UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended May 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number:
SUPERIOR NETWORKS, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 98-0339543
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1281 West Georgia Street, Suite 501
Vancouver, British Columbia, Canada V6E 3J7
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(Address of principal executive offices)
(604) 484-2899
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(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
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 practicable date: A total of 22,305,000 common shares
were issued and outstanding as at July 11, 2002.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
SUPERIOR NETWORKS, INC.
-----------------------
(A Development Stage Company)
FINANCIAL STATEMENTS
MAY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
2
BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
MAY 31 NOVEMBER 30
2002 2001
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ASSETS
Current
Cash $ -- $ 592
Software Development Costs 4,807 4,807
-------- --------
$ 4,807 $ 5,399
======== ========
LIABILITIES
Current
Accounts payable $ 14,108 $ 5,196
Loan payable 34,854 8,361
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48,962 13,557
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shareholderS' EQUITY
Share Capital
Authorized:
100,000,000 common shares,
par value $0.001 per share
Issued and outstanding:
22,305,000 common shares 7,435 7,435
Additional paid in capital 39,315 39,315
Deficit (90,905) (54,908)
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(44,155) (8,158)
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$ 4,807 $ 5,399
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See accompanying notes to financial statements.
3
SUPERIOR NETWORKS, INC.
-----------------------
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
INCEPTION
THREE MONTHS ENDED SIX MONTHS ENDED MAY 24, 2000
MAY 31 MAY 31 TO
2002 2001 2002 2001 MAY 31, 2002
----------- ----------- ----------- ----------- -----------
Expenses
Consulting $ -- $ -- $ -- $ -- $ 4,675
Professional fees 14,089 13,340 34,221 29,176 82,773
Office and sundry 1,767 30 1,776 545 3,457
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Net Loss For The Period 15,856 13,370 35,997 29,721 $ 90,905
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Deficit, Beginning Of Period
75,049 24,035 54,908 7,684
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Deficit, End Of Period $ 90,905 $ 37,405 $ 90,905 $ 37,405
=========== =========== =========== ===========
Net Loss Per Share $ 0.01 $ 0.01 $ 0.01 $ 0.01
=========== =========== =========== ===========
Weighted Average Number Of Common
Shares Outstanding 22,305,000 22,305,000 22,305,000 22,305,000
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See accompanying notes to financial statements.
4
SUPERIOR NETWORKS, INC.
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(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
INCEPTION
THREE MONTHS ENDED SIX MONTHS ENDED MAY 24, 2000
MAY 31 MAY 31 TO
2002 2001 2002 2001 MAY 31, 2002
----------- ----------- ----------- ----------- -----------
Cash Flows From Operating Activities
Net loss for the period $(15,856) $(13,370) $(35,997) $(29,721) $(90,905)
Adjustments To Reconcile Net Loss
To Net Cash By Operating Activities
Accounts receivable -- 496 -- 496 --
Accounts payable (10,812) 3,974 8,912 11,646 14,108
Loan payable 26,052 -- 26,493 -- 34,854
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(616) (8,900) (592) (17,579) (41,943)
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Cash Flows From Financing Activity
Common stock issued -- -- -- -- 46,750
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Cash Flows From Investing Activity
Software development costs -- -- -- (1,347) (4,807)
-------- -------- -------- -------- --------
Increase (Decrease) In Cash (616) (8,900) (592) (18,926) --
Cash, Beginning Of Period 616 31,584 592 41,610 --
-------- -------- -------- -------- --------
Cash, End Of Period $ -- $ 22,684 $ -- $ 22,684 $ --
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See accompanying notes to financial statements.
5
SUPERIOR NETWORKS, INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of May 31, 2002 included herein have
been prepared without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with United States generally accepted principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. It is
suggested that these financial statements be read in conjunction with the
November 30, 2001 audited financial statements and notes thereto.
2. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the state of Nevada, U.S.A. on May 24,
2000.
b) Development Stage Activities
The Company intends to offer specialized training programs over the
internet to reach a demographically focused learning audience. The
web-based training model is intended to offer a cost-effective and
convenient alternative to traditional learning environments. Initially
the website will provide a comprehensive driver training program to
seniors interested in acquiring discounts from insurance companies and
in improving their driving ability. The program is focused on
individuals requiring brush-ups, those requiring training in new
vehicle types and those wishing to upgrade based on accident history.
The Company is in the development stage; therefore recovery of its
assets is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's
development program and its transition, ultimately to the attainment of
profitable operations is dependent upon obtaining adequate financing to
fulfill its development activities and achieve a level of sales
adequate to support its cost structure.
6
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States. Because
a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period
necessarily involves the use of estimates which have been made using
careful judgment.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the significant accounting policies summarized below:
a) Development Stage Company
The Company is a development stage company as defined in the Statements
of Financial Accounting Standards No. 7. The Company is devoting
substantially all of its present efforts to establish a new business
and none of its planned principal operations have commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses for the reporting period. Actual results could differ from
these estimates.
c) Website Development Costs
Software development costs represent capitalized costs of design,
configuration, coding, installation and testing of the Company's
website up to its initial implementation. Upon implementation, the
asset will be amortized to expense over its estimated useful life of
three years using the straight-line method. Ongoing website
post-implementation costs of operation, including training and
application maintenance, will be charged to expense as incurred.
7
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
d) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No.
109 - "Accounting for Income Taxes" (SFAS 109). This standard requires
the use of an asset and liability approach for financial accounting and
reporting on income taxes. If it is more likely than not that some
portion or all if a deferred tax asset will not be realized, a
valuation allowance is recognized.
e) Stock Based Compensation
The Company measures compensation cost for stock based compensation
using the intrinsic value method of accounting as prescribed by A.P.B.
Opinion No. 25 - "Accounting for Stock Issued to Employees". The
Company has adopted those provisions of Statement of Financial
Accounting Standards No. 123 - "Accounting for Stock Based
Compensation", which require disclosure of the pro-forma effect on net
earnings and earnings per share as if compensation cost had been
recognized based upon the estimated fair value at the date of grant for
options awarded.
f) Financial Instruments
The Company's financial instruments consist of cash, accounts payable
and loans payable.
Unless otherwise noted, it is management's opinion that this Company is
not exposed to significant interest or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
g) Net Loss Per Share
The loss per share is calculated using the weighted average number of
common shares outstanding during the year. Fully diluted loss per share
is not presented, as the impact of the exercise of options is
anti-dilutive.
h) Revenue Recognition
The Company intends to recognize revenue from product sales, and fee
and commission arrangements at the time the sales occur or the fees and
commissions are earned.
8
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2002
(Unaudited)
(Stated in U.S. Dollars)
4. SHARE CAPITAL
During the period, the Company increased its issued and outstanding share
capital by way of a three for one split of the Company's common stock. The
stock split was effected by the completion of a stock dividend to each of
the Company's shareholders of two common shares for every one common share
held.
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operations
The Company is a development stage company. At this time, we have insufficient
funds to commence development of our initial product. We will require additional
financing in order to implement our business plan. As at May 31, 2002 we had
only a nominal amount of cash to maintain operations. In order to complete our
objectives over the next 12 months, we require additional funding. The amount of
additional financing we will require to sustain our business operations 12
months from now will depend on the level of revenues we will be generating at
that time. The Company does not anticipate receiving any revenues in the near
future. It is impossible to give a meaningful forecast at this time as to the
amounts of additional financing that will be required. We do not currently have
any arrangements for financing and we can provide no assurance to investors that
we will be able to find such financing if required.
We launched the website for Superioronlinetraining.com on January 17, 2001. The
site focuses on a training program specifically designed to cater to senior
drivers' needs and features a section on aging and driving, a driving course and
a quiz on the driving course.
The site is designed to align itself with The American Automobile Association,
The American Association of Retired Persons, and senior websites by providing a
service needed by the demographic they serve. We hope this alignment will assure
a supply of registrants. We hope to achieve contractual affiliations with each
of these organizations but are not so affiliated at the present time. The
Company will also align itself with insurance companies to ensure fulfillment of
insurance discounts and to garner referral fees.
9
Superioronlinetraining.com will attempt to attract banner advertising to
generate revenues from the site. Once we affiliate ourselves with insurance
companies we intend to charge course fees to registrants plus referral fees from
the insurance companies. At that time we plan to associate companies who sell
products to seniors including medical products and services, leisure and travel
needs, and financial planning and investment services.
We have not earned any revenues from the date of inception through the interim
period ending May 31, 2002. We do not anticipate earning revenues until such
time as we have our initial product developed and available to the public on the
Internet. Furthermore, we do not expect to generate significant revenues until
such time as we have developed a substantial customer base and affiliated
merchants have become successful in the marketing their products to that base.
We anticipate that course clients will become familiar with our site by repeated
visits to the site in order to complete the course. Other services to the
demographic of which the client is a part will also be offered at the site and
will be noticed by the client. We believe these additional services will induce
further visits to the site by the client even after the initial course is
completed. At the present time we have no affiliated merchants nor do we have a
customer base.
We incurred an accumulated deficit of $90,905 from the date of inception through
May 31, 2002. Currently, we are not able to operate our business according to
plan because of cash constraints. Failure to raise the necessary capital in the
immediate future will, at a minimum, prevent us from fully developing our
initial product and, in the worst case, cause our business to fail. We are
actively pursuing candidates for a strategic alliance or possible acquisition of
a business interest. Although, we are pursuing these avenues, it cannot be
guaranteed that such arrangements can be reached in such a time or manner that
will enable us to continue to develop our product. The Company will continue to
seek out business opportunities in which it can engage.
Even though the Company does not at the present time have any understandings or
agreements with any persons or entities to provide such funding, shareholders
having an interest in seeing that the Company remains a viable business entity
have been willing to provide funds to the Company in the past either through
purchasing additional stock or by loaning money to the Company. However, there
can be no assurances to that effect, as the Company has no revenues and the
Company's need for capital may change dramatically if it acquires an interest in
a business opportunity during that period. It should also be noted that the
Company is now obligated to satisfy the costs associated with filing the
required reports under the Securities and Exchange Act of 1934, as amended. It
appears at the present time that these costs will also have to be met through
the sale of stock or by borrowing additional funds. The Company's current
operating plan is to (i) handle the administrative and reporting requirements of
a public company; (ii) continue development of its website and course offerings;
and (iii) search for potential business, products, technologies and companies
for acquisition.
10
Future Products
We plan on developing a number of training applications including providing
young adults with a menu of free courses that provide instruction about setting
up bank accounts, obtaining credit, renting property, and managing household
affairs. Further, the Company also plans to offer courses on safety and
operation for consumers who rent power equipment such as chainsaws, floor
sanders and carpet cleaning equipment. Both planned applications are in the
initial planning stages and are not under development at the present time. There
are currently no target dates at which they will be operational.
Employees and Consultants
It is anticipated that our part-time employment positions will be limited to the
current officers and directors of the Company. We intend to contract with third
party consultants for the development of our website and our courses. Such
individuals have not yet been contracted by the Company. Such contracts are
entirely dependent upon our ability to raise additional capital.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Our actual results and actual plan of operations may differ materially from what
is stated above. From time to time, the Company will make written and oral
forward-looking statements about matters that involve risk and uncertainties
that could cause actual results to differ materially from projected results.
Important factors that could cause actual results to differ materially include,
among others:
- general domestic economic and political conditions;
- changes in laws and government regulations, including without limitation
regulations of the Securities and Exchange Commission;
- availability and timing of receipt of necessary outside capital; and
- other risk factors described from time to time in the Company's filings
with the Securities and Exchange Commission.
Many of these factors are beyond the Company's ability to control and predict.
Investors are cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update its
forward-looking statements, whether as a result of receiving new information,
the occurrence of future events or otherwise.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
The Company was late in filing its quarterly report on Form 10Q-SB for the
period ended February 28, 2002. As a result the Company's securities were
suspended from trading on the NASD Over-the-Counter Bulletin Board ("OTCBB") on
May 23, 2002. The Company subsequently made an application, on Form 15c2-11, for
quotation of its securities on the OTCBB, which application was approved by the
NASD on June 27, 2002. As such, the Company's common shares are again eligible
for quotation on the OTCBB. Item 6. Exhibits and Reports on Form 8-K.
The Company filed a current report on Form 8-K on March 27, 2002. The report was
filed in connection with the acquisition, by Robert Rosner, of 5,000,000 common
shares in the capital stock of the Company on March 4, 2002. The Company also
effected a 3:1 stock split on March 13, 2002. Mr. Rosner therefore holds
15,000,000 common shares in the capital stock of the Company.
Exhibit 99: Risk Factors.
SIGNATURES
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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.
SUPERIOR NETWORKS, INC.
(Registrant)
Date July 12, 2002 /s/ Robert Rosner
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Robert Rosner, President
http://www.sec.gov/divisions/corpfin/forms/10qsb.htm
Last update: 06/07/2000