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 September 30, 2004_
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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.
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(Exact name of small business issuer as specified in its charter)
Delaware 98-0216911
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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1175 Walt Whitman Rd. 11747
Suite 100
Melville, New York
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(Address of principal executive offices) (Zip Code)
(631) 424-9009
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(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 October 1, 2004, there were 17,391,667 shares of the registrant's
common stock, par value $0.001 issued and outstanding.
VERTICALBUYER, INC.
SEPTEMBER 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 of Financial Condition and Results of Operations 11
Item 3. Control and Procedures 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
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 September 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 of Financial Condition and Results of Operations".
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
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Consolidated Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003 5
Consolidated Statements of Operations for the three months and nine months ended 6
September 30, 2004 and September 30, 2003 (unaudited)
Consolidated Statements of Cash Flows for the Nine Months Ended September 7
30, 2004 and September 30, 2003 (unaudited)
Notes to Consolidated Financial Statements 8
4
VERTICALBUYER, INC.
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CONSOLIDATED BALANCE SHEET
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SEPTEMBER 30, 2004
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(Unaudited)
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ASSETS
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LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 73,420
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Total current liabilities 73,420
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Stockholders' deficit:
Common stock, $.001 par value; 50,000,000 authorized,
17,391,667 issued and outstanding 17,392
Additional paid-in capital 2,008,670
Accumulated deficit (2,099,482)
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Total stockholders' deficit (73,420)
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$ -
============
See notes to financial statements
5
VERTICALBUYER, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2004 2003 2004 2004
------------ ----------- ------------ -----------
Revenues $ - $ - $ - $ -
Cost of Sales - - - -
------------ ----------- ------------ -----------
GROSS PROFIT - - - -
------------ ----------- ------------ -----------
Expenses:
Selling, general and administrative 770 - 770 -
Interest income, net - - - -
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Total operating expenses 770 - 770 -
------------ ----------- ------------ -----------
Loss from continuing operations (770) - (770) -
Income from discontinued operations 40,695 - 40,695 -
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NET LOSS $ 39,925 $ - $ 39,925 $ -
============ =========== ============ ===========
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 financial statements
6
VERTICALBUYER, INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
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Nine Months Ended
September 30,
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2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (770) $ -
Adjustments to reconcile net (loss) to net cash flows
(used) in operating activities:
Income from discontinued operations 40,695 -
Changes in assets and liabilities:
Accounts payable and accrued liabilities (39,925)
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NET CASH USED BY OPERATING ACTIVITIES - -
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS, beginning of period - -
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CASH AND CASH EQUIVALENTS, end of period $ - $ -
========= ======
See notes to financial statements
7
VERTICALBUYER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2004 and 2003
(unaudited)
Note 1 - Basis of presentation
-----------------------------------
The accompanying unaudited consolidated financial statements and related notes
have been prepared using accounting principles generally accepted in the United
States of America for interim financial statements and pursuant to the rules and
regulations of the Securities and Exchange Commission for Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America 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. For further information read the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 2003. The results of operations
for the nine-months ended September 30, 2004 are not necessarily indicative of
the operating results that may be expected for the fiscal year ending December
31, 2004.
Note 2 - Summary of significant accounting policies
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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
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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
8
subsidiaries were owned/held by the Company. All significant intercompany
accounts and transactions have been eliminated in the preparation of the
consolidated financial statements.
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 4,470,000 shares of common stock were outstanding at September 30,
2004, but 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
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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.
Recent Accounting Pronouncements:
---------------------------------
Management does not believe that any recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying consolidated financial statements.
9
Note 3 - Going Concern
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The Company has incurred an accumulated deficit at September 30, 2004 of
approximately $2,180,000 and had negative capital at September 30, 2004 of
approximately $73,000. The Company's ability to continue as a going concern is
dependent upon the Company obtaining adequate capital to fund losses.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
Overview
VerticalBuyer, Inc.(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.
Management believes that we will require additional funding for working
capital in order to sustain our operations while we seek opportunities. Such
financing is expected to 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 proceed with a business plan and it is unlikely we will be able to
continue as a going concern. Should this be the case, we will attempt to sell
the Company (or its assets) and liquidate. As of September 30, 2004, we had no
cash, no assets and no operations.
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. All post-closing conditions of
this sale have been finalized. 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. In August 2004, Joseph
Donahue resigned as a director from the board of directors. On August 16, 2004,
the board of directors appointed Chris Kern as a director of the company. On
October 22, 2004, the board of directors accepted the resignation of Messrs.
Kent and Rosen from their respective positions as directors and officers of the
Company. Mr. Kern appointed Abraham Mirman, President of Maximum Ventures,
Inc., as a director and Chief Executive Officer of the Company. Following this
appointment, Mr. Kern resigned from the board of directors and was subsequently
appointed the Company's Interim Chief Financial Officer on November 17, 2004.
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 has 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.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS IN 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. All post-closing conditions of
this sale have been finalized. 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. In August 2004, Joseph
Donahue resigned as a director from the board of directors. On August 16, 2004,
the board of directors appointed Chris Kern as a director of the company. On
October 22, 2004, the board of directors accepted the resignation of Messrs.
Kent and Rosen from their respective positions as directors and officers of the
Company. Mr. Kern appointed Abraham Mirman, President of Maximum Ventures,
Inc., as a director and Chief Executive Officer of the Company. Following this
appointment, Mr. Kern resigned from the board of directors and was subsequently
appointed the Company's Interim Chief Financial Officer on November 17, 2004.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
No. Description of Exhibit
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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 Certification of Chief Executive Officer
32.2 Section 1350 Certification of 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.
12
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.
VERTICALBUYER, INC.
Dated: November 22, 2004
By: /s/ Abraham Mirman
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Abraham Mirman
Chief Executive Officer
Dated: November 22, 2004
By: /s/ Chris Kern
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Chris Kern
Chief Financial Officer
13