UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
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Commission File Number: 000-49616
Global Yacht Services, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0488686
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7710 Hazard Center Drive, Suite E-415, San Diego, California, 92108
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(Address of principal executive offices)
619.990.0976
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of May 15, 2003, there were
1,917,277 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT
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GLOBAL YACHT SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003 AND 2002
2
GLOBAL YACHT SERVICES, INC.
CONTENTS
PAGE
Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheet 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
3
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2003 AND 2002
(UNAUDITED)
ASSETS
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CURRENT ASSETS
Cash $ 73,112
Accounts receivable, net 1,695
Prepaid expenses 17,165
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Total current assets 91,972
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Total assets $ 91,972
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LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,446
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Total current liabilities 14,446
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CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 1,917,277 1,917
Additional paid-in capital 190,398
Accumulated deficit (114,789)
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Total stockholders' deficit 77,526
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Total liabilities and stockholders' deficit $ 91,972
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See accompanying notes to consolidated financial statements.
4
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002
(UNAUDITED)
March 31,
2003 2002
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REVENUES
Charter services $ --- $ 1,240
Yacht management fees 2,820 2,628
Sales commissions --- 25,000
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Net revenues 2,820 28,868
COST OF REVENUES
Charter expenses --- 787
Yacht management expenses 817 2,008
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Total cost of revenues 817 2,795
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GROSS MARGIN 2,003 26,073
OPERATING EXPENSES
Legal and professional fees 8,203 10,145
Occupancy 585 585
Office supplies and expense 523 1,076
Outside services 1,500 1,500
Telephone and utilities 266 409
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Total operating expenses 11,077 13,715
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INCOME (LOSS) FROM OPERATIONS (9,074) 12,358
OTHER INCOME --- 4
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INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (9,074) 12,362
PROVISION FOR INCOME TAXES 800 3,000
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NET INCOME (LOSS) $ (8,362) $ 9,362
=============== ===============
NET INCOME (LOSS) PER COMMON SHARE-- BASIC AND DILUTED
$ --- $ ---
=============== ===============
WEIGHTED AVERAGE OF COMMON SHARES-- BASIC AND DILUTED
1,917,277 1,282,777
=============== ===============
See accompanying notes to consolidated financial statements.
5
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003 AND MARCH 31, 2002
(UNAUDITED)
March 31,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (9,874) $ 9,362
Adjustments to reconcile net income (loss) to net cash used in operating
activities
Occupancy costs contributed by officer 585 585
Changes in operating assets and liabilities
(Increase) in accounts receivable (1,695) (24,365)
(Increase) in prepaid expenses (17,165) ---
(Decrease) Increase in accounts payable
and accrued expenses 4,012 (407)
Increase in income taxes payable --- 2,200
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Net cash used in operating activities (24,137) (12,625)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (24,137) (12,625)
CASH AND CASH EQUIVALENTS, beginning of period 97,249 26,127
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CASH AND CASH EQUIVALENTS, end of period $ 73,112 $ 13,502
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 800 $ 800
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Interest paid $ --- $ ---
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See accompanying notes to consolidated financial statements.
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003 AND 2002
(UNAUDITED)
NOTE 1 - PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of the Global Yacht Services, Inc. and its majority owned subsidiary,
Global Yacht Services, Ltd. All significant intercompany transactions have been
eliminated, if any. The unaudited consolidated financial statements included
herein have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Item 301(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
periods ended March 31, 2003 and 2002 are not necessarily indicative of the
results that may be expected for the years ended December 31, 2003 and 2002.
These statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form
10-KSB.
NOTE 2 - COMMON STOCK
On 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 3 - RELATED PARTY TRANSACTIONS
The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying consolidated statement of operations for
the three-month periods ended March 31, 2003 and 2002, respectively, and are
considered additional contributions of capital by the officer and the Company.
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ITEM 2. PLAN OF OPERATION
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
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 Quarterly Report on Form
10-QSB for the period ended March 31, 2003.
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.
7
We have also generated revenues from our yacht management services and our
delivery services. Yacht management services include managing the yacht for the
owners including routine maintenance, repairs and electronics installation.
Regular maintenance includes services such as exterior and interior cleaning,
bottom cleaning, waxing and zinc replacement. Delivery services include
delivering newly purchased yachts to various locations around the world.
FOR THE THREE MONTHS ENDED MARCH 31, 2003.
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Liquidity and Capital Resources. Our total assets were $91,972 as of March 31,
2003. Of those assets, we had cash of $73,112, accounts receivable of $1,695,
and prepaid expense of $17,165 as of March 31, 2003. Therefore, our total
current assets were $74,807 as of March 31, 2003. We believe that our available
cash is sufficient to pay our day-to-day expenditures.
Our current liabilities were $14,446 as of March 31, 2003, and were represented
solely by accounts payable and accrued expenses. We had no other liabilities and
no long term commitments or contingencies as of March 31, 2003.
RESULTS OF OPERATIONS.
REVENUE. For the three months ended March 31, 2003, we realized revenues of
$2,820 from yacht management fees, compared to revenues of $28,868 generated for
the three months ended March 31, 2002, which resulted from receiving $1,240 in
charter services, $2,628 in yacht management fees and $25,000 we received from
sales commissions. The difference in our revenues is accounted for the fact that
we had no revenues from sales commissions during the three months ended March
31, 2003. Our cost of revenues was $817 for the three months ended March 31,
2003, which was represented by yacht management expenses. This is compared to
$2,795 for the same period ended March 31, 2002, which was represented by $787
in charter expenses and $2,008 in yacht management expenses. Therefore, our
gross margin for the three months ended March 31, 2003 was $2,003, compared to
$26,073 for three months ended March 31, 2002. We hope to generate more revenues
as we expand our customer base.
OPERATING EXPENSES. For the three months ended March 31, 2003, our total
operating expenses were approximately $11,077, compared to $13,715 for the three
months ended March 31, 2002. For the three months ended March 31, 2003, the
majority of our total operating expenses were represented by legal and
professional fees of $8,203. We also had occupancy expenses of $585, office
supplies and expense of $523, outside services expenses of $1,500, and $266 for
telephone and utilities. Our operating expenses for the three month period
ending March 31, 2002 totaled $13,715, most of which were represented by legal
and professional fees of $10,145. We also had occupancy expenses of $585, office
supplies and expense of $1,076, outside services expenses of $1,500, and $409
for telephone and utilities. Our operating expenses were lower because we
incurred fewer professional and legal fees during the three month period ending
March 31, 2003 as compared to the three months ending March 31, 2002, because
during 2002 we were preparing a registration statement.
For the three months ended March 31, 2003, we experienced a net loss of
approximately $9,874 compared to a net income of $9,362 the three months
ended March 31, 2002, because we generated less in commissions and fees during
the three months ended March 31, 2003. We anticipate that we will continue to
incur significant general and administrative expenses, but hope to continue
generating income as we expand our operations.
OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. In our management's opinion,
to effectuate our business plan in the next twelve months, the following events
should occur or we should reach the following milestones in order for us to
become profitable:
8
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. We hope to continue to increase our
customer base.
2. We must continue to 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. We hope
to continue to develop relationships with several of those parties who
provide some of the services that we offer as well as be sources of
referrals.
3. We must develop our website so that it will function as a means for
global clients to access our range of services and communicate with us
for support services as well as for use as a marketing tool to inform
and persuade customers to engage our services. We intend to develop our
website so that we utilize a database set up on the backend, which will
capture customer information and allow us to process information
concerning our clients and potential clients. One objective for our
website is to interact with clients in "real time" so that they feel
that their needs are being taken care of professionally and on a
personal level. Within six to twelve months, we should have developed
our website to provide those services.
We have cash of $73,112 as of March 31, 2003. In the opinion of management,
available funds will satisfy our working capital requirements for the next
twelve months. Our forecast for the period for which our financial resources
will be adequate to support our operations involves risks and uncertainties and
actual results could fail as a result of a number of factors. In order to expand
our operations, we do not currently anticipate that we will need to raise
additional capital in addition to the funds raised in this offering. If we do
not raise adequate funds from this offering, then we may not be able to conduct
marketing activities and expand our operations.
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. In the event that we expand our customer base,
then we may need to hire additional employees or independent contractors as well
as purchase or lease additional equipment.
ITEM 3. CONTROLS AND PROCEDURES
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(a) Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission. Based upon
their evaluation of those controls and procedures performed within 90 days of
the filing date of this report, our chief executive officer and the principal
financial officer concluded that our disclosure controls and procedures were
adequate.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
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None.
ITEM 2. CHANGES IN SECURITIES.
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None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
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None.
ITEM 5. OTHER INFORMATION
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None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
9
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Global Yacht Services, Inc.,
a Nevada corporation
May 15, 2003 By: /s/ Mitch Keeler
-----------------------------------
Mitch Keeler
Its: president, principal executive officer, director
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CERTIFICATIONS
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I, Mitch Keeler, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Mitch Keeler
----------------------
Mitch Keeler
Chief Executive Officer
11
CERTIFICATIONS
--------------
I, Melissa Day, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Global Yacht
Services, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
Melissa Day
----------------------
Melissa Day
Chief Financial Officer
12