U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under section 13 or 15 (D) of
the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2002
[ ] Transition report under section 13 or
15 (d) of the Securities Exchange Act of
1934 for the transition period from _____ to _____
YSEEK, INC.
(Name of small business issuer in its charter)
Florida 65-0783722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7732 N. Mobley Drive
Odessa, Florida 33556
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (813) 926-3298
Securities registered under Section 12(b) of the Exchange Act:
None
Name of exchange on which registered
OTC Bulletin Board
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $.0001 par value
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 ___
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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.
The issuer's revenue for the most recent fiscal year ending December 31,
2002, was $-0-.
The aggregate market value of the 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 March 19,
2002, was approximately $695,070.
The number of shares of the Company's common stock, par value $.0001 per
share, outstanding as of March 19, 2002, was 36,011,765.
Transitional Small Business Disclosure Format (Check One) Yes____ No X
Part I
Item 1. Description of Business
The Company
Yseek, Inc. is a Florida Corporation formed on September 23, 1997 ("Yseek"). The
Company has been engaged in the business of operating an Internet search portal
WWW.Yseek.com. The Company had no income in 2002.
The Company was originally formed to develop, own and operate a chain of
full-service car washes and express oil change centers. The Company is a
successor to Steele Holdings, Inc., a Florida Corporation formed on August 13,
1997. Rachel Steele was the sole shareholder of and President of Steele
Holdings. On January 20, 1998, the Company and Steele Holdings, Inc., were
reorganized with all the assets of Steele Holdings being transferred into the
Company. All 6,000 authorized shares of common stock were exchanged on a one to
one thousand basis for shares in the Company. After the reorganization, all
stock in the Company was owned by the Company's president, Rachel Steele. Steele
Holdings has conducted no other business, held no other assets and was dissolved
on October 16, 1998. On October 22, 1999, the Company changed its name to
SwiftyNet.com, Inc. On January 29, 2001, the Company changed its name to Yseek,
Inc.
The Company constructed an oil change center in Palm Harbor, Florida on real
property owned by the Company (the "Center"). The approximately one (1) acre
site was purchased from Champion Hills by the Company's predecessor for
$312,500. The first Center was opened on January 18, 1999.The Center was sold on
April 19, 2000, for a cash sales price of $1,000,000. The sales price was
determined through arms-length negotiations. The car wash was purchased by In
and Out Express Lube, Inc. There were no material relationships between the
purchaser and the Company or its affiliates, or any officer or director, or any
associate of such officer or director.
In November 2000, the Company entered into a non-exclusive 10-year license for
web-based Internet search software with Norman J. Jester, III, for a total
consideration of 1,665,000 restricted shares of common stock. In January 2001,
the Company used the software to begin operating the Yseek.com web site.
Yseek.com provides a free search engine and links by category to other World
Wide Web sites at [www.yseek.com]
The stock issued under the traffic promotion agreements was returned in
September 2002. New management elected in September 2002 has decided not to
pursue an Internet related business and therefore recognized an impairment loss
for the unamortized value of the search engine in the fourth quarter of 2002.
Management will attempt to sell the remaining term of the license however there
is no ready market and the ultimate proceeds, if any, cannot be determined.
The Company's plans include acquiring profitable business ventures. On February
1, 2003, the Company entered into a consulting agreement with an individual to
investigate the ultrasound fetal imaging business for a period of ninety days.
Based on the consultant's recommendations, the Company presently intends to
acquire or develop ultrasound facilities. In exchange for these services, the
consultant will receive $10,000 and 1,000,000 common shares. The Company is
currently actively exploring several possible acquisitions however there are no
pending letters of intent or active negotiations.
Item 2. Description of Property
None.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Company's security holders
during the 2001 year. The Company's name change to Yseek, Inc. was approved by a
majority of the Company's outstanding shares without a meeting.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's common stock are traded on the Over-the-Counter Bulletin Board.
The high and low sales prices for each quarter since then are as follows:
Common Stock
High Low
1st quarter 2000 $4.00 $1.563
2nd quarter 2000 $3.5633 $1.500
3rd quarter 2000 $1.844 $0.875
4th quarter 2000 $1.375 $0.344
1st quarter 2001 $0.719 $0.72
2nd quarter 2001 $0.38 $0.188
3rd quarter 2001 $0.34 $0.08
4th quarter 2001 $0.23 $0.06
1st quarter 2002 $0.0453 $0.0416
2nd quarter 2002 $0.0201 $0.0195
3rd quarter 2002 $0.0170 $0.0164
4th quarter 2002 $0.0139 $0.0134
The approximate number of holders of record of common stock is 110. No dividends
have been declared to date. The future dividend policy will depend upon the
Company's earnings, capital requirements, financial condition and other factors
considered relevant by the Company's Board of Directors.
Recent Sales of the Company's Securities.
During 2002, the Company sold 9,216,665 shares of common stock for cash of
$138,730.
In 2000, the Company issued 5,720,000 shares of common stock under two traffic
promotion agreements, with two companies related to then officers or directors
of Yseek. These agreements expired one year later. The Company recognized an
expense of $1,287,000 related to these agreements. In September 2002, the two
companies returned the entire 5,720,000 common shares. Yseek and the companies
executed mutual releases from any future claims, losses or rights. The shares
received by the Company were recorded at cost, which was zero.
On October 1, 2002, the Company issued 9,000,000 shares of common stock under
one-year employment agreements with two officers of the Company. The Company
recognized an expense of $90,000 related to these agreements, which represents
the market value of the shares less a discount because the shares are
unregistered and are not easily marketable.
From September 9, 2002 to March 11, 2003, Registrant sold a total of 12,916,665
common shares for a cash purchase price of $.015 per share as follows:
Name Number Common Shares Purchased Date
Rachel L. Steele 2,300,000 09-10-02
Gary H. Anderson 1,000,000 09-25-02
Barbara B. Reschly 1,000,000 09-09-02
Alvin L. Ferrer 333,333 09-10-02
Jainarine Leonard 66,666 09-19-02
Frances Best-Ferrer 266,666 09-18-02
Timothy C. Minnehan 2,000,000 09-09-02
Theodore Grevas 700,000 09-25-02
James C. Ottogalli 200,000 02-21-03
Richard T. Fisher 1,000,000 03-11-03
Paul Welch 500,000 01-10-03
James C. Ottogalli. 200,000 02-14-03
William Kapner 500,000 01-27-03
Leonard Root 100,000 01-23-03
Denno Family Limited
Partnership 1,000,000 02-03-03
Douglas W. Kile 350,000 12-12-02
Sarah L. Tyson 200,000 12-19-02
Douglas B. Odell 200,000 01-01-03
Richard T. Fisher 1,000,000 11-22-02
All sales were made pursuant to Section 4(2) of the 1933 Act. The proceeds
of the sale of these securities ($194,250.00) were used to pay $53,439.05 due
to 2D&H, Inc., a corporation controlled by David G. Marshlack and Charles Bruce
Hammil, $80,000 to David G. Marshlack, Dan Marshlack, and Charles Bruce Hammil,
and to provide operating capital.
On February 1, 2003, the Company entered into a consulting agreement with an
individual to investigate a potential business opportunity for a period of
ninety days. In exchange for services, the consultant will receive $10,000 and
1,000,000 common shares.
Special Note Regarding Forward Looking Statements.
This annual report on Form 10-KSB of Yseek, Inc. for the year ended December 31,
2002 contains certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be covered by the safe
harbors created thereby. To the extent that such statements are not recitations
of historical fact, such statements constitute forward-looking statements which,
by definition, involve risks and uncertainties. In particular, statements under
the Sections; Description of Business, Business Strategy and Management's
Discussion and Analysis of Financial Condition and Results of Operations contain
forward-looking statements. Where, in any forward-looking statement, Yseek
expresses an expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished.
The following are factors that could cause actual results or events to differ
materially from those anticipated, and include but are not limited to: general
economic, financial and business conditions; changes in and compliance with
governmental regulations; changes in tax laws; and the costs and effects of
legal proceedings.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere in this
report. This report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Special
Note Regarding Forward-Looking Statements."
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. 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. In September 2002 these officers and directors elected new officers
and directors and then resigned. The new officers and directors have been
involved with the company since its inception, except for the period from April
2001 to September 2002.
In late 2000, 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.
The stock issued under the traffic promotion agreements was returned in
September 2002. New management elected in September 2002 has decided not to
pursue an Internet related business and therefore recognized an impairment loss
for the unamortized value of the search engine in the fourth quarter of 2002.
Management will attempt to sell the remaining term of the license however there
is no ready market and the ultimate proceeds, if any, cannot be determined.
The Company's plans include acquiring profitable business ventures. On February
1, 2003, the Company entered into a consulting agreement with an individual to
investigate the ultrasound fetal imaging business for a period of ninety days.
Based on the consultant's recommendations, the Company presently intends to
acquire or develop ultrasound facilities. In exchange for these services, the
consultant will receive $10,000 and 1,000,000 common shares. The Company is
currently actively exploring several possible acquisitions however there are no
pending letters of intent or active negotiations.
The Company's plans to acquire other profitable business ventures will require
additional funds. From September, 2002 through December, 2002, the Company
received $138,730 from sales of common stock, of which $35,000 was from one of
the new officers who is a major stockholder. This initial funding was used
primarily to pay off debts and to fund minimal administrative costs. The Company
plans to fund the operations of the company through additional sales of common
stock. Acquisitions will be funded through a combination of cash, stock and
debt. The Company believes that in the current marketplace they are an
attractive merger partner due to their public company status. In early 2003, the
Company received $52,500 from sales of common stock. These funds were used to
fund the consultant agreement and ongoing operations.
As of December 31, 2002 the Company had cash available of approximately $7,000.
However, the Company's operations are currently minimal and the cash outflows
have been substantially reduced. Additionally the Company's officers and board
members have agreed to fund the Company's operations if necessary.
In October 2002 the Company entered into employment agreements with its vice
president and treasurer. The employment agreements are for the period October 1,
2002 through September 30, 2003. Compensation under both agreements will be
4,500,000 common shares valued at $.01 per share.
Item 7. Financial Statements
YSEEK, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2002
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Yseek, Inc.
We have audited the accompanying balance sheet of Yseek, Inc. as of December 31,
2002, and the related statements of operations, changes in stockholders' equity,
and cash flows for the years ended December 31, 2002 and 2001. These financial
statements are the responsibility of the management of Yseek, Inc. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 Yseek, Inc. as of December 31,
2002, and the results of its operations and its cash flows for the years ended
December 31, 2002 and 2001, in conformity with accounting principles generally
accepted in the United States of America.
Certified Public Accountants
Tampa, Florida
March 6, 2003
The accompanying notes to financial statements
are an integral part of this statement.
F-2
YSEEK, INC.
BALANCE SHEET
DECEMBER 31, 2002
ASSETS
Current assets
Cash $ 6,999
-----------------
Total Assets $ 6,999
_________________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 39,030
_________________
Commitments and contingencies
Stockholders' equity
Common stock; $.0001 par value; 50,000,000 shares authorized; 34,811,765 shares
issued and outstanding 3,481
Paid-in capital 8,380,042
Accumulated deficit (8,415,554)
__________________
Total stockholders' equity (32,031)
------------------
Total Liabilities and Stockholders' Equity $ 6,999
_________________
The accompanying notes to financial statements
are an integral part of these statements.
F-3
YSEEK, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
----------------- -----------------
Revenues $ - $ -
----------------- -----------------
Expenses
Selling, general and administrative 119,771 329,608
----------------- -----------------
Total expenses 119,771 329,608
----------------- -----------------
Other income (expense)
Interest income - 11,888
Interest expense (2,952) (7,976)
----------------- -----------------
Total other income (expense) (2,952) 3,912
----------------- -----------------
Loss from continuing operations (122,723) (325,696)
Discontinued operations
Loss from discontinued operations of internet business 593,558 3,310,774
----------------- -----------------
Net loss $ (716,281) $ (3,636,470)
----------------- -----------------
Loss per common share
From continuing operations $ - $ (.01)
Discontinued operations - loss from operations (.02) (.14)
----------------- -----------------
Total loss per share $ (.02) $ (.15)
----------------- -----------------
Weighted average common shares outstanding 33,074,189 23,605,698
=================================================================================================================================
The accompanying notes to financial statements
are an integral part of this statement.
F-4
YSEEK, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Total
Accumulated Stockholders'
Common Stock Paid-in Capital Deficit Equity
Shares Amount
Balance, December 31, 2000 23,840,100 $ 2,383 $ 10,398,372 $ (4,062,803) $ 6,337,952
Common stock sold 475,000 48 104,640 - 104,688
Common stock issued for acquisition 1,000,000 100 203,000 - 203,100
of Rankstreet.com, Inc
Common stock returned in reformation (3,000,000) (300) (2,562,200) - (2,562,500)
agreement
Services donated by stockholder - - 8,750 - 8,750
Net loss - - - (3,636,470) (3,636,470)
---------------- --------------- --------------- ------------------ -----------------
Balance, December 31, 2001 22,315,100 2,231 8,152,562 (7,699,273) 455,520
Common stock issued for services 9,000,000 900 89,100 - 90,000
Common stock issued for cash 9,216,665 922 137,808 - 138,730
Common stock returned (5,720,000) (572) 572 - -
Net loss - - - (716,281) (716,281)
---------------- ---------------- --------------- ------------------ -----------------
Balance, December 31, 2002 34,811,765 $ 3,481 $ 8,380,042 $ (8,415,554) $ (32,031)
================ ================ =============== ================== =================
The accompanying notes to financial statements
are an integral part of these statements.
F-5
YSEEK, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
Operating activities ------------------ -----------------
Net loss $ (716,281) $ (3,636,470)
------------------ -----------------
Adjustments to reconcile net loss to net cash used in operating
activities:
Contributed services - 8,750
Stock issued to consultants and employees 90,000 104,688
Depreciation and amortization 65,400 83,041
Increase in allowance for doubtful accounts - 128,442
Writedown of property and equipment due to impairment - 129,773
Writedown of software license due to impairment 517,754 -
Recovery of amortization expense due to stock recision - (324,069)
Loss from disposal of equipment - 13,566
Decrease (increase) in other receivables 2,025 (2,025)
Increase in interest receivable - (11,863)
Decrease in prepaid expenses - 3,349,468
Increase in accounts payable and accrued expenses 4,133 2,620
Total adjustments 679,312 3,482,391
----------------- -----------------
Net cash used in operating activities (36,969) (154,079)
----------------- -----------------
Investing activities
Decrease (increase) in deposits and other assets - 30,000
----------------- -----------------
Financing activities
Proceeds from issuance of notes and loans payable 22,564 95,000
Payments on notes payable (117,564) (4,252)
Proceeds from sale of common stock 138,730 -
Net advances from a stockholder - 32,519
----------------- -----------------
Net cash provided by financing activities 43,730 123,267
----------------- -----------------
Net increase (decrease) in cash 6,761 (812)
Cash, beginning of year 238 1,050
----------------- -----------------
Cash, end of year $ 6,999 $ 238
==================================================================================================================================
The accompanying notes to financial statements
are an integral part of these statements.
F-6
YSEEK, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Supplemental disclosures of noncash investing and financing activities
In June 2001, 3,000,000 shares of common stock were returned to the Company
related to goodwill originally valued at $2,562,500.
In 2002 and 2001, the Company issued stock amounting to $90,000 and $104,688,
respectively, for consultant services and employee compensation.
Cash flow information:
2002 2001
----------------- -----------------
Cash paid for interest $ 7,539 $ 2,016
F-7
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(1) Significant Accounting Policies:
The following is a summary of the more significant accounting policies and
practices of Yseek, Inc. (the Company) which affect the accompanying financial
statements.
(a) Organization--Yseek, Inc. was incorporated on September 23, 1997.
(b) Operations--The Company acquires and develops unique companies and/or
technologies. In late 1999, the Company acquired a company that developed a
web site to provide comparative statistical analysis of Internet
advertising. This web site and its technology was abandoned in early 2001.
Late in 2000, the Company launched an Internet search portal called
Yseek.com. The Internet search portal was abandoned as an operating asset
in late 2002 and internet operations were discontinued.
Originally the Company was formed to develop, own and operate a chain of
full-service car wash and express oil change centers. The Company owned and
operated one such center from January 1999 through April 2000. The center
was sold in April 2000. The Company discontinued this segment of business.
The Company is currently investigating operating businesses to acquire or
develop.
(c) Use of estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
(d) Cash--For the purposes of reporting cash flows, the Company considers
all highly liquid investments with an original maturity of three months or
less to be cash equivalents.
(e) Software license-- The cost of purchased software is capitalized and
depreciated using the straight-line method over the estimated useful life
of ten years.
(f) Loss per common share--Loss per share is based on the weighted average
number of common shares outstanding during each period in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share. In
computing diluted earnings per share, warrants were excluded because the
effects were antidilutive.
(g) Advertising--Advertising costs are charged to operations when incurred.
Advertising expense was $4,300 for the year ended December 31, 2001.
(h) Deferred income taxes-- Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statements carrying amounts of existing
assets and liabilities and their respective income tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized as income in the
period that included the enactment date.
F-8
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(1) Significant Accounting Policies: (Continued)
--------------------------------
(i) Long-lived assets--Long-lived assets to be held and used are reviewed
for impairment whenever events or changes in circumstances indicate that
the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on
the excess of the asset's carrying amount and fair value of the asset and
long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
(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 web site 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
businesses. The new Board of Directors evaluated the web site 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 the recovery of amortization in the amount
of $324,069. The Company recognized an impairment loss due to the Rankstreet web
site of $129,773.
(3) Loss from Impairment of Software License and Discontinued Operations:
---------------------------------------------------------------------
Late in 2000, the Company launched an Internet search portal called Yseek.com
based on a ten-year license it acquired in late 2000. During 2001 and 2002, the
Company entered into several short-term revenue sharing agreements with internet
host sites to generate traffic to the site and generate revenues. The Company's
management with internet related experience resigned from the Company in
September 2002.
F-9
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(3) Loss from Impairment of Software License and Discontinued Operations:
---------------------------------------------------------------------
(Continued)
In December 2002, current management determined they would dispose of their
software license for an Internet search portal called Yseek.com due to the lack
of revenues, experience of current management with internet businesses and due
to the lack of funds available to generate sufficient revenues from the site.
Management will attempt to sell the license however there is not an active
market for such an asset, and no buyer is presently identified. As of December
31, 2002, the net book value of the license was $517,754. The Company recognized
a loss from impairment of $517,754 in 2002 which is included in loss from
discontinued operations in the statement of operations. The Company discontinued
internet operations in December 2002.
Amortization expense on software license, which is included in general and
administrative expense, was $65,400 in 2002 and 2001, respectively.
Summarized results of internet operations for the years ended December 31, 2002
and 2001 are as follows:
Year Ended
December 31,
-------------------------------------
2002 2001
------------------ ------------------
Net sales $ 254 $ 477
================== ==================
Operating loss $ (593,558) $ (3,310,774)
================== ==================
Loss from discontinued operation $ (593,558) $ (3,310,774)
================== ==================
(4) Income Taxes:
No provision for income taxes has been recorded for 2002 or 2001 due to net
losses incurred.
Temporary differences giving rise to the deferred tax assets consist primarily
of the deferral and amortization of start-up costs for tax reporting purposes,
differences in lives and depreciation methods for property and equipment and
intangible assets and impairment losses recognized for financial statement
purposes. Management has established a valuation allowance equal to the amount
of the deferred tax assets due to the uncertainty of realization of the benefit
of the net operating losses against future taxable income. The components of
deferred tax assets at December 31, 2002, consist of the following:
Deferred tax assets:
Net operating loss $ 2,013,000
Deferred start up costs and other
temporary differences 140,000
Valuation allowance (2,153,000)
Net deferred tax asset ----------------
$ -
================
The Company has operating losses of approximately $7,743,000 which can be used
to offset future taxable income. These losses begin to expire in the year 2018.
F-10
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
() Stock Transactions:
During 2002, the Company sold 9,216,665 shares of common stock for cash of
$138,730.
In 2000, the Company issued 5,720,000 shares of common stock under two traffic
promotion agreements, with two companies related to then officers or directors
of Yseek. These agreements expired one year later. The Company recognized an
expense of $1,287,000 related to these agreements. In September 2002, the two
companies returned the entire 5,720,000 common shares. Yseek and the companies
executed mutual releases from any future claims, losses or rights. The shares
received by the Company were recorded at cost, which was zero.
On October 1, 2002, the Company issued 9,000,000 shares of common stock under
one-year employment agreements with two officers of the Company. The Company
recognized an expense of $90,000 related to these agreements, which represents
the market value of the shares less a discount because the shares are
unregistered and are not easily marketable.
During January and February of 2001, the Company issued 150,000 shares of common
stock to individuals and other entities for services performed during the first
quarter of 2001. The Company recognized an expense of $31,250, the market value
of the shares less a 50% discount because the shares are unregistered and the
Company stock is not easily marketable.
During January and February of 2001, the Company issued 200,000 and 125,000
shares of common stock under six-month and one-year consulting agreements,
respectively. The 125,000 shares were issued to an officer of the Company. The
Company recorded a prepaid expense of $73,438 related to these agreements, the
market value of the shares less a 50% discount because the shares are
unregistered and the stock is not easily marketable. The Company expensed
$73,438 utilizing the straight line method over the life of the agreements in
2001. Additionally, options were granted to an individual as part of one of the
agreements. The option agreement allows for the purchase of 75,000 shares of
Company common stock for $.50 per share for a period of three years. The other
consulting agreement included issuance of 500,000 warrants at an exercise price
of $.50 per share.
During February 2001, the Company issued the final contingent 1,000,000 shares
related to the 1999 business acquisition. The Company capitalized goodwill of
$203,100, the market value of the shares less a 50% discount because the shares
are unregistered, are a significant block of stock and the Company stock is not
easily marketable. See Note 2 regarding goodwill and shares rescinded.
(6) Commitments and Related Party Transactions:
------------------------------------------
The President and Operations Manager performed services for the Company at no
cost through March 2001. The Board of Directors valued these services at $8,750
in 2001, and recorded this amount as an expense and an increase in additional
paid-in capital in the accompanying financial statements. The Operations Manager
has an employment contract through March 2001, with a minimum salary of $25,000
per year.
The Company entered into several agreements with related parties as described in
Note 5.
F-11
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(6) Commitments and Related Party Transactions: (Continued)
------------------------------------------
The above related party agreements are not necessarily indicative of the
agreements that would have been entered into by independent parties.
During 1998, the Company entered into an agreement for use of a private suite at
the Raymond James Stadium for the 1998 through 2003 football seasons. Included
in deposits at December 31, 2000 was a $30,000 deposit in accordance with the
terms of this agreement. The Company incurred expenses of $33,030 during 2000,
related to this agreement. The Company was committed under this agreement for an
annual fee of $30,000 through 2003. In June 2001, the Company terminated this
agreement and forfeited their deposit of $30,000.
() Warrants:
At December 31, 2001, the Company had outstanding exercisable warrants to
purchase 318,240 shares of the Company's common stock at $2.00 per share. The
warrants expired in 2001.
At December 31, 2001, the Company had outstanding exercisable warrants to
purchase 249,000 shares of the Company's common stock at various prices based
upon expiration dates. Warrants expiring in 2003 are exercisable at $7.00.
Prior to expiration, the warrants may be redeemed by the Company at a price of
$.01. As of December 31, 2002 no warrants have been redeemed.
(8) Stock Options:
The Company granted options to consultants under various consulting agreements.
These agreements grant to the consultants the option to purchase shares of
Company common stock at a fixed price of $.50 per share. Management has
determined these per share prices equal or exceed fair market value. These
options expire on the third anniversary date of the execution date of the
respective agreement and are immediately vested.
A summary of consultant option activity follows:
December 31,
2002 2001
Outstanding, beginning of year 3,075,000 3,000,000
Issued - 75,000
Cancelled - -
---------------- -----------
Outstanding, end of year 3,075,000 3,075,000
================ ===========
F-12
YSEEK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(8) Stock Options: (Continued)
--------------
The Company follows SFAS 123 in accounting for stock options issued to
nonemployees. The fair value of each option granted is estimated using the
Black-Scholes stock option pricing model. The following assumptions were made in
estimating fair value: risk-free interest rate of 5.38% in 2001; no dividend
yield; expected life of one and one-half years; 9.53% volatility in 2001. There
was no compensation cost related to these options.
The weighted average exercise price of options granted was $.50 in 2001. The
weighted average fair value of options granted was $.00 in 2001.
(9) Subsequent Events:
In 2003, the Company has sold 2,500,000 shares of common stock for $37,500.
On February 1, 2003, the Company entered into a consulting agreement with an
individual to investigate a potential business opportunity for a period of
ninety days. In exchange for services, the consultant will receive $10,000 and
1,000,000 common shares.
F-13
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company has not had any disagreement with its independent auditor on any
matter of accounting principles or practices or financial statement disclosure.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
The following is a brief description of the educational and business experience
of each director, executive officer and key employee of the Company:
Year First
Principal Occupations During Past Became
Name of Director Age Five Years; Certain Directorships Director
David Weintraub 39 1998-2000: Vice President-Marketing - Swifty Car Wash & Quik-Lube, Inc. 2002
2000-2001: Sales, Marketing - SwiftyNet.com, Inc.
2003-Present: CEO, Director - Yseek, Inc.
Rachel Steele 36 1998-2000: President, Secretary - Swifty Car Wash & Quik-Lube, Inc. 2002
2000-2002: President - SwiftyNet.com, Inc.
2000-2001: Director - SwiftyNet.com, Inc.
2002-Present: Vice President, Director - Yseek, Inc.
Glen Ostrowski 37 1998-2002: Vice President-Marketing - Animagic Animation 2002
2002-Present: President - Yseek, Inc.
Tanya Ostrowski 26 1995-2002: Administrative Assistant, Processor - Compass Bank 2002
2002-Present: Secretary, Treasurer, Director - Yseek, Inc.
No voting arrangements exist between the officers and directors. Mr. Weintraub
and Ms. Steele live together. The above persons were selected pursuant to
provisions in the Company's By-Laws, all holding office for a period of one year
or until their successors are elected and qualified. None of the officers or
directors of the Company have been involved in legal proceedings during the past
five years which are material to an evaluation of the ability or integrity of
any director, person nominated to become a director, or executive officer of the
issuer, including any state or Federal criminal and bankruptcy proceedings.
Item 10. Executive Compensation
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Securities All
Principal Annual Restricted Underlying Other
Position Compen Stock Options/ LTIP Compens-
Year Salary($) Bonus($) sation Awards($) SARs(#) Payouts($) sation($)
David Weintraub
Chief Executive Officer 0 0 0 0 0 0 0 0
Glen Ostrowski
President 0 0 0 0 0 0 0 0
Tanya Ostrowski
Secretary-Treasurer 0 0 0 0 0 0 0 $45,000(1)
Rachel Steele 0 0 0 0 0 0 0 $45,000(2)
Vice President
(1) Reflects issuance of 4,500,000 shares.
(2) Reflects issuance of 4,500,000 shares.
All of the Company's officers and director but Ms. Steele are engaged in other
enterprises on a full-time basis. Ms. Steele donated her 2000 and 2001 salary to
the Company. No other officer or directors have been compensated for their
services in those capacities. At this time, the Company does not plan on paying
its Board of Directors in return for their services as Directors.
Item 11. Security Ownership of Certain Beneficial Owners and Management
None of the officers and directors have received a salary during the past twelve
months. There are no officer or director groups. As a group, the officers and
directors of the Company own 11,682,768. As of March 19, 2003 the stock
ownership of the Officers and Directors and 10% Shareholders was as follows.
Title Name and Amt and Percent
Of Address Nature of of
Class of Beneficial Owner Beneficial Ownership Class
Common Glen Ostrowski 100,000 0.27%
Stock 3645 Kings Road
Bldg 6, #104
Palm Harbor, FL 34685
Common Rachel Steele 7,082,768 19.67%
Stock 7732 N. Mobley Road
Odessa, FL 33556
Common Tanya Ostrowski 4,500,000 12.50%
Stock 3645 Kings Road
Bldg 6, #104
Palm Harbor, FL 34685
Common Candidhosting.com, Inc. 2,430,000 06.75%
Stock 412 East Madison
Suite 1000
Tampa, FL 33602
Common Timothy Minnehan 2,232,000 06.20%
Stock P.O. Box 243
Linonia NY 14487
Common
Stock Total 16,344,768 45.39%
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Exhibit Description Number
(2)Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession
(3)Articles of Incorporation and By-Laws
*(3.1)Articles of Incorporation
**(3.2)By-Laws
++(3.3)Articles of Amendment Name Change
(4)Instruments Defining the Rights of Security Holders
(a)Subscription Agreement
*(b)Warrant Agreement
++(c)Warrant Resolution dated March 2, 2000
(9)Voting Trust Agreement
(10)Material Contracts *(10.1)Equipment Purchase Contract *(10.2)Construction
Contract *(10.3)Architect Contract *(10.4)Consulting Contract-Donald Hughes
*(10.5)Employment Contract-Stanley Rabushka *(10.6)Promissory Note - Swifty
*(10.7)Promissory Note - Steele *(10.8)Consulting Contract-John Oster
*(10.9)Raymond Lipsch Contract *(10.10)Land Purchase Contract
**(10.11) Stanley Rabushka Employment and Stock Agreement
**(10.12) Tampa Bay Buccaneers Agreement
***(10.13)Edgar Arvelo Consulting Contract
***(10.14)Richard Kleinberg Employment Contract
***(10.15)Vladimir Rafalovich
***(10.16)Martinez Consulting Contract
****(10.17)Purchase and Sale Contract between Jim Malak and/or Assigns and
SwiftyNet.com, Inc.
dated April 6, 2000
+(10.18)Consulting Agreement with Netelligent Consulting
dated October 11, 2000
+(10.19)Consulting Agreement with Frank Pinizzotto
dated September 19, 2000
+(10.20)Consulting Agreement with Gigi Pinizzotto
dated September 19, 2000
+(10.21)Professional Services Agreement with
Laurie Stern dated July 31, 2000
+(10.22)Consulting Agreement with Mark Daniel White
dated September 19, 2000
++(10.23)Consulting Agreement with Nick Trupiano
dated November 25, 2000
++(10.24)Consulting/Option Agreement with CandidHosting.com, Inc.
dated December 1, 2000
++(10.25)Consulting/Option Agreement with David S. Goldman
dated December 19, 2000
++(10.26)Consulting/Option Agreement with Voice Media, Inc.
dated December 1, 2000
++(10.27)Public Relations Agreement with Shoreliner
Capital Ltd. Partnership dated January 17, 2001
++(10.28 Traffic Promotion Agreement with Voice Media, Inc.
dated November, 2000
++(10.29)Traffic Promotion Agreement with CandidHosting.com,Inc.
dated December 1, 2000
++(10.30)Consulting Agreement with Paul Runyon
dated November 25, 2000
++(10.31)Non-Exclusive License Agreement with Norman J. Jester, III
dated November, 2000
++(10.31)Client Services Agreement with Markham/Novell
Communications, Ltd. dated January 9, 2001
++(10.32)Client Services Agreement with Novell Markham
Communications, Ltd. dated January 9, 2001
++(10.33)Stock Option Agreement with Mark P. Dolan
dated January 10, 2001
++(10.34)Assignment of Contract with Netelligent
dated December 7, 2000
++(10.35)Consulting Agreement with Marlene Trupiano
dated January 3, 2000
++(10.36)Consulting Agreement with Marlene Trupiano
dated November 25, 2000
+++(10.37)Promissory Note to 2D&H, Inc.
+++(10.38)Guaranty Agreement
+++(10.39)Termination Agreement Reformation Agreement with NeuTelligent, Inc.,
f/k/a CandidHosting.com, Inc.*
+++(10.40)Termination Agreement Reformation Agreement with Voice Media, Inc.
++++(10.41)Employment Agreement with Rachel L. Steele dated October 1, 2002....
++++(10.42)Employment Agreement with Tanya Ostrowski dated October 1, 2002.. ..
(11)Statement re: computation of per share earnings Note 1 to
Financial
Statements
(13)Annual or Quarterly Reports, Form 10Q None
(16)Letter regarding Changes in Certifying Accountant None
(18)Letter on change in accounting principles None
(21)Subsidiaries of the registrant 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
+++++99.1 Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
* Previously filed with Form 10-SB on November 23, 1998.
** Previously filed with Form 10-SBA No. 1 on February 2, 1999.
*** Previously filed with Form 10-KSB filed on March 30, 2000.
**** Previously filed with Form 10-QSB filed May 15, 2000.
+ Previously filed with Form 10QSB filed 11-17-00.
++ Previously filed with Form 10KSB filed March 29, 2001.
+++ Previously filed with Form 8-K filed September 16, 2002.
++++ Previously filed with Form 10-QSB filed November 14, 2002.
+++++ Filed herewith.
Reports on Form 8-K
None.
Item 14. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date (the
"Evaluation Date") within 90 days before the filing of this annual report, have
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were adequate and designed to ensure that the information required to
be disclosed in the reports filed or submitted by us under the Securities
Exchange Act of 1934 is recorded processed, summarized and reported with in the
requisite time periods.
(b) Changes in internal controls.
There were no significant changes in our internal controls or in other factors
that could significantly affect our internal controls subsequent to the
Evaluation Date.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 26, 2003.
YSEEK, INC.
f/k/a SwiftyNet.com, Inc.
By: ___________/s/__________________
DAVID WEINTRAUB,
Chief Executive Officer
In accordance with the requirements of the Exchange Act, this report
has been signed by the following persons in the capacities indicated on March
26, 2003.
SIGNATURE TITLE
__________/s/_______________________ Chief Executive Officer, Director
DAVID WEINTRAUB
__________/s/_______________________ President, Director
GLEN OSTROWSKI
__________/s/_______________________ Vice President, Director
RACHEL STEELE
__________/s/_______________________ Secretary, Treasurer, Director
TANYA OSTROWSKI
CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, DAVID WEINTRAUB, certify that:
1. I have reviewed this annual report on Form 10-KSB of YSEEK, 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: March 26, 2003
_________/s/_____________
DAVID WEINTRAUB
Chief Executive Officer
Chief Financial Officer