U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2002
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0001058307
YSEEK, INC.
(Exact Name of Small Business Issuer in Its Charter)
Florida 65-0783722
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) fication No.)
412 East Madison Street, Suite 1000, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 221-4429
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Check whether the issuer:(1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
The number of shares of the registrant's common stock, par value $.0001 per
share, outstanding as of May 13, 2002 was 22,315,100.
Table of Contents to Form 10QSB
Part I - Financial Information Page
Item 1. Financial Statements (unaudited)
Balance Sheet March 31, 2002.. ...............................F-1
Statements of Operations - Three Months
Ended March 31, 2002 and 2001 ...............................F-2
Statements of Cash Flows - Three Months
Ended March 31, 2002 and 2001 ..................................F-3
Notes to Financial Statements ..................................F-5
Item 2. Management's Discussion and Analysis or Plan of Operation............6
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds .........................None
Item 3. Reports on 8-K.................................................... None
Item 6. Exhibits and Reports on Form 8-K...................................None
Part I - Financial Information
Item 1. Financial Statements
YSEEK, INC.
FINANCIAL STATEMENTS
MARCH 31, 2002
YSEEK, INC.
BALANCE SHEET
March 31, 2002
(unaudited)
ASSETS
Current assets
Cash $ 308
Other receivables 741
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Total current assets 1,049
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Software license, net 566,804
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Other assets
Shareholder loan receivable, net 9,598
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Total Assets $ 577,451
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 37,860
Current maturities of long-term debt 119,197
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Total current liabilities 157,057
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Long-term debt, less current maturities 5,117
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Commitments and contingencies
Stockholders' equity
Common stock; $.0001 par value; 50,000,000 shares
authorized; 22,315,100 shares issued and outstanding 2,231
Paid in capital 8,152,562
Accumulated deficit (7,739,516)
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Total stockholders' equity 415,277
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Total Liabilities and Stockholders' Equity $ 577,451
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The accompany notes are an integral part of the financial statements.
F-1
YSEEK, INC.
STATEMENTS OF OPERATIONS
Three Months Ended March 31,
2002 2001
(unaudited) (unaudited)
Revenues $ 219 $ --
Expenses
Selling, general and administrative 36,188 816,050
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Total expenses 36,188 816,050
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Other income (expense)
Interest income ---- 3,215
Interest expense (4,274) (562)
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Total other income (expense) (4,274) 2,653
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Net loss $ (40,243) $ (813,397)
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Net loss per common share $ --- $ (.03)
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Weighted average common shares outstanding 22,315,100 25,077,490
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The accompany notes are an integral part of the financial statements.
F-2
YSEEK, INC.
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2002 2001
(unaudited) (unaudited)
Cash flows from operating activities
Net loss $ (40,243) $ (813,397)
Adjustments to reconcile net loss to
net cash used in operating activities:
Contributed services ---- 8,750
Stock issued to consultants ---- 104,688
Depreciation and amortization 16,350 33,991
Write down of property and equipment
due to impairment ---- 129,773
Recovery of amortization expense due to stock
recision ---- (324,069)
Decrease in other receivables 1,284 -----
Increase in interest receivable ---- (3,190)
Decrease in prepaid expenses ---- 791,069
Increase in accounts payable and accrued expenses 2,963 44,627
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Total adjustments 20,597 785,639
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Net cash used in operating activities (19,646) (27,758)
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Cash flows from financing activities
Payments on notes payable (1,165) (1,005)
Proceeds from issuance of loans payable 19,314 -----
Net advances from a stockholder 1,567 28,639
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Net cash provided by financing activities 19,716 27,634
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Net increase (decrease) in cash 70 (124)
Cash, beginning of period 238 1,050
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Cash, end of period $ 308 $ 926
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The accompanying notes are an integral part of the financial statements.
F-3
YSEEK, INC.
STATEMENTS OF CASH FLOWS
(Continued)
Supplemental disclosures of noncash investing and financing activities:
None
Supplemental disclosure of cash flow information:
The Company paid approximately $402 and $562 in interest for the three
months ended March 31, 2002 and 2001, respectively.
F-4
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
The information presented herein as of March 31, 2002, and for the
three-months ended March 31, 2002 and 2001, is unaudited.
(1) Basis of Presentation:
The accompanying financial statements of Yseek, Inc. (the Company) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal required adjustments) considered necessary for a fair
presentation have been included.
Operating results for the three-month period ended March 31, 2002, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. For further information, refer to the financial statements
and footnotes included in the Company's annual report of Form 10-KSB for the
year ended December 31, 2001.
Net loss per common share is computed in accordance with the requirements
of Statement of Financial Accounting Standards No. 128 (SFAS 128). SFAS 128
requires net loss per share information to be computed using a simple weighted
average of common shares outstanding during the periods presented. In computing
diluted loss per share, warrants exercisable into common shares were excluded
because the effect is antidilutive.
(2) Reformation Agreement and Loss From Impairment of Assets:
In December 1999, the Company purchased all the outstanding stock of
Rankstreet.com, Inc. In the transaction accounted for as a purchase, the total
purchase price of $2,763,510 (including the value of contingent shares issued in
May 2000 and February 2001) was classified as goodwill. The goodwill was being
amortized over five years and as of December 31, 2000, accumulated amortization
totaled $525,082.
Additionally, during 2000 the Company contracted with consultants to
develop a web site for Rankstreet. The website was capitalized with a value of
$206,250 and was being amortized over three years. Accumulated amortization as
of December 31, 2000 was $59,289.
In April 2001, the existing management and Board of Directors of the
Company resigned and were replaced by individuals with experience with internet
based business. The new Board of Directors evaluated the website and the
goodwill that was acquired in the purchase of Rankstreet.com, Inc. and deemed it
to be impaired and of no future value to the Company.
Upon further investigation by the Company's new management it was
determined that certain contingencies in the original acquisition agreement had
not been met. In June 2001, the original stockholders of Rankstreet.com, Inc.
entered into a reformation agreement with the Company. This agreement concluded
that the 3,000,000 shares issued in December 1999 and May 2000 would be returned
since the contingencies related to these shares had not been met. Those shares
were returned to the Company in June 2001. This reformation results in a
reduction in goodwill related to the Rankstreet acquisition of $2,562,500, the
original value of the shares issued. This resulted in the recovery of
amortization in the amount of $324,069. The Company recognized an impairment
loss due to the Rankstreet website of $129,773. The March 31, 2001 financial
statements have been restated to reflect this agreement.
F-5
Item 2. Management's Discussion and Analysis or Plan of Operation
PLAN OF OPERATION
In the fourth quarter of 2000 and the first quarter of 2001, the Company entered
into strategic alliances with companies and individuals with substantial
experience in the Internet industry. The alliances allowed the Company to
acquire management and marketing expertise through consulting agreements.
Although these agreements expired near the end of 2001, certain individuals are
continuing to provide very limited management and marketing experience in their
roles as officers of the Company. Those individuals are expected to resume
providing additional services in the future, most likely in exchange for stock.
This will allow the company to continue to move forward without the use of its
limited funds.
Additionally, the Company acquired a ten-year software license for the use of a
keyword biddable search engine and related domain names. The Company entered
into two traffic promotion agreements whereby each promoter provided hits to the
Company web site. The Company issued stock in exchange for these agreements
enabling the Company to move forward on its plans without the use of any funds.
In April 2001, the Company's officers resigned. Individuals affiliated with the
consultants noted above were elected to the Board of Directors. These
individuals have substantial experience with profitable Internet companies and
web sites.
The Company's plans for the next twelve months include the continued promotion
of its Web search portal, Yseek.com. The search portal was launched in mid 2001
and the company has entered into several agreements with search engines during
the 3rd and 4th quarters of 2001. Other companies owned by officers of the
Company have continued to provide traffic to the Yseek site and the Company is
providing other options for traffic generation alliances. The Company believes
there will be sufficient traffic to make the site a profitable internet portal.
The Company's officers and consultants are involved with the internet industry
on a full time basis and are proceeding cautiously to attempt to learn from the
success and failures of other internet companies.
Additionally the Company's expansion plans include acquiring and developing
other profitable business ventures. The Company is currently actively exploring
several possible acquisitions however there are no pending letters of intent,
active negotiations or other plans.
In conjunction with planning the course of action for the next twelve months,
the new Board of Directors investigated the viability of Rankstreet.com.
Rankstreet was to be an all-in-one Web site including a directory, web counter
and business to business Internet advertising agency. The Board determined that
there was no value in pursuing the marketing and enhancement of the Rankstreet
web site and has abandoned any such plans. Additionally, management determined
that the contingencies stated in the acquisition agreement had not been met. In
June, 2001, the former stockholders of Rankstreet.com, Inc. entered into a
reformation agreement and returned 3,000,000 shares for which the contingencies
were not met.
The Companies plans to market the Yseek.com search engine and to acquire and
develop other profitable business ventures that will require additional funds.
During 2001, the Company received $95,000 in loans from a relative of a Board
member, from two officers of the Company and a company owned by officers. During
the 1st quarter of 2002, the Company received $19,314 from a company owned by
officers. These loans all bear interest at 14% and are currently due on demand.
As of March 31, 2002 the Company had minimal available funds. However, most of
the Company's operations are being conducted within the consulting agreements
entered into in the fourth quarter of 2000 and the cash outflows have been
substantially reduced. Additionally two of the Company's officers and board
members have agreed to fund the Company's operations as they currently exist.
There is currently no expected purchase or sale of plant and equipment or
expected significant changes in the number of employees.
Page 6
Item 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit Description Number
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession................................None
(4) Instruments defining the rights of holders, including Indentures None
(10) Material contracts ...................................................None
(11) Statement re: computation of per share earnings..................Note 1 to
Financial
Statements
(15) Letter re: Unaduited Interim Financial Information....................None
(18) Letter on change in accounting principles.............................None
(19) Report Furnished to Security Holders .................................None
(22) Published report regarding matters submitted to
vote..................................................................None
(23) Consents of Experts and Counsel.......................................None
(24) Power of Attorney.....................................................None
(99) Additional Exhibits...................................................None
(b) REPORTS ON FORM 8-K:
NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
YSEEK, INC.
Dated: May 15, 2002 By: /s/ Bruce Hammil
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Bruce Hammil, President
Chief Executive Officer,
Chief Financial Officer and
Chief Operating Officer