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 quarter ended June 30, 2004
or
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 333-34144
VERTICALBUYER, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 98-0216911
------------------------ ----------
(State of Incorporation) (I.R.S. Employer
Identification No.)
c/o Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, New York 10022
------------------ -----
(Address of principal executive offices) (Zip Code)
(212) 400-6900
(Issuer's telephone number, including area code)
Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90
days. Yes | X | No | |
As of July 27, 2004, there were 17,391,667 shares of the VerticalBuyer,
Inc.'s common stock, par value $0.001 issued and outstanding.
VERTICALBUYER, INC.
JUNE 30, 2004 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page
Number
Special Note Regarding Forward-Looking Statements. . . . . . . . . . . . . . . . . . . . 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . . 5
Item 3. Control and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Changes in Securities and Small Business Issuer Purchases of Equity Securities 6
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . 6
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 6
References in this report to "we", "us", "our" and similar terms means
VerticalBuyer, Inc., a Delaware corporation, and its wholly owned subsidiaries.
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2004 discusses financial projections,
information or expectations about our products or markets, or otherwise makes
statements about future events, such statements are forward-looking. We are
making these forward-looking statements in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking
statements. These risks and uncertainties are described, among other places in
this Quarterly Report, in "Management's Discussion and Analysis or Plan of
Operation".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page
Number
Consolidated Balance Sheet for period ended June 30, 2004 . . . . . . . . . . . . . . . . . . . F-1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003 F-2
Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2004 and 2003 F-3
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . F-4 - F-5
4
VERTICALBUYER, INC.
-------------------
CONSOLIDATED BALANCE SHEET
--------------------------
JUNE 30, 2004
--------------
(Unaudited)
-----------
ASSETS
------
Current Assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . $ -
------------
$ -
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses . . . . . . . . $ 113,345
------------
Total current liabilities . . . . . . . . . . . . . 113,345
------------
Stockholders' deficit:
Common stock, $.001 par value; 50,000,000 authorized,
17,391,667 issued and outstanding . . . . . . . . . 17,392
Additional paid-in capital. . . . . . . . . . . . . . 2,008,670
Accumulated deficit . . . . . . . . . . . . . . . . . (2,139,407)
------------
Total stockholders' deficit . . . . . . . . . . . . (113,345)
------------
$ -
============
See notes to consolidated financial statements
F-1
VERTICALBUYER, INC.
-------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
-----------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues. . . . . . . . . . . . . . . $ - $ - $ - $ -
Cost of Sales . . . . . . . . . . . . - - - -
----------- ----------- ----------- -----------
GROSS PROFIT. . . . . . . . . . . . - - - -
----------- ----------- ----------- -----------
Expenses:
Selling, general and administrative - - - -
Interest income expense, net. . . . - - - -
----------- ----------- ----------- -----------
Total operating expenses. . . . . . - - - -
----------- ----------- ----------- -----------
Loss from continuing operations . . . - - - -
Loss from discontinued operations . . - - - -
----------- ----------- ----------- -----------
NET LOSS. . . . . . . . . . . . . . $ - $ - $ - $ -
=========== =========== =========== ===========
NET LOSS PER WEIGHTED AVERAGE
SHARES OUTSTANDING -
Basic and diluted
Continued operations. . . . . . . $ - $ - $ - $ -
=========== =========== =========== ===========
Discontinued operations . . . . . $ - $ - $ - $ -
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING . . . . . . . . . . . . 17,033,334 17,033,334 17,033,334 17,033,334
=========== =========== =========== ===========
See notes to consolidated financial statements
F-2
VERTICALBUYER, INC.
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
-----------
Six Months Ended
June 30,
2004 2003
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ -
Adjustments ro reconcile net (loss) to net cash
(used) in operating activities:
Loss (income) from discontinued operations . . . . . . . . . - -
Changes in assets and liabilities: . . . . . . . . . . . . . - -
----- -----
NET CASH USED BY OPERATING ACTIVITIES. . . . . . . . . . . . . . - -
Effect of exchange rate differences on cash and cash equivalents - -
----- -----
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . - -
CASH AND CASH EQUIVALENTS, beginning of period . . . . . . . . . - -
----- -----
CASH AND CASH EQUIVALENTS, end of period . . . . . . . . . . . . $ - $ -
===== =====
See notes to consolidated financial statements
F-3
VERTICALBUYER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
disclosures required for annual financial statements.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of June 30, 2004 are included.
The results of operations for the three month period ended June 30, 2004 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Vertical Buyer, (the "Company") a Delaware corporation, was incorporated on
September 24, 1999 and on March 1, 2000 issued 14,250,000 shares of its common
stock to the shareholders of Lightseek Limited in exchange for all of the
outstanding common stock of Lightseek Limited. On February 15, 2001, Lightseek
Limited acquired all of the outstanding common stock of Litech Limited. The
acquisition of Litech has been accounted for under the purchase method, and,
accordingly, Litech's operations have been included in the Company's
consolidated financial statements from its date of acquisition. Lightseek is
principally engaged in the development of Internet sites designed to exploit
Business-to-Business e-commerce opportunities within the global commercial
electrical and lighting markets. Litech is a specialist designer and
manufacturer of fiber optic lighting applications for the entertainment,
commercial and retail markets. In September 2001 the Company discontinued the
operations of both Lightseek Limited and Litech Limited.
Use of estimates
The preparation of financial statements in accordance with generally accepted
accounting principles 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. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid short-term investments, with a remaining
maturity of three months or less when purchased, to be cash equivalents.
Principles of Consolidation
The consolidated financial statements of the Company include those of the
Company and of each of its subsidiaries for the periods in which the
subsidiaries were owned/held by the Company. All significant intercompany
accounts and transactions have been eliminated in the preparation of the
consolidated financial statements.
F-4
Stock Options
Statement of Financial Accounting Standards No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure, an Amendment of FASB Statement No. 123,"
amends the disclosure requirements of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), to
require more prominent disclosures in both annual and interim financial
statements regarding the method of accounting for stock-based employee
compensation and the effect of the method used on reported results.
The Company accounts for stock-based compensation to employees and directors
using the intrinsic value method of accounting as prescribed under Accounting
Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Under the intrinsic value method,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of the grant, no compensation
expense is recognized in the Company's Consolidated Statements of Operations
Loss per share
Loss per share has been determined based on the Company's net loss divided by
the weighted average number of common shares outstanding. Warrants and options
to purchase shares of common stock outstanding at June 30, 2004 were not
included in the computation of diluted loss per share because the effect of
their inclusion would be antidilutive.
Foreign currency
The assets and liabilities of the foreign subsidiary are translated at current
exchange rates and their related revenues and expenses at average exchange rates
in effect during the period. Resulting translation adjustments are recorded as
a separate component of stockholders' deficit while foreign currency transaction
gains and losses are included in operations.
Income taxes
Deferred income taxes are provided on a liability method whereby deferred tax
assets are established for the difference between the financial reporting and
income tax basis of assets. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
VerticalBuyer, (the "Company") a Delaware corporation, was incorporated on
September 24, 1999 and on March 1, 2000 issued 14,250,000 shares of its common
stock to the shareholders of Lightseek Limited in exchange for all of the
outstanding common stock of Lightseek Limited. On February 15, 2001, Lightseek
Limited acquired all of the outstanding common stock of Litech Limited.
Lightseek was principally engaged in the development of Internet sites designed
to exploit Business-to-Business e-commerce opportunities within the global
commercial electrical and lighting markets. Litech was a specialist designer and
manufacturer of fiber optic lighting applications for the entertainment,
commercial and retail markets. In September 2001, the Company discontinued the
operations of both Lightseek Limited and Litech Limited.
VerticalBuyer had sought to specialize in the creation of Internet based
news sites dedicated to specific industries. Lightseek was our first website
developed for the commercial lighting industry. Subsequently, other lighting
sites were also tested, including an auction site for the global market.
Following a consolidation of these sites, we are currently evaluating how to
re-launch Lightseek, which we believe is the brand-name that has the greatest
franchise in the market.
We require additional funding for working capital in order to resume
operations. Such financing may be through the sale of common stock and or debt
issuances. However, we do not have any commitment from any sources to raise this
capital. If management is unable to generate external financing, we will not be
able to resume operations.
As of September 30, 2001 the Company had no operations, no revenues, no
cash and no assets.
As of June 30, 2004 the Company had no operations, no revenues, no cash and
no assets.
On March 12, 2004 controlling shareholders Leslie Kent and Timothy Rosen
sold their combined shares of common stock totaling 13,950,000 shares, which
represents approximately eighty percent (80%) of the Company's outstanding
shares, to Maximum Ventures, Inc. for $150,000. Although this sale was executed
on March 12, 2004 there are certain post closing conditions which have not yet
been met. Maximum Ventures, Inc. also assumed certain liabilities of the
Company. Maximum Ventures, Inc. is located at 1175 Walt Whitman Road, Suite
100, Melville, New York 11747.
ITEM 3. CONTROLS AND PROCEDURES
Our principal executive officer and principal financial officer evaluated
the effectiveness of the Company's disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended) as of the end of the period covered by this report. Based on
this evaluation, the Company's principal executive officer and principal
financial officer have concluded that the Company's controls and procedures are
effective in providing reasonable assurance that the information required to be
disclosed in this report has been recorded, processed, summarized and reported
as of the end of the period covered by this report. During the period covered by
this report, there have not been any significant changes in our internal
controls or, to my knowledge, in other factors that could significantly affect
our internal controls.
5
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 11, 2002 there was a judgment entered against VerticalBuyer for
$42,000 with post-judgment interest at the rate of ten percent (10%) per annum
from the judgment date until paid and 225,000 shares of common stock in
VerticalBuyer, Inc., together with all costs of Court. The judgment was in the
case Intratech Capital Partners, Ltd. v. VerticalBuyer, Inc., Cause No.
CC-01-06374-B, in the County Court, Dallas County, Texas. On March 12, 2004 a
Mutual Release with Judgment Holder Intratech Capital Partners, LTD. was
executed.
ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On March 12, 2004 controlling shareholders Leslie Kent and Timothy Rosen
sold their combined shares of common stock totaling 13,950,000 shares, which
represents approximately eighty percent (80%) of the Company's outstanding
shares, to Maximum Ventures, Inc. for $150,000. Maximum Ventures, Inc. also
assumed certain liabilities of the Company. Although this sale was executed on
March 12, 2004 there are certain post closing conditions which have not yet been
met. Maximum Ventures, Inc. is located at 1175 Walt Whitman Road, Suite 100,
Melville, New York 11747.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description of Exhibit
2.1 Stock Purchase Agreement, dated March 12, 2004 between Leslie Kent and
Timothy Rosen, and Maximum Ventures, Inc.
10.1 Stock Purchase Agreement, dated March 12, 2004 between Leslie Kent and
Timothy Rosen, and Maximum Ventures, Inc. (filed as exhibit 2.1)
10.2 Mutual Release with Judgment Holder Intratech Capital Partners, LTD.,
dated March 12, 2004
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1 Section 1350 Certifications of Chief Executive Officer and Chief Financial
Officer
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period represented by this
Quarterly Report on Form 10-QSB.
6
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this 10-QSB report for the period ended June 30, 2004 to be signed on its
behalf by the undersigned, thereunto duly authorized.
VERTICALBUYER, INC.
Dated: July 27, 2004
By: /s/ Timothy Rosen
-------------------------------------
Timothy Rosen
President and Chief Executive Officer
Dated: July 27, 2004
By: /s/ Leslie Kent
-------------------------------------
Leslie Kent
Chief Financial Officer
7