UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to ______.
Commission File Number: 000-29445
Wrap-N-Roll USA, Inc.
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(Name of Small Business Issuer in its charter)
Nevada 84-1432450
--------------------------------- --------------------------
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
1056 East Platinum Way, Sandy, Utah 84094
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(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number: (801) 576-8073
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required
to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to
the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
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:
As of November 13, 2002, there were 10,550,000 shares of common stock
issued and outstanding.
Transitional Small business Format (Check one): Yes [ ] No [X]
FORM 10-QSB
WRAP-N-ROLL USA, INC.
TABLE OF CONTENTS
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PAGE
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. . . 20
ITEM 3. CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . . 23
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 2. CHANGES IN SECURITIES. . . . . . . . . . . . . . . . . . . . . 24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . 24
ITEM 5. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 24
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2
PART I
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited condensed
financial statements included in this Form 10-QSB reflect all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the results of operations for the periods presented. The
results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year.
[THIS SPACE INTENTIONALLY LEFT BLANK]
3
WRAP-N-ROLL USA, INC.
CONTENTS
PAGE
- Unaudited Condensed Balance Sheets,
September 30, 2002 and December 31, 2001 5 - 6
- Unaudited Condensed Statements of Operations,
for the three and nine months ended
September 30, 2002 and 2001 7
- Unaudited Condensed Statements of Cash Flows,
for the nine months ended September 30, 2002
and 2001 8 - 9
- Notes to Unaudited Condensed Financial Statements 10 - 19
4
WRAP-N-ROLL USA, INC.
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
2002 2001
____________ ____________
CURRENT ASSETS:
Cash $ 373 $ 17,657
Accounts receivable, net of
allowance for doubtful accounts
of $0 and $1,819, respectively 3,892 1,050
Related party receivable 1,244 523
Notes receivable - related party 12,217 14,127
Inventory 2,060 -
____________ ____________
Total Current Assets 19,786 33,357
PROPERTY AND EQUIPMENT, net 21,956 26,660
____________ ____________
$ 41,742 $ 60,017
____________ ____________
[Continued]
5
WRAP-N-ROLL USA, INC.
UNAUDITED CONDENSED BALANCE SHEETS
[Continued]
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 30, December 31,
2002 2001
____________ ____________
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 75,582 $ 35,212
Accounts payable and accrued
expenses - related party 40,303 21,427
Notes payable - related party 26,671 16,671
Current portion of long-term debt 5,664 5,554
____________ ____________
Total Current Liabilities 148,220 78,864
LONG-TERM DEBT, less current portion 15,943 20,206
UNEARNED REVENUE 500 -
____________ ____________
Total Liabilities 164,663 99,070
____________ ____________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
20,000,000 shares authorized,
10,550,000 and 11,000,000 shares
issued and outstanding, respectively 10,550 11,000
Capital in excess of par value 450 -
Retained earnings (deficit) (133,921) (50,053)
____________ ____________
Total Stockholders' Equity (Deficit) (122,921) (39,053)
____________ ____________
$ 41,742 $ 60,017
____________ ____________
Note: The Balance Sheet of December 31, 2001 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
6
WRAP-N-ROLL USA, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
______________________ ______________________
2002 2001 2002 2001
__________ __________ __________ __________
SALES REVENUE, net of returns,
discounts and allowances $ 8,864 $ 213,976 $ 49,655 $ 256,116
COST OF GOODS SOLD 14,706 153,574 47,851 190,348
__________ __________ __________ __________
GROSS PROFIT (5,842) 60,402 1,804 65,768
__________ __________ __________ __________
EXPENSES:
Selling - 19 31 925
General and administrative 22,813 31,020 83,955 59,325
__________ __________ __________ __________
Total Expenses 22,813 31,039 83,986 60,250
__________ __________ __________ __________
EARNINGS (LOSS) BEFORE
OTHER INCOME (28,655) 29,363 (82,182) 5,518
__________ __________ __________ __________
OTHER INCOME (EXPENSE):
Gain on assignment of
operating lease - - - 1,500
Interest income - related
party 241 272 721 272
Interest expense - related
party (583) (390) (1,525) (953)
Interest and other income
(expense) 23 (273) (882) (569)
__________ __________ __________ __________
Total Other Income
(Expense) (319) (391) (1,686) 250
__________ __________ __________ __________
EARNINGS (LOSS) BEFORE
INCOME TAXES (28,974) 28,972 (83,868) 5,768
CURRENT TAX EXPENSE - - - -
DEFERRED TAX EXPENSE - - - -
__________ __________ __________ __________
NET INCOME (LOSS) $ (28,974) $ 28,972 $ (83,868) $ 5,768
__________ __________ __________ __________
EARNINGS (LOSS) PER
COMMON SHARE $ (.00) $ .00 $ (.01) $ .00
__________ __________ __________ __________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
7
WRAP-N-ROLL USA, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Nine
Months Ended
September 30,
______________________
2002 2001
__________ __________
Cash Flows From Operating Activities:
Net income (loss) $ (83,868) $ 5,768
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Bad debt expense 382 -
Depreciation expense 4,704 2,937
Non-cash expenses 1,800 -
Changes in assets and liabilities:
(Increase) in accounts receivable (3,224) (3,489)
(Increase) in related party receivable (721) (8,069)
(Increase) in inventory (2,060) -
Increase in accounts payable and accrued expenses 40,370 40,339
Increase in accounts payable and accrued expenses
- related party 18,984 20,305
Increase in unearned revenue 500 -
__________ __________
Net Cash Provided (Used) by Operating
Activities (23,133) 57,791
__________ __________
Cash Flows From Investing Activities:
Payments for notes receivable - (2,500)
Receipts from notes receivable 110 2,800
Payments for property and equipment - (29,368)
__________ __________
Net Cash Provided (Used) by Investing
Activities 110 (29,068)
__________ __________
Cash Flows From Financing Activities:
Proceeds from notes payable - related party 9,892 6,400
Payments on notes payable - related party - (1,400)
Proceeds from long-term debt - 26,868
Payments on long-term debt (4,153) (1,670)
__________ __________
Net Cash Provided by Financing Activities 5,739 30,198
__________ __________
Net Increase (Decrease) in Cash (17,284) 58,921
Cash at Beginning of Period 17,657 3,059
__________ __________
Cash at End of Period $ 373 $ 61,980
__________ __________
[Continued]
8
WRAP-N-ROLL USA, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
[Continued]
For the Nine
Months Ended
September 30,
______________________
2002 2001
__________ __________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 865 $ 477
Income taxes $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the nine months ended September 30, 2002:
The Company applied expenses totaling $1,800 against notes receivable.
On July 30, 2002, the Company extended a note payable of $5,000, a
loan payable of $1,000 and related accrued interest of $108 into a new
note payable of $10,000.
For the nine months ended September 30, 2001:
On July 1, 2001, the Company extended a receivable of $15,027 into a note
receivable.
On August 1, 2001, the Company extended a note payable of $812, a note
payable of $10,000 and related accrued interest of $859 into a new
note payable of $16,671.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
9
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Wrap-N-Roll USA, Inc. ("the Company") was organized
under the laws of the State of Nevada on September 26, 1997 as Oxy
General Corporation. Effective November 17, 2000, the Company changed
its name from Oxy General Corporation to Wrap-N-Roll USA, Inc. The
Company provides specialized advertising services to businesses of all
sizes emphasizing large format digital printing on perforated and non-
perforated vinyl substrates. Through use of a special non-corrosive,
vinyl material with a patented adhesive made by 3M, the Company offers
businesses the ability to wrap the exterior of buildings, windows and
motor vehicles with an advertising message. In addition to the sale of
its wrapping services, the Company also offers advertising services
using wrapped property.
Condensed Financial Statements - The accompanying financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 2002 and 2001 and
for the periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles in the United States of America have been
condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 2001 audited
financial statements. The results of operations for the periods ended
September 30, 2002 and 2001 are not necessarily indicative of the
operating results for the full year.
Cash and Cash Equivalents - The Company considers all highly liquid
debt investments purchased with a maturity of three months or less to
be cash equivalents.
Accounts and Loans Receivable - The Company records accounts and loans
receivable at the lower of cost or fair value. The Company determines the
lower of cost or fair value of nonmortgage loans on an individual asset
basis. The Company recognizes interest income on an account receivable
based on the stated interest rate for past-due accounts over the period
that the account is past-due. The Company recognizes interest income on a
loan receivable based on the stated interest rate over the term of the
loan. The Company accumulates and defers fees and costs associated with
establishing a receivable to be amortized over the estimated life of the
related receivable. The Company estimates allowances for doubtful
accounts and loan losses based on the aged receivable balance and
historical losses. The Company records interest income on delinquent
accounts and loans receivable only when payment is received. The Company
first applies payments received on delinquent accounts and loans
receivable to eliminate the outstanding principal. The Company charges
off uncollectible accounts and loans receivable when management estimates
no possibility of collecting the related receivable. The Company
considers accounts and loans receivable to be past-due or delinquent based
on contractual terms.
Inventory - Inventory is carried at the lower of cost or market using
the specific identification method. At September 30, 2002, inventory
consists of printed vinyl for a job that is expected to be completed in
November or December 2002 valued at $2,060.
10
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Property and Equipment - Property and equipment are recorded at cost.
Expenditures for repairs and maintenance are charged to operating
expense as incurred. Expenditures for additions and betterments that
extend the useful lives of property and equipment are capitalized, upon
being placed in service. When assets are sold or otherwise disposed
of, the cost and related accumulated depreciation or amortization is
removed from the accounts and any resulting gain or loss is included in
operations. Depreciation is calculated using the straight-line method
and is based upon the estimated useful lives of the assets of five
years [See Note 2].
Revenue Recognition - The Company's revenue comes primarily from the
installation of advertising which is wrapped around a vehicle, window
or building. Installation revenue is recognized upon completion of the
installation. The Company also sells monthly advertising, typically
with a term ranging from 1 month to 1 year. The advertising is
displayed on vehicles owned or rented by the Company. Advertising
revenue is recognized over the term of the advertising agreement using
the straight-line method. The actual design, layout, printing and
installation of the advertising are subcontracted out to third party
vendors. These direct costs are recorded by the Company as cost of
goods sold.
The Company has joint agreements wherein the Company jointly shares
advertising revenue with other entities. Revenue derived from joint
agreements or from commission type agreements is recorded on a net
basis. On a net basis, only the share of revenue belonging to the
Company is recorded as revenue.
Advance payments and deposits, which are received up front by the
Company, are deferred and recognized as revenue upon completion of the
installation or upon delivery of the advertising. At September 30,
2002, the Company had recorded unearned revenue of $500, representing
the prepayment of a job not yet started at that date.
Advertising Costs - Advertising costs, except for costs associated with
direct-response advertising, are charged to operations when incurred.
The costs of direct-response advertising are capitalized and amortized
over the period during which future benefits are expected to be
received.
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" [See Note 12].
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimated.
11
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations", SFAS
No. 142, "Goodwill and Other Intangible Assets", SFAS No. 143,
"Accounting for Asset Retirement Obligations", SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", SFAS
No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections", SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities", and
SFAS No. 147, "Acquisitions of Certain Financial Institutions - an
Amendment of FASB Statements No. 72 and 144 and FASB Interpretation No.
9", were recently issued. SFAS No. 141, 142, 143, 144, 145, 146 and
147 have no current applicability to the Company or their effect on the
financial statements would not have been significant.
Reclassification - The financial statements for periods prior to
September 30, 2002 have been reclassified to conform to the headings
and classifications used in the September 30, 2002 financial
statements.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
September 30, December 31,
2002 2001
____________ ____________
Vehicles $ 31,365 $ 31,365
Less: Accumulated depreciation (9,409) (4,705)
____________ ____________
Net Property and Equipment $ 21,956 $ 26,660
____________ ____________
Depreciation expense for the nine months ended September 30, 2002 and
2001 was $4,704 and $2,937, respectively.
NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at:
September 30, December 31,
2002 2001
____________ ____________
Accounts payable $ 56,303 $ 30,701
Accrued payroll, taxes and
withholdings 19,098 4,046
Joint agreements revenues payable - 350
Sales tax payable 141 80
Interest payable 40 35
____________ ____________
$ 75,582 $ 35,212
____________ ____________
12
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES - RELATED PARTY
Accounts payable and accrued expenses to a related party consisted of
the following at:
September 30, December 31,
2002 2001
____________ ____________
Accrued payroll - related party $ 38,182 $ 20,723
Accrued interest - related party 2,121 704
____________ ____________
$ 40,303 $ 21,427
____________ ____________
NOTE 5 - LONG-TERM DEBT
Long-term debt consisted of the following at:
September 30, December 31,
2002 2001
____________ ____________
Note payable to financing agency for
60 months at an interest rate of 3%,
secured by a vehicle with a net book
value of $21,956 $ 21,607 $ 25,760
Less: Current portion (5,664) (5,554)
____________ ____________
$ 15,943 $ 20,206
____________ ____________
Maturity of long-term debt for the twelve month periods ended:
September 30, Principal Due
____________ _____________
2003 $ 5,664
2004 5,830
2005 6,002
2006 4,111
2007 -
_____________
$ 21,607
_____________
Interest expense for long-term debt for the nine months ended September
30, 2002 and 2001 amounted to $514 and $569, respectively.
NOTE 6 - CAPITAL STOCK
Preferred stock - The Company has authorized 5,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences and
designations and to be issued in such series as determined by the Board
of Directors. No shares were issued and outstanding at September 30,
2002 and December 31, 2001.
13
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK [Continued]
Common Stock - The Company has authorized 20,000,000 shares of common
stock with a par value of $.001. At September 30, 2002 and December
31, 2001, there were 10,550,000 and 11,000,000 shares issued and
outstanding, respectively.
Cancellation - On June 5, 2002, a shareholder of the Company returned
450,000 shares of common stock for cancellation.
NOTE 7 - SALES REVENUE
Sales revenue consisted of the following for the nine months ended:
September 30, September 30,
2002 2001
____________ ____________
Installation revenues $ 37,030 $ 256,116
Advertising revenues 12,466 -
Joint agreements revenues 541 -
Less: Returns, discounts and
allowances (382) -
____________ ____________
Sales revenue, net of returns,
discounts and allowances $ 49,655 $ 256,116
____________ ____________
NOTE 8 - OPERATING LEASES
The Company had two cars under operating leases expiring in 2003. In
April 2001, the Company purchased a van to replace one of the cars. As
part of the purchase, the Company assigned the lease of the original
car to the financing agency [See Note 10].
Minimum future rental payments under the remaining non-cancelable
operating lease having a remaining term in excess of one year as of
September 30, 2002 for the twelve month periods ended and in aggregate
are:
September 30, Amount
____________ ____________
2003 $ 3,473
2004 579
2005 -
2006 -
2007 -
____________
Total minimum future rental payments: $ 4,052
____________
Rental payments for the nine months ended September 30, 2002 and 2001
amounted to $2,604 and $3,152, respectively.
14
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
SFAS No. 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards. At
September 30, 2002, the Company has available unused operating loss
carryforwards of approximately $20,900, which may be applied against
future taxable income and which expire in various years through 2022.
The amount of and ultimate realization of the benefits from the
deferred tax assets for income tax purposes is dependent, in part, upon
the tax laws in effect, the future earnings of the Company, and other
future events, the effects of which cannot be determined. Because of
the uncertainty surrounding the realization of the deferred tax assets,
the Company has established a valuation allowance equal to the tax
effect of the deferred tax assets and, therefore, no deferred tax asset
has been recognized. The net deferred tax assets, which consist
primarily of accrued compensation, accounts payable and net operating
loss carryforwards, are approximately $50,200 and $20,200 as of
September 30, 2002 and December 31, 2001, respectively, with an
offsetting valuation allowance of the same amount resulting in an
increase in the valuation allowance of approximately $30,000 during the
nine months ended September 30, 2002.
NOTE 10 - RELATED PARTY TRANSACTIONS
Receivable - As of June 30, 2001, an officer/shareholder of the Company
had been advanced a total of $15,027 by the Company as a non-interest
bearing loan. On July 1, 2001, the Company extended the receivable of
$15,027 into a note receivable.
Notes Receivable - On July 1, 2001, the Company extended a receivable
of $15,027 into a note receivable. On August 1, 2001 the Company
signed a note receivable with an officer/shareholder of the Company for
$2,500. Both notes accrue interest at 7% per annum and are due on
demand. At September 30, 2002, accrued interest amounted to $1,244.
As of September 30, 2002, the Company had applied rent and
utilities/miscellaneous expenses totaling $4,200 and a $1,000 down
payment made on behalf of the Company against the principal of the two
notes, plus the officer/shareholder repaid $110, resulting in principal
of $12,217 owed at September 30, 2002 [See below and Note 13].
Purchase Agreement - On April 21, 2001, the Company purchased a van for
$31,365 to replace one of its leased cars. To finance the purchase, an
officer/shareholder/employee of the Company paid a down payment of
$1,000 to the financing agency. The Company also assigned the
operating lease for the original car to the financing agency and
recognized a $1,500 gain. The remaining $28,865 was financed through
the financing agency in the name of the officer/shareholder/employee at
an interest rate of 3%. The agreement was negotiated in the name of
the officer/shareholder/employee to take advantage of certain
conditions and financing arrangements that were unavailable to the
Company since it had only recently begun operations and had incurred
losses since inception. The Company then purchased the van from the
officer/shareholder/employee on the same terms and conditions. The
agreement requires the Company to make 60 monthly payments of $518
directly to the financing agency beginning June 8, 2001. At September
30, 2002, the Company owed $21,607 on the purchase of the van [See Note
5].
15
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 10 - RELATED PARTY TRANSACTIONS [Continued]
Loan Payable - On May 28, 2002, an entity controlled by a former
shareholder of the Company loaned $1,000 to the Company as a 30-day
loan. On July 30, 2002, the loan was extended into a new note payable.
Notes Payable - As of July 31, 2001, the Company owed a former
shareholder of the Company $812 for a note payable due April 1, 2002
accruing interest at 10% per annum, $10,000 for a note payable due
October 31, 2001 accruing interest at 10% per annum and $859 for
interest that had accrued on the two notes payable. On August 1, 2001,
the Company extended the notes and related accrued interest with an
additional loan of $5,000 into a note payable of $16,671 that was due
August 1, 2002. The note accrues interest at 10% per annum. Accrued
interest amounted to $1,954 at September 30, 2002. On August 1, 2002,
the Company extended the note payable to a shareholder of the Company
to be due on demand.
On April 24, 2001, the Company signed a $1,400 note payable to a former
shareholder of the Company. The note accrued interest at 10% per
annum. On July 20, 2001, the Company repaid the note payable and
accrued interest of $35 to the former shareholder.
On April 15, 2002, the Company signed a $5,000 note payable to an
entity controlled by a former shareholder of the Company. The note
accrued interest at 10% per annum and was due on demand. On July 30,
2002, the note was extended into a new note payable.
On July 30, 2002, the Company extended a $5,000 note payable, a $1,000
loan payable, and related accrued interest of $108 with an additional
loan of $3,892 into a note payable of $10,000 that is due on demand.
The new note accrues interest at 10% per annum. Accrued interest
amounted to $167 at September 30, 2002.
Management Compensation - For the year ended December 31, 2000, the
Company did not pay any compensation to any officer/director of the
Company. On January 1, 2001, the Company entered into an employment
agreement with an officer/director/employee of the Company to pay
$1,000 per month. On April 1, 2001, the Company increased the salary
to $4,000 per month. During the nine months ended September 30, 2002
and 2001, total compensation to the officer/director/shareholder
amounted to $38,034 and $27,000, respectively [See Note 13].
Office Space/Utilities - During the year ended December 31, 2000, the
Company did not have a need to rent office space. On January 1, 2001,
the Company entered into a rental/utilities agreement with an
officer/director/employee of the Company allowing the Company to use
office space in his home for the operations of the Company at a base
rent of $100 per month. The Company also agreed to pay the
officer/director/employee of the Company a base utilities/miscellaneous
expense of $100 per month designated for but not limited to heat,
power, water, sewer, garbage collection, recycling, phone, fax,
Internet, computer, printer and any other office items needed for the
operations of the Company, not currently being paid by the Company. On
September 1, 2001, the company decided to begin paying the rent and
utilities as funds are available. During the nine months ended
September 30, 2002 and 2001, the Company expensed $1,800 and $1,800,
respectively, as rent and utilities/miscellaneous expenses which have
been applied against the principal of two notes receivable from the
officer/director/employee [See above and Note 13].
16
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 11 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplate continuation of the Company as a going
concern. However, the Company has incurred losses since its inception
and has current liabilities in excess of current assets, raising
substantial doubt about the ability of the Company to continue as a
going concern. In this regard, management is proposing to raise any
necessary additional funds not provided by operations through loans or
through additional sales of its common stock. There is no assurance
that the Company will be successful in raising this additional capital
or achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
NOTE 12 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share
for the periods presented:
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
______________________ ______________________
2002 2001 2002 2001
__________ __________ __________ __________
Loss from continuing
operations available to
common shareholders
(numerator) $ (28,974) $ 28,972 $ (83,868) $ 5,768
__________ __________ __________ __________
Weighted average number
of common shares
outstanding used in loss
per share for the period
(denominator) 10,550,000 11,000,000 10,807,143 11,000,000
__________ __________ __________ __________
Dilutive loss per share was not presented, as the Company had no common
stock equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
NOTE 13 - COMMITMENTS AND AGREEMENTS
Employment Agreement - On January 1, 2001, the Company entered into an
employment agreement with its sole officer and director. The agreement
provided for a $1,000 per month salary for a period of three years
commencing January 1, 2001. The expense was to accrue until the
Company had achieved net income of $50,000 at which time the Company
would pay 50% of its net income before tax towards reducing the accrued
salary liability. On April 1, 2001, the Company increased the salary
to $4,000 per month and decided to begin paying the salary as funds are
available. During the nine months ended September 30, 2002 and 2001,
respectively, the Company accrued payroll of $17,459 and $19,536 and
paid $20,575 and $7,464 to the officer/director/employee.
17
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 13 - COMMITMENTS AND AGREEMENTS [Continued]
Employment Agreement - On August 1, 2001, the Company entered into an
employment agreement with an employee. The agreement provided for a
$3,000 per month salary for a period of one year commencing August 1,
2001. The employment agreement continues on a month-to-month basis.
During the nine months ended September 30, 2002 and 2001, respectively,
the Company accrued payroll of $17,249 and $1,385 and paid $11,275 and
$7,615 to the employee.
Rental/Utilities Agreements - On January 1, 2001, the Company entered
into rental and utilities agreements with its sole officer and
director. The agreements provide for payment of $100 per month for
rent and $100 per month for utilities and other incidentals on a month-
to-month basis starting January 1, 2001. The rent was to accrue until
the Company had achieved net income of $50,000, at which time the
Company would pay 10% of its net income before tax towards reducing the
accrued rent liability. The utilities portion was to accrue until the
Company elected to make payment. On September 1, 2001, the company
decided to begin paying the rent and utilities as funds are available
[See Note 10]. During the nine months ended September 30, 2002 and
2001, respectively, rent and utilities/miscellaneous expenses totaled
$1,800 and $1,800 and were applied toward two notes receivable [See
Note 10].
Joint Agreements - On May 14, 2001, the Company entered into a joint
agreement with Jose Dicenzo ("JD") to provide advertising services.
The Company was to provide advertisers and collection of payments. JD
was to provide a fleet of vehicles available for wrapping, business
referrals and vehicle wrapping. The Company and JD would evenly split
the revenues. The agreement was for one year and was not extended. No
revenues were generated as part of this agreement.
On June 11, 2001, the Company entered into a joint agreement with
Newspaper Agency Corporation ("NAC") to provide advertising services.
The Company provided advertisers, vehicle wrapping and collection of
payments. NAC provided a fleet of vehicles available for wrapping and
business referrals. The Company and NAC evenly split the revenues.
The agreement was for one year and could be extended or cancelled at
any time by written mutual consent. The Company is currently
negotiating an extension to this agreement. During the nine months
ended September 30, 2002 and 2001, respectively, the Company recognized
$350 and $0 in revenues as part of this agreement.
The Company was negotiating a joint agreement with the Standard
Examiner ("SE") to provide advertising services. The Company was
expected to provide advertisers, vehicle wrapping and collection of
payments. SE was expected to provide a fleet of vehicles available for
wrapping and business referrals. The Company and SE were expected to
evenly split the revenues. The agreement was expected to be for six
months. The Company had started providing services based on the
anticipated agreement. The Company was unable to negotiate a joint
agreement with SE and is no longer providing any services. During the
nine months ended September 30, 2002 and 2001, respectively, the
Company recognized $191 and $0 in revenues as part of the anticipated
agreement.
18
WRAP-N-ROLL USA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 14 - CONCENTRATIONS OF CREDIT RISK
Significant Customers - During the nine months ended September 30,
2002, the Company had three customers that accounted for approximately
35% of the Company's revenues. The following table lists the percent
of sales made to each customer that accounted for 10% or more of total
sales during the nine months ended September 30, 2002:
Customer A 14%
Customer B 11%
Customer C 10%
The loss of these significant customers could adversely affect the
Company's business and financial position.
Geographic Region - During the nine months ended September 30, 2002,
all of the Company's sales and operations were located in and around
Salt Lake City, Utah.
NOTE 15 - SUBSEQUENT EVENTS
Note Payable - On October 17, 2002, the Company signed a $2,500 note
payable to a former shareholder of the Company. The note accrues
interest at 10% per annum and is due on demand.
19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
Wrap-N-Roll is a marketing company for specialty advertising in the
form of large format digital printing on perforated and non-perforated
vinyl substrates that can be applied to the exterior of buildings,
windows, and motor vehicles. We began this business in October 2000, but
did not realize any revenue from the business until the first quarter of
2001. Before then we had no business operations, so our specialty
advertising business is a new venture.
Our business is not capital intensive because we do not require
production or storage facilities to operate our business. We rely on
third party suppliers to produce and install the advertising product we
sell, and we place orders with suppliers only against purchase orders we
receive through our marketing efforts. The cost of production and
installation of the advertising product has been averaging approximately
80 percent of the total invoice price.
Our operations recently commenced at the end of 2000 and we do not
have a history of operations from which we can evaluate our ability to
generate revenue at sufficient levels to sustain and develop our
operations without outside financing. We emphasize that it is
management's belief alone regarding the potential market for our
advertising product that serves as the basis for pursuing this business.
If our belief about the market for our product is wrong, then our sales
revenues will likely stagnate or decrease and our ability to sustain and
develop the business will be substantially impaired. In these
circumstances we would likely need to seek outside financing to sustain
our operations, and we do not know whether financing would be available on
acceptable terms. The foregoing factors raise substantial doubt about our
ability to continue as a going concern.
Results of Operations
****************************************************************
NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001,
AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
****************************************************************
Revenue: The Company had revenues of $49,655 and $256,116
respectively for the nine-month periods ended September 30, 2002 and 2001.
The Company had revenues of $8,864 and $213,976 respectively for the three-
month periods ended September 30, 2002 and 2001.
Our average monthly revenue rate over the first nine months of 2002
was approximately $5,517. Our goal is to increase monthly revenue by at
least 10 percent each month over the next 12 months. At present our
marketing effort is limited to personal sales calls we initiate with
business owners in the Salt Lake City metropolitan area. We have set as a
sales goal an average of 20 van-advertising installations and 10
installations on other vehicles per month. We have not implemented any
other form of advertising or marketing for our advertising product and
believe we can achieve our sales goals over the next 12 months with direct
sales efforts. We believe the revenue we generate internally from
marketing our specialty advertising products with our current personnel
and resources will be adequate to cover our costs of production and
operating expenses through the next 12 months.
Cost of Goods Sold: Cost of goods sold for the nine-month periods
ended September 30, 2002 and 2001 were $47,851 and $190,348 respectively.
The cost of goods sold for the three-month periods ended September 30,
2002 and 2001 were $14,706 and $153,574 respectively. For the nine months
ended September 30, 2002, our cost of goods sold has been averaging about
20
74% percent of sales revenue. Cost of goods sold includes the cost of
production of the advertising material we sell and its installation.
General and Administrative Expenses: General and administrative
expenses and selling expenses for the nine month periods ended September
30, 2002 and 2001 were $83,955 and $59,325 respectively. These expenses
for the three-month periods ended September 30, 2002 and 2001 were $22,813
and $31,020 respectively.
Operating Expenses: Operating expenses consist primarily of salary
for our two employees, office expenses, and professional fees. The total
salary accrued for and paid to Cliff Halling, our president, was $38,034
for the nine month period ended September 30, 2002, or 77% of sales
revenue compared to $27,000 for the nine month period ended September 30,
2001, or 11% of sales. The total salary accrued for and paid to Mr.
Halling for the three-month periods ended September 30, 2002 and 2001 was
$13,108 and $12,000 respectively. His monthly salary is $4,000 through the
remainder of 2002. We pay to our sales person a salary of $3,000 per
month, which began in August 2001. Our vehicle leasing and purchase
obligations total $807 per month, which includes approximately $300
payable over a three-year term for the leased vehicle and the remainder
payable over a five-year term for the vehicle being purchased. Our office
rent and utilities through the nine-month periods ended September 30, 2002
and 2001 was $1,800 and $1,800 respectively. Office rent and utilities for
the three-month periods ended September 30, 2002 and 2001 was $600 and
$600 respectively. We expect our office expense will remain at a rate of
approximately $200 per month through the end of 2002. Professional fees
for the nine-month periods ended September 30, 2002 and 2001 were $8,552
and $12,004 respectively and for the three-month periods ended September
30, 2002 and 2001 were $703 and $3,023 respectively.
Wrap-N-Roll had two cars under operating leases expiring 2003. On
April 21, 2001, we purchased a new van to replace one of the cars. To
finance the purchase, Cliff Halling, our sole officer and director, paid
$1,000 to the financing agency. This payment made by Mr. Halling for our
benefit was applied to reduce his outstanding obligations payable to us.
Wrap-N-Roll also assigned the operating lease for the original car to the
financing agency and recognized a $1,500 gain on the assignment. The
remaining $28,865 was financed through an unrelated financing agency at an
interest rate of 3 percent.
Interest Expense and Interest Income: Interest expense for the nine-
month periods ended September 30, 2002 and 2001, was $2,407 and $1,522,
respectively. Interest expense for the three-month periods ended September
30, 2002 and 2001 was $560 and $663 respectively. We also recognized
interest income of $721 for the nine-month period ended September 30,
2002, on a note receivable from Cliff Halling compared to $272 for the
nine-month period ended September 30, 2001. Interest income for the three-
month periods ended September 30, 2002 and 2001, was $241 and $272
respectively.
As a result of the foregoing factors, Wrap-N-Roll realized a net loss
of $83,868 for the nine-month period ended September 30, 2002, compared to
a net income of $5,768 for the nine-month period ended September 30, 2001.
Wrap-N-Roll realized a net loss of $28,974 for the three-month period
ended September 30, 2002, compared to a net income of $28,972 for the
three-month period ended September 30, 2001.
********************************************************************
CALENDAR YEARS ENDED DECEMBER 31, 2001 AND 2000
********************************************************************
The Company had $258,872 in revenue for the calendar year ended
21
December 31, 2001 and no revenues for the calendar year ended December 31,
2000. The Company incurred $36,713 in net operating losses for the
calendar year ended December 31, 2001 as compared to $10,942 in net
operating losses for the calendar year ended December 31, 2000.
The net operating loss for all periods resulted primarily from general
and administrative expenses and interest expense. The net loss per share for
each period was $0.00 per share.
General and administrative expenses for all periods ended consisted of
general corporate administration, legal and professional expenses, and
accounting and auditing costs. These expenses were $96,859 for the calendar
year ended December 31, 2001 and $10,584 for the calendar year ended
December 31, 2000.
Selling expenses for the calendar year ended December 31, 2001 and 2000
were $925 and $116 respectively.
Interest expense for the calendar year ended December 31, 2001 and
2000 was $3,059 and $242 respectively. Interest was accrued on notes
payable to a related party in the principal amount of $10,812. These
notes payable and related accrued interest of $859 were rolled into a new
one-year related party note payable, due on August 1, 2002, and bears
interest at 10% per annum. Interest was accrued on the note payable in
the amount of $704 at December 31, 2001.
For the current fiscal year, the Company anticipates incurring a loss as
a result of legal and accounting expenses, expenses associated with
registration under the Securities Exchange Act of 1934, as amended, and
expenses associated with its new business plan, as described herein.
Liquidity and Capital Resources
At September 30, 2002, we had a working capital deficit of $128,434,
compared to working capital deficit of $2,686 at September 30, 2001.
Current assets consist primarily of cash in the amount of $373,
accounts receivable of $3,892, and notes receivable and accrued interest
from Cliff Halling, our president and sole director, in the amount of
$13,461. Prior to July 2001, Wrap-N-Roll advanced a total of $15,027 to
Mr. Halling, which is represented by a note payable to Wrap-N-Roll bearing
interest at 7% per annum and due on demand. We made a further advance to
Mr. Halling in the amount of $2,500 represented by a note dated August 1,
2001, bearing interest at 7 percent per annum and due on demand. Mr.
Halling has repaid $5,310 on the notes, so that the outstanding balance at
September 30, 2002, was $12,217 with accrued interest of $1,244.
Current liabilities consist primarily of $75,582 in accounts payable
and accrued expenses, $38,182 of accrued payroll due to Cliff Halling,
$16,671 on a note payable to a former stockholder, $10,000 on a note
payable to Park Street Investments and $5,664 of current portion on long-
term debt incurred to purchase our van. A former stockholder loaned to us
$712 through April 2000, $10,000 in November 2000, $1,400 in April 2001,
and $5,000 in August 2001. These funds were used to fund our working
capital needs. The loan for $1,400 was repaid, with interest, in July
2001. The remaining loans and their accrued interest were restructured as
a new note in August 2001 in the principal amount of $16,671 bearing
interest of 10 percent per annum and due upon demand. Accrued interest on
this note at September 30, 2002 was $1,954. On April 15, 2002, the Company
signed a $5,000 note payable to an entity controlled by a former
shareholder of the Company. The note accrues interest at 10% per annum
and is due upon demand. On May 28, 2002, the Company was advanced $1,000
by an entity controlled by a former stockholder of the Company. On July
30, 2002 the Company was advanced an additional $3,892 by an entity
22
controlled by a former stockholder of the Company. The Company signed a
Promissory Note to an entity controlled by a former shareholder for
$10,000 on July 30, 2002. This note combines the April 15, 2002 note for
$5,000 including interest of $83, the $1,000 advance at May 28, 2002
including a $25 fee and the additional $3,892 advanced on July 30, 2002.
The note accrues interest at 10% per annum and is due upon demand. Accrued
interest on this note at September 30, 2002 was $167.
Long-term debt at September 30, 2002, consisted of $21,607 due an
unrelated finance company that provided the financing on our van. The
obligation is payable in monthly installments over a term of five years
commencing in April 2001, bears interest at three percent per annum, and
is secured by our van with a net book value of $21,956.
If we achieve our revenue goals by the end of 2002, then we will
evaluate the feasibility of adding two employees, one sales person and one
clerical person. New employees will be added only if our operations can
support the new employees without outside financing and if we believe the
addition of these employees will enable us to penetrate our market more
effectively. An increase in our operations and the number of employees
may require us to seek larger office space to house our marketing and
service personnel. Should this growth occur, we expect that we would not
need more than approximately 600 square feet of office space. We believe
that there is an adequate supply of office space in Salt Lake County, Utah
to meet our need for larger space, should it arise. Based solely on our
informal investigation of office space, we believe we could find suitable
space to rent for $12 per square foot per year, or a total of $7,200 per
year for 600 square feet.
Wrap-N-Roll began generating sales revenue from its business
operations since the beginning of 2001. Consequently, we do not have a
history of operations that allows us to predict with any certainty whether
our sales will continue at current levels or increase over the next 12
months. Assuming we can maintain our current level of sales revenue, we
believe we can fund our operations internally over the next 12 months. The
agreement with the Newspaper Agency Corporation expired in June 2002, and
the Company is currently negotiating to extend this agreement. We were
negotiating a joint agreement with the Standard Examiner to provide
advertising services, however at September 30, 2002 the Company terminated
negotiations and previous receivables of $382 recognized as part of the
anticipated agreement were determined to be uncollectible and expensed as
bad debts.
In the past Cliff Halling, our president and sole director, agreed to
defer payment of his compensation when we did not have sufficient revenue
to pay the expense. We have no agreement or arrangement with Mr. Halling
to renew this practice in the future, should the need arise. We have also
relied in the past on loans from a former stockholder, to provide working
capital for our operations. We similarly have no agreement or arrangement
with any stockholder to provide financing in the future. Should there be
a substantial reduction in our sales revenue at any time over the next 12
months it is likely we would need to seek outside financing to fund our
operations. We have not identified any sources for such financing and we
do not know whether any financing would be available to us on acceptable
terms.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing of this report, the Company's
management, including the Company's Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design of the
Company's disclosure controls and procedures, as defined in Rules 13a-
14(c) and 15d-14(c) under the Securities and Exchange Act of 1934. Based
on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures
are effective.
23
There have been no significant changes (including corrective actions
with regard to significant deficiencies and material weaknesses) in the
Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of Management's evaluation.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings,
and to the best of its knowledge, no such proceedings by or against the
Company have been threatened.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits, which is incorporated herein
by reference.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during
the last quarter of the period covered by this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed below by the following persons on behalf by the undersigned
thereunto duly authorized.
WRAP-N-ROLL USA, INC.
/s/Cliff Halling
-----------------------------------
Date: November 14, 2002 By: Cliff Halling, President, Secretary
Treasurer, Director
24
CERTIFICATIONS
I, Cliff Halling, as Chief Executive Officer and Chief Financial Officer
of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Wrap-N-Roll USA,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. I have disclosed, based on my 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. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ Cliff Halling
Cliff Halling
Chief Executive Officer and
Chief Financial Officer
25
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Wrap-N-Roll USA, Inc. (the
"Company") on Form 10-QSB for the period ending September 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Cliff Halling, Chief Executive Officer and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted
pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of operations of
the Company.
/s/ Cliff Halling
Cliff Halling
Chief Executive Officer and Chief Financial Officer
November 14, 2002
26
INDEX TO EXHIBITS
---------------------
SEC Ref
No. Page No. Description
- ------- -------- -----------
3.1 *1* Articles of Incorporation of the Company, filed with
the State of Nevada on September 26, 1997.
3.2 *2* Certificate of Amendment of Articles of Incorporation,
filed with the State of Nevada on October 19, 2000,
but effective November 17, 2000.
3.3 *1* Bylaws of the Company.
5.1 *6* Opinion and consent of Lehman Walstrand & Associates,
LLC.
10.1 *3* Promissory Note dated April 1, 2000 executed by the
Company.
10.2 *4* Promissory Note dated November 1, 2000 executed by the
Company.
10.3 *5* Employment Agreement by and between the Company and
Cliff Halling dated January 1, 2001.
10.4 *5* Rental/Utilities Agreement by and between the Company
and Cliff Halling dated January 1, 2001.
10.5 *7* Promissory Note dated July 1, 2001 executed by the
Company.
10.6 *7* Promissory Note dated August 1, 2001 executed by the
Company.
10.7 *7* Amended Employment Agreement by and between the
Company and Cliff Halling dated April 1, 2001.
10.8 *8* Joint Agreement with Jose Dicenzo dated May 14, 2001.
10.9 *8* Joint Agreement with Newspaper Agency Corporation
dated June 11, 2001.
10.10 *8* Form of Wrap-N-Roll Service Agreement.
10.11 *9* Employment Agreement by and between the Company and
Derek Williams dated August 1, 2001.
10.12 *9* Rental/Utilities Agreement by and between the Company
and Cliff Halling dated September 1, 2001.
10.13 *9* Note Receivable in the form of a Promissory Note Dated
August 1, 2001 executed by the Company.
10.14 *10* Note Payable in the form of a Promissory Note Dated
April 15, 2002 executed by the Company.
10.15 *10* Note Payable in the form of a Promissory Note Dated
July 30, 2002.
27
10.16 Promissory Note Dated August 1, 2002, executed by the
Company.
10.17 Promissory Note Dated October 17, 2002, executed by
the Company.
*1* The listed exhibits are incorporated herein by this reference to the
Registration Statement on Form 10-SB, filed by the Company with the
Securities and Exchange Commission on February 10, 2000.
*2* The listed exhibit is incorporated herein by this reference to the
Annual Report on Form 10-KSB for the calendar year ended December 31,
2000, filed by the Company with the Securities and Exchange Commission on
April 12, 2001.
*3* The listed exhibit is incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2000, filed
by the Company with the Securities and Exchange Commission on August 14,
2000.
*4* The listed exhibit is incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2000,
filed by the Company with the Securities and Exchange Commission on
November 9, 2000.
*5* The listed exhibits are incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001,
filed by the Company with the Securities and Exchange Commission on May
16, 2001.
*6* The listed exhibit is incorporated herein by this reference to the
Registration Statement on Form SB-2, filed by the Company with the
Securities and Exchange Commission on July 10, 2001.
*7* The listed exhibits are incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2001, filed
by the Company with the Securities and Exchange Commission on August 20,
2001.
*8* The listed exhibits are incorporated herein by this reference to
Amendment No. 1 of the Registration Statement on Form SB-2/A, filed by the
Company with the Securities and Exchange Commission on October 9, 2001.
*9* The listed exhibits are incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001,
filed by the Company with the Securities and Exchange Commission on
November 19, 2001.
*10* The listed exhibits are incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002, filed
by the Company with the Securities and Exchange Commission on August 19,
2002.
28