requires the reporting of basic and diluted earnings/loss per share.
Basic loss per share is calculated by dividing net loss by the weighted average
number of outstanding common shares during the period.
17
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Loss - The Company applies Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes standards for the reporting and display of comprehensive income or
loss, requiring its components to be reported in a financial statement that is
displayed with the same prominence as other financial statements. For the period
ended December 31, 2001, the Company had no other components of its
comprehensive income or loss other than the net loss as reported on the
consolidated statement of operations.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - CONTINGENCIES
As shown in the accompanying consolidated financial statements, the Company has
incurred a net operating loss of $104,915 since inception on February 21, 2001
through December 31, 2002. Management believes its existing cash resources of
approximately $96,000 will be sufficient over the next twelve months to continue
the expansion of its business plan and operations.
The Company occupies office space within the officer's residence. 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 statements of operations for
years ended December 31, 2002 and 2001, respectively.
NOTE 3 - ACCRUED EXPENSES
Accrued Wages and Compensated Absences - The Company currently does not have any
employees. The majority of development costs and services have been provided to
the Company by the officers and outside, third party vendors. As such, there is
no accrual for wages or compensated absences as of December 31, 2002 and 2001.
NOTE 4 - COMMON STOCK
On February 22, 2001, the Company issued 1,000,000 shares of its common stock to
its officer 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.
18
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
NOTE 4 - COMMON STOCK (Continued)
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. The net proceeds were $126,900.
NOTE 5 - INCOME TAXES
At December 31, 2002, the Company has available for federal income tax purposes
a net operating loss carryforward of approximately $104,915, expiring at various
dates through 2022, that may be used to offset future taxable income. Therefore,
the provision for income taxes includes only the minimum state franchise tax of
$800.
In addition, the Company has deferred tax assets of approximately $24,000 at
December 31, 2002. The Company has not recorded a benefit from its net operating
loss carryforward because realization of the benefit is uncertain and,
therefore, a valuation allowance of ($24,000) has been provided for the deferred
tax assets.
NOTE 6 - 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 4.
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 year ended December 31, 2002 and for the period February 21, 2001
(inception) through December 31, 2001 and are considered additional
contributions of capital by the officer and the Company.
19
The financial statements required by Item 7 are presented in the following
order:
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
-------------------------------------------------------
On November 11, 2002, our Board of Directors voted to replace our independent
accountant, Quintanilla Accountancy Corporation ("Quintanilla"). Effective as of
November 11, 2002, our new independent accountant is Hall & Company, certified
public accountants ("Hall & Company"). We retained the accounting firm of Hall &
Company on November 11, 2002, to make an examination of our financial statements
for the 2002 fiscal year. We authorized Quintanilla to respond fully to any
inquiries from Hall & Company and to make its work papers available to Hall &
Company.
The reports of Quintanilla from February 21, 2001, the date of our inception,
through November 11, 2002, did not contain any adverse opinion, disclaimer of
opinion, or qualification or modification as to the certainty, audit scope or
accounting principles. During February 21, 2001 through November 11, 2002, there
were no disagreements between us and Quintanilla on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure. In addition, during February 21, 2001 through November 11, 2002,
there were no "reportable events" within the meaning of Item 304 of the
Securities and Exchange Commission's Regulation S-K.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
----------------------------------------------------------------------
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could hinder our ability to conduct operations and complete future
development, if suitable replacements are not promptly obtained. We hope that we
will enter into employment agreements with Mitch Keeler and Melissa Day.
Although we do not know the terms of those proposed agreements, we hope to enter
into an employment agreement with Mitch Keeler and Melissa Day with a term of at
least one year with compensation contingent on us becoming profitable. We cannot
guaranty that each executive will remain with us during or after the term of his
or her employment agreement. In addition, our success depends, in part, upon our
ability to attract and retain other talented personnel. Although we believe that
our relations with our personnel are good and that we will continue to be
successful in attracting and retaining qualified personnel, we cannot guaranty
that we will be able to continue to do so. Our officers and directors will hold
office until their resignations or removal.
Our directors and principal executive officers are as specified on the following
table:
=============================== =============== ================================
Name Age Position
------------------------------- --------------- --------------------------------
Mitch Keeler 45 President and Director
------------------------------- --------------- --------------------------------
Melissa Day 34 Secretary, Treasurer, Director
=============================== =============== ================================
Mitch Keeler. Mr. Keeler is our president and one of our directors since our
inception. Mr. Keeler is our principal executive officer and is responsible for
our day-to-day operations. Mr. Keeler currently devotes approximately 40 hours
per week to our business. Mr. Keeler has been a licensed yacht captain for the
past twenty years. He has a 100 Ton Master license, and is qualified for motor
and sail operations and commercial assistance towing. He also has completed the
following courses: U.S. Coast Guard Advanced Navigation; the Shipboard
Firefighting School, Coast Guard Certified Course at Mobile, Alabama and the
Maritime Consortium Compliance with U.S. Coast Guard Drug Testing Regulations.
From 1997 to the present, Mr. Keeler has been the owner and operator of
Tlaquepaque Yacht Charters, managing the crew and performing routine maintenance
on a cruising route between Baja California, Mexico to Santa Barbara, CA.
Tlaquepaque Yacht Charters' current operations include the rental of Mr.
Keeler's yacht, Tlaquepaque, to other yacht charter service companies. Mr.
Keeler currently devotes less than two hours per month on the business of
Tlaquepaque Yacht Charters. Also from 1997 to the present, he has served as a
tugboat captain for West Coast Tugs, where he moves various vessels and barges,
works closely with pilots, and trains the crew. From 1994 to 1997, he served as
the operations manager and captain for San Diego Harbor Excursions, conducting
both ferry and dinner charters as the Captain of the Spirit of San Diego, a 120'
Blaunt 600 passenger charter yacht. He also served as the manager of charters,
performing maintenance, Coast Guard inspections, and personnel and deliveries.
Prior to 1994, he was the captain of vessels ranging between 65' and 120', and
has experience including interisland cruising in Hawaii, returning a vessel to
Newport Beach from Kauai, Pacific yacht racing, long range cruising, conducting
sport fishing charters, dinner cruises and whale watching trips. Mr. Keeler has
not been a director of any other reporting company.
Melissa Day. Ms. Day has been our secretary and treasurer since our inception
and was appointed one of our directors in August 2001. Ms. Day is our principal
financial and accounting officer and is responsible for all of our financial
reporting and record keeping. Ms. Day currently devotes approximately 40 hours
per week to our business. Ms. Day has experience in the charter industry and has
experience in advertising, web site design, graphic art and marketing. Ms. Day
is a Microsoft Certified Professional in Windows NT, and has experience in
network administration, design and installation. From 1999 to 2000, Ms. Day was
a technical marketing director for Technology Answers, and in 1999 a Marketing
Director of Information Systems for CFS Management. She was the Assistant NT
Systems Administrator from 1998 to 1999 for Centrax Corporation, and from 1996
to 1998 was the owner of Business Systems Consulting, providing consulting
services for technical-based business. She has a Bachelor of Science degree in
business administration from the University of Southern California, with an
emphasis in marketing and entrepreneurship, which she earned in 1993, and has an
Associates degree in Computer Applications and Networks from Coleman College in
La Mesa, California. Ms. Day is not an officer or director of any other
reporting company.
20
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Our directors will serve until the next annual meeting of stockholders. Our
executive officers are appointed by our Board of Directors and serve at the
discretion of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance. Our officers,
directors, and principal shareholders have filed all reports required to be
filed on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of
Securities), a Form 4 (Statement of Changes of Beneficial Ownership of
Securities), or a Form 5 (Annual Statement of Beneficial Ownership of
Securities).
ITEM 10. EXECUTIVE COMPENSATION
--------------------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the year ended
December 31, 2002. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
==================================== ======= ============= ============= ===================== ==========================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other Compensation
Salary ($) Compensation ($)
------------------------------------ ------- ------------- ------------- --------------------- --------------------------
Mitch Keeler - president 2002 None None None None
------------------------------------ ------- ------------- ------------- --------------------- --------------------------
Melissa Day - secretary, treasurer 2002 None None None None
==================================== ======= ============= ============= ===================== ==========================
Compensation of Directors. Our current directors are also our employees
and receive no extra compensation for their service on our board of directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
------------------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of April 29, 2003, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
Title of Class Name of Beneficial Owner Amount and Nature of Percent of Class
Beneficial Owner
------------------------ ----------------------------------------------------- ------------------------------ ---------------------
Common Stock Mitch Keeler 1,000,000 shares, president, 52.16%
7710 Hazard Center Drive, Suite E-415, San Diego, director
California 92108
Common Stock Melissa Day 5,000 shares, secretary, 0.26%
7710 Hazard Center Drive, Suite E-415, San Diego, treasurer, director
California 92108
Common Stock Flexgene Corp. 180,555 shares 9.42%
The Mill Mall, Barkers
P.O. Box 62
Roadtown, Tortola, BVI
Common Stock Carib-Ventures Inc. 97,222 shares 5.07%
Caribbean Place, Suite #3
P.O. Box 599
Providenciales, Turks & Caicos Islands, BWI
Common Stock All directors and named executive officers as a 1,005,000 shares 52.42%
group
The officer, director and shareholder of Flexgene Corp. is Martin Regan. The
director of Carib-Ventures Inc. is Sterling Directors Ltd. and Keith Burant. The
shareholder of Carib-Ventures Inc. is Meridian Trust Company Limited, which is
controlled by Keith Burant.
21
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------
Related party transactions.
Mitch Keeler, our president and director, currently provides office space to us
at no charge. Mr. Keeler does not expect to be paid or reimbursed for providing
office facilities. Our financial statements reflect, as occupancy costs, the
fair market value of that space, which is approximately $193 per month. That
amount has been included in the financial statements as additional capital
contribution by Mr. Keeler.
Our president, Mitch Keeler, owns one yacht, Tlaquepaque, which is used for our
charter services. Mr. Keeler does not expect to be paid or reimbursed for
providing the use of his yacht.
In February 2001, we issued 1,000,000 shares of our common stock to Mitch
Keeler, our president and one of our directors, in exchange for $10,000, or
$0.01 per share.
In May 2001, we issued 5,000 shares of our common stock to Melissa Day, our
secretary, treasurer and one of our directors, in exchange for $500, or $0.10
per share.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclosing such transactions in prospectuses where required;
o disclosing in any and all filings with the Securities and Exchange
Commission, where required;
o obtaining disinterested directors consent; and
o obtaining shareholder consent where required.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
(a) Exhibit No.
---------------
3.1 Articles of Incorporation*
3.2 Certificate of Amendment to Articles of
Incorporation*
3.3 Bylaws*
99.1 Section 906 Certification by Chief Executive Officer
99.2 Section 906 Certification by Chief Financial Officer
* Included in the registration statement on Form SB-2 filed on September 21,
2001.
(b) Reports on Form 8-K
-----------------------
No reports on Form 8-K were filed during the last quarter of the period covered
by this annual report on Form 10-KSB, except for the following:
On November 12, 2002, we filed a report on Form 8-K to report our change in
accountant.
ITEM 14. 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.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned in the City of San Diego, on April 29, 2003.
Global Yacht Services, Inc.,
a Nevada corporation
By: /s/ Mitch Keeler
---------------------------------------
Mitch Keeler
Its: president, principal executive officer,
director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Mitch Keeler April 29, 2003
--------------------------------------------
Mitch Keeler
Its: president, principal executive officer, director
By: /s/ Melissa Day April 29, 2003
--------------------------------------------
Melissa Day
Its: secretary, treasurer, director
23
CERTIFICATIONS
--------------
I, Mitch Keeler, certify that:
1. I have reviewed this annual report on Form 10-KSB of Global Yacht Services,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and
c) presented in this annual 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
annual report whether 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: April 29, 2003
/s/ Mitch Keeler
-----------------------
Mitch Keeler
Chief Executive Officer
24
CERTIFICATIONS
--------------
I, Melissa Day, certify that:
1. I have reviewed this annual report on Form 10-KSB of Global Yacht Services,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and
c) presented in this annual 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
annual report whether 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: April 29, 2003
/s/ Melissa Day
-----------------------
Melissa Day
Chief Financial Officer