SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period March 31,2002
Commission file number 0-28927
Garden Bay International, Ltd.
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(Name of Small Business Issuer in its Charter)
77-513 Ashberry Court, Palm Desert, California, 92211
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(Address of Principal Executive Offices) (ZIP Code)
(760) 409-6749
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(Issuer's Telephone Number, Including Area Code)
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(Issuer's Telephone Number, Including Area Code)
Not applicable
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(Former Name, Former Address and Former Fiscal Year, if changed
since last report)
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 [ ]
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There were 5,672,000 shares of Common stock outstanding as of May 1, 2002.
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PART I
Item 1. FINANCIAL STATEMENTS.
Microsoft Word 10.0.3416;ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANTS
(A Professional Corporation)
Armando C. Ibarra,
C.P.A.
Members of the California Society of
Armando Ibarra, Jr.,
C.P.A.
Certified Public Accountants
To the Board of Directors of
Garden Bay International, Ltd.
(A Development Stage Company)
INDEPENDENT ACCOUNTANT'S REPORT
We have reviewed the accompanying balance sheets of Garden Bay International,
Ltd. (A Development Stage Company) as of March 31, 2002 and December 31, 2001,
and the related statements of operations, changes in stockholders' equity, and
cash flows for the three months ended March 31, 2002 and 2001, in accordance
with Statements on Standards for Accounting Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of Garden Bay
International, Ltd.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with generally accepted accounting principles.
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Armando C. Ibarra, CPA-APC
May 3, 2002
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GARDEN BAY INTERNATIONAL, LTD.
(A Development Stage Company)
Balance Sheets
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As of As of
March 31, December 31,
2002 2001
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ASSETS
Current Assets
Cash $ 143 $ (12)
Inventory 0 0
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Total Current Assets 143 (12)
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TOTAL ASSETS $ 143 $ (12)
================== ==================
================== ==================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,190 $ 1,190
Loans payable 205 0
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Total Current Liabilities 1,395 1,190
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TOTAL LIABILITIES 1,395 1,190
Stockholders' Equity
Preferred stock, ($.0001 par value, 20,000,000
shares authorized; none issued and outstanding) 0 0
Common stock ($.0001 par value, 80,000,000
shares authorized; 5,672,000 shares issued
and outstanding) 568 568
Additional paid-in capital 42,657 42,657
Deficit accumulated during development stage (44,477) (44,427)
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Total Stockholders' Equity (1,252) (1,202)
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TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY
4 143 $ (12)
================== ==================
See Notes to Financial Statements
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GARDEN BAY INTERNATIONAL, LTD.
(A Development Stage Company)
Statements of Operations
- -----------------------------------------------------------------------
uly 20, 1998
Three Months Three Months (inception)
Ended Ended through
March 31, March 31, March 31,
2002 2001 2002
----------------- ---------------- ------------
Revenues
Revenues $ 241 $ 0 $ 1,441
----------------- ---------------- ------------
Total Revenues 241 0 1,441
General & Administrative
Expenses 291 24 45,918
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Total General &
Administrative Expenses 291 24 45,918
----------------- ---------------- ------------
Net Loss $ (50) $ (24) $ (44,477)
================= ================ ============
Basic loss per share $ (0.00) $ (0.00)
================= ================
Weighted average number of
common shares outstanding 5,672,000 5,437,000
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See Notes to Financial Statements
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GARDEN BAY INTERNATIONAL, LTD.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From July 20, 1998 (inception) through March 31, 2002
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Deficit
Common Common Additional Accumulated
Shares Stock Paid-in During Total
Amount Capital Development
Stage
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Issued for cash on July 20, 1998 5,000,000 $ 500 $ 500 $ 0 $ 1,000
Net loss, July 20, 1998 (inception)
to December 31, 1998 (25) (25)
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Balance, December 31, 1998 5,000,000 500 500 (25) 975
============================================================================================================================
Issued from sale of private placement
(Note #1) March 25, 1999 187,000 19 18,681 0 18,700
Net loss, January 1, 1999 through
December 31, 1999 (9,392) (9,392)
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Balance, December 31, 1999 5,187,000 519 19,181 (9,417) 10,283
============================================================================================================================
Common Stock issued November 11,
2000 @ $0.0001 per share 0 0 25
250,000 25
Net loss, January 1, 2000 through
December 31, 2000 (10,045) (10,045)
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Balance, December 31, 2000 5,437,000 19,181 (19,462)
544 263
============================================================================================================================
Common Stock issued May 14,
2001 @ $0.10 per share 11,738 0 11,750
117,500 12
Common Stock issued May 18,
2001 @ $0.10 per share 11,738 0 11,750
117,500 12
Net loss, January 1, 2001 through
December 31, 2001 (24,965) (24,965)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001 5,672,000 42,657 (44,427) (1,202)
568
============================================================================================================================
Net loss, January 1, 2002 through
March 31, 2002 (50) (50)
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Balance, March 31, 2002 5,672,000 $ 568 $ 42,657 $ (44,477) $ (1,252)
============================================================================================================================
See Notes to Financial Statements
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GARDEN BAY INTERNATIONAL, LTD.
(A Development Stage Company)
Statements of Cash Flows
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July 20, 1998
Three Months Three Months (inception)
Ended Ended through
March 31, March 31, March 31,
2002 2001 2002
------------------- -------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (50) $ (24) $ (44,477)
Amortization 0 0 306
(Increase) in organization costs 0 0 (306)
Increase in accounts payable 0 0 1,190
Increase in loans payable 205 0 205
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Net cash provided / (used) by operating 155 (24) (43,082)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities 0 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 0 0 42,225
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Net cash provided by financing activities 0 0 42,225
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Net increase / (decrease) in cash 155 (24) (857)
Cash at beginning of period (12) 44 1,000
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Cash at end of period $ 143 $ 20 $ 143
=================== ==================== =====================
See Notes to Financial Statements
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Microsoft Word 10.0.3416;GARDEN BAY INTERNATIONAL, LTD.
(A Development Stage Company)
Notes to Financial Statements
As of March 31, 2002
NOTE 1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized July 20, 1998, under the laws of the state of
Delaware, as Garden Bay International, Ltd. The Company has no significant
revenues and no material operations and in accordance with SFAS # 7, the Company
is considered a development stage company.
On July 20, 1998, the Company issued 5,000,000 shares of its common stock at
$0.0001 per share for cash valued at $500.
On March 25, 1999, the Company completed a public offering that was offered
without registration under the securities Act of 1933, as amended (The "Act"),
in reliance upon the exemption from registration afforded by sections 4(2) and
3(b) of Securities Act and Regulation D promulgated thereunder. The Company sold
187,000 shares of common stock at a price of $ 0.10 per share for a total amount
raised of $ 18,700.00.
On May 14, 2001, the Company issued 117,000 shares of its common stock at $0.10
per share for cash valued at $ 11,750.
On May 18, 2001, the Company issued 117,000 shares of its common stock at $0.10
per share for cash valued at $ 11,750. As of March 31, 2002 the Company had
5,672,000 shares of common stock outstanding.
NOTE 2. ACCOUNTING POLICIES AND PROCEDURES
a. Basis of Accounting
The Company uses the accrual method of accounting.
b. Basic Loss Per Share
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective July 20, 1998 (inception).
Basic net loss per share amounts is computed by dividing the net income by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
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NOTE 2. ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)
c. Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
d. Inventory
Inventory is valued at the lower cost or market.
e. 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 during the reporting period.
Actual results could differ from those estimates.
f. Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
NOTE 3. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common stock or preferred stock.
NOTE 4. GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. Without realization of additional capital, it would be unlikely for
the Company to continue as a going concern. It is management's plan to seek
additional capital through the sale of its securities through private
placements.
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NOTE 5. RELATED PARTY TRANSACTION
The Company neither owns, nor leases any real or personal property. A director
provides office services without charge. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity become available, such persons may face a conflict
in selecting between the Company and their other business interests. The Company
has not formulated a policy for resolution of such conflicts.
NOTE 6. INCOME TAXES
As of March As of March
31, 2002 31, 2001
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-------------------- ------------------
Deferred tax assets:
Net operating loss carryforwards $ 6,672 $ 1,507
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Other -0- -0-
Valuation allowance (6,672) (1,507)
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Net deferred tax assets $ -0- $ -0-
==================== ==================
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
NOTE 7. SCHEDULE OF NET OPERATING LOSSES
1998 Net Operating Loss $ (25)
1999 Net Operating Loss (9,392)
2000 Net Operating Loss (10,045)
2001 Net Operating Loss (24,965)
2002 Net Operating Loss (1st. Qtr.) (50)
-----------------
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Net Operating Loss $ (44,477)
=================
As of March 31, 2002 the Company has a net operating loss carryforward of
approximately $ 44,477, which will expire twenty years from the date the loss
was incurred.
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Certain Forward-Looking Information
Information provided in this Form 10QSB may contain forward-looking statements
within the meaning of Section 21E or Securities Exchange Act of 1934 that are
not historical facts and information. These statements represent the Company's
expectations or beliefs, including, but not limited to, statements concerning
future and operating results, statements concerning industry performance, the
Company's operations, economic performance, financial conditions, margins and
growth in sales of the Company's products, capital expenditures, financing g
needs, as well assumptions related to the forgoing. For this purpose, any
statements contained in this Quarterly Report that are not statements of
historical fact may be deemed to be forward-looking statements. These
forward-looking statements are based on current expectations and involve
various risks and uncertainties that could cause actual results and outcomes
for future periods to differ materially from any forward-looking statement or
views expressed herein. The Company's financial performance and the forward-
looking statements contained herein are further qualified by other risks
including those set forth from time to time in the documents filed by the
Company with the Securities and Exchange Commission.
COMPARISON OF QUARTER ENDED MARCH 31, 2002 WITH QUARTER ENDED MARCH 31, 2001
Revenues for the quarter ended March 31, 2002 were $214 as compared with $0 in
2001.
General & Administrative Expenses for the quarter ended March 31,were $291 in
2002 and $24. in 2001. Net loss in the quarter ended March 31,2002 was
$50 as against $24 in 2001.
The Company had Total Assets of $143 at March 31, 2002 as compared to $(12) at
March 31, 2001.
The Business Plan for the Company over the next twelve months is to design and
manufacture sets of distinctive, hand-painted ceramic dinnerware in four
designs approved by the company and to implement a wholesale sales group to
distribute the Company's products for placement to retail outlets. The Company
plans to implement a merchandising strategy that will seek out other hand-
designed products by artisans world-wide for distribution. The Company plans
initially to have its products shipped directly from the vendor to the
wholesale suppliers and distributors and later, as the need arises, to rent a
small order fulfillment and distribution facility. The shipment of products
directly from vendors to the suppliers or directly to the stores reduces the
level of the lead-time required to receive the products. Financing will be
arranged as required during this period. The Company will require a down
payment on all orders sufficient to defray the cost of the production. The
Company has plans to raise the additional capital by the sale of its securities
in a private placement. There can be no assurance that this offering can be
accomplished at prices satisfactory to the Company, if at all.
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The Company anticipates that a small 150 - 250 square feet warehouse space will
be adequate to carry on the operation over the next year of business. Sales
will be established through wholesale suppliers and distributors. It is
anticipated that sales will grow in an orderly fashion over the next year. An
Internet web site for sales, information and trades has been created
(Gardenbaydishes.com) to market the inventory online and to gather a larger
sales population. A catalog for retail consumers has been prepared and is being
distributed.
The Company has contacted suppliers in Tijuanna and Rosarito
Mexico and is inspecting new designs in order to increase the inventory. A
wholesaler, Heather Hooper Wholesale, in Solana Beach, CA plans to
distribute the products in the San Diego California area as soon as catalogs
are published..
RISK FACTORS
1. Limited History of Operations. The Company was organized on July 20, 1998
and has had limited operations to date. Therefore its operations are subject to
all of the risks inherent in new business enterprises. The likelihood of the
success of the Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection
with the start up of new businesses and the competitive environment in which
the Company will operate. The Company has had no significant revenues to date.
2. Time lapse to Operational Stage of the Company Operations therefore will
depend upon the continued availability of investment capital to fully fund
subsequent Projects. If operating revenues are insufficient to continue the
Company's operations, additional funds would have to be raised through equity
or debt financing. The Company has no commitments for any additional debt or
equity financing and there can be no assurance that any such commitments will
be obtained on favorable terms, if at all.
3. Competition. The Company will operate in a highly competitive
enviromemt. The Company will compete with retailers which have a history and
experience the company does not have.
4. Dependence on Management. Because the Company is a new business and has
no significant operating history, it will be heavily dependent upon the
services and experiences of its officers. The loss of the service of any
officer could adversely affect the conduct of the Company's business.
5. Industry and Economic Factors. The industry in which the Company expects to
operate is subject to constant changes based upon changes in public taste as
well as the condition of the general economy. Factors beyond the control of the
Company or those on whom it intends to rely could cause the Company to fail.
6. Control of the Company. The Officers, Directors and Principal Shareholder
Group own more than 50% of the Common Shares of the Company. Therefore, the
Control Group will either control or significantly influence a voting control
of the Company. Pursuant to the laws of Delaware, a majority of all
shareholders entitled to vote an any regularly called shareholders meeting, may
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act, as a majority, without notice or meeting, giving notice to other
shareholders only after such action may have been taken. While there are some
limits upon this right of the majority, Investors should understand that
Management commands a voting majority in control of the Company.
7. Dividends. The Company has paid no dividends on its Common Shares since
its inception. The Company does not anticipate paying any dividends on its
Common Stock until and unless such profit is realized and may not pay out any
dividends thereafter.
8. Potential Conflicts of Interest. The officers and directors may be
associated with other firms, including others with material contractual
relationships with this Issuer, and may become involved in a range of business
activities. Due to these affiliations and the fact that some officers are
expected to devote only a portion of their time to the business of the Company,
there are potential inherent conflicts of interest in their acting as directors
and as officers. Each of the officers and directors is or may become an
officer, director, controlling shareholder, partner or participant in other
entities engaged in a variety of businesses. These existing and potential
conflicts of interest are irreconcilable and could involve the participating
officers and directors in litigation brought by the Company's shareholders or
by the shareholders of other entities with which the officers and directors are
currently, or may become, affiliated. To help alleviate this position somewhat,
Management has adopted a policy of full disclosure with respect to business
transactions with any entity in which any or all of the officers or directors
are affiliated, either directly or indirectly. An officer or director may
continue any business activity in which such officer or director engaged prior
to joining the Company.
9. Going Concern. As of March 30, 2002 the Company had a negative stockholders'
Equity of $(1,252). The auditors have raised a "going concern" question on the
audit for the year ended December 31, 2001. The Company's auditors also raised
a going concern question on the reviewed financial statements for the quarter
ended March 31, 2002.
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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
None
Item 6. Exhibits and Reports on Form 8-K
(a) (2) Filed by reference; Form 10-SB filed February 23, 2000.
(3) Filed by reference; Form 10-SB filed February 23, 2000.
(11) Statement re: Computation of per share earnings.
(b) There were no reports filed on Form 8-K
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this disclosure statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
GARDEN BAY INTERNATIONAL, LTD.
Dated: 5/15/2002
ROBERT BERK
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ROBERT BERK
President
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