<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended May 31, 2001
[ ] Transition Report pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period to
Commission File Number 333-54658
-----------------
SUPERIOR NETWORKS, INC.
----------------------------------------
(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0339543
- ------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer Identification
No.)
incorporation or organization)
Suite 1000-355 Burrard Street, Vancouver,
British Columbia, Canada V6C 2G8
- ----------------------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-519-6556
------------------
None
---------------------------------------------
(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 Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days [ X] Yes [ ] No
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
7,435,000 Shares of $.001 par value Common Stock outstanding as of
August 14, 2001.
<Page>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and Item 310 (b) of
Regulation S-B, and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity
in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a
fair presentation of the results of operations and financial position
have been included and all such adjustments are of a normal recurring
nature. Operating results for the six months ended May 31, 2001 are
not necessarily indicative of the results that can be expected for
the year ending November 30, 2001.
2
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
MAY 31, 2001
(Stated in U.S. Dollars)
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEET
(Stated in U.S. Dollars)
- --------------------------------------------------------------------
MAY 31 NOVEMBER 30
2001 2000
- --------------------------------------------------------------------
ASSETS
Current
Cash $ 22,684 $ 41,610
Accounts receivable - 496
------------------------
22,684 42,106
Software Development Costs 4,807 3,460
------------------------
$ 27,491 $ 45,566
====================================================================
LIABILITIES
Current
Accounts payable $ 11,646 $ -
Loan payable 6,500 6,500
-------------------------
18,145 6,500
-------------------------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 common shares, par
value $0.001 per share
Issued and outstanding:
7,435,000 common shares 7,435 7,435
Additional paid in capital 39,315 39,315
Deficit (37,405) (7,684)
-------------------------
9,345 39,066
-------------------------
$ 27,491 $ 45,566
====================================================================
Approved by the Board of Directors:
- -------------------- ------------------
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT
(Stated in U.S. Dollars)
- --------------------------------------------------------------------
INCEPTION
MAY 24
THREE MONTHS ENDED SIX MONTHS ENDED 2000 TO
MAY 31 MAY 31 MAY 31
2001 2000 2001 2000 2001
- --------------------------------------------------------------------
Expenses
Consulting $ - $ - $ - $ - $ 2,675
Professional
fees 13,340 - 29,176 - 33,412
Office and
sundry 30 - 545 - 1,318
------------------------------------------------
Net Loss For
The Period 13,370 - 29,721 - $37,405
=======
Deficit, Beginning
Of Period 24,035 - 7,684 -
-----------------------------------------
Deficit, End
Of Period $37,405 $ - $37,405 $ -
=============================================================
Net Loss Per Share $ 0.01 $ - $ 0.01 $ -
=============================================================
Weighted Average
Number Of Common
Shares
Outstanding 7,435,000 - 7,435,000 -
=============================================================
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
- ---------------------------------------------------------------------
INCEPTION
MAY 24
THREE MONTHS ENDED SIX MONTHS ENDED 2000 TO
MAY 31 MAY 31 MAY 31
2001 2000 2001 2000 2001
- ---------------------------------------------------------------------
Cash Flows From
Operating
Activities
Net loss for
the period $13,370 $ - $ 29,721 $ - $37,405
Adjustments To
Reconcile Net
Loss To Net
Cash By
Operating
Activities
Accounts
receivable 496 - 496 - -
Accounts
payable 3,974 - 11,646 - 11,646
Loan
payable - - - - 6,500
------------------------------------------------
8,900 - 17,579 - 18,629
------------------------------------------------
Cash Flows From
Financing
Activity
Common stock
issued - - - - 46,750
------------------------------------------------
Cash Flows From
Investing
Activity
Software
development
costs - - 1,347 - 4,807
Increase (Decrease)
In Cash (8,270) - (18,296) - 22,684
Cash, Beginning Of
Period 31,584 - 41,610 - -
------------------------------------------------
Cash, End Of
Period $ 22,684 $ - $ 22,684 $ - $ 22,684
=====================================================================
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of May 31, 2001 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, 2000 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.
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.
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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.
<Page>
SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 receivable 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.
<Page>
Item 2. Management's Discussion and Analysis or Plan of Operations
Plan of Operations
- ------------------
The Company was incorporated in the state of Nevada on May 24,
2000 for the purpose of providing various training programs via
the Internet. By providing training programs through the medium
of the Internet, Superior Networks hopes to develop a
demographically desirable online consumer base. In addition to
training program fees charged by Superior Networks, we expect to
be able to economically exploit the consumer base through product
sales corresponding to the demographic characteristics of the
consumer base.
For some types of training, the Internet offers a cost-effective
and convenient alternative to traditional learning environments.
The speed with which these possibilities have opened up has
meant that traditional and even Internet-based training companies
have not yet visualized many of the niches within this market
space. By selecting training applications in which we can be
among the first to market, Superior Networks has the opportunity
to establish itself as a leading provider of web-based niche
training programs.
Each training program topic will be calculated to create a tightly
focused web audience having demographics desirable for creating
additional revenue streams. As outlined below, the Company
expects such revenue streams to be supplemented by revenue from
the sale of affiliated company products, advertisement, and
select customer data base records. To date we have not generated
revenue and are conducting only minimal business operations.
We expect to generate revenues in the future from the
following sources:
. Training course enrollment fees;
. Commissions on sales of third party products and
services generated by our web sites;
. Click through referral fees from links at our sites;
and
. Banner advertising fees.
While we have sufficient funds to commence development of our
initial product, we will require additional financing in order to
implement our full business plan. We currently have enough cash
to complete our objectives over the next 12 months. 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 are generating at that time. 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. The site features a
section on aging and driving, a driving course and a quiz on the
driving course.
4
<Page>
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.
Superioronlinetraining.com will now and for the next 12 months
begin 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 will now, and for the next 12 months, begin to market and brand
the website by both online and offline strategies. Marketing the
site will commence once Superioronlinetraining.com has allied
itself by contracting to provide reciprocal services with key
organizations as mentioned above.
Competition
- -----------
Superior Networks will face potential competition from several
sources:
. Traditional training firms, such as Sylvan Learning Centers,
which may decide to enter the world of cyber-learning;
. "How to" websites, which may begin to target specific
markets;
. Specialized off-line training programs, which may directly
compete with some Superior Networks offerings.
Research and Development Expenditures
- -------------------------------------
For the twelve months after May 31, 2001 we expect to incur
$10,000 in research or development expenditures for the
development of our website.
Marketing
- ---------
We plan to undertake an advertising and marketing campaign once
the development of our website and course are complete. We
anticipate that initial marketing expenses for the twelve months
following May 31, 2001 will be approximately $10,000.
Employees and Consultants
- -------------------------
For the six months after May 31, 2001, we intend that our part-
time employment positions will be limited to the current officers
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.
Results Of Operations
- ---------------------
We did not earn any revenues from the date of inception through
the period ending May 31,
5
<Page>
2001. 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 marketing
their products to that base. A course client 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 operating expenses in the amount of $29,721 for the
six month period ended May 31, 2001. These operating expenses
were comprised almost entirely of professional fees that were
primarily attributable to our corporate organization and the
development of our business plan. Since we had no revenues, we
incurred a loss of $37,405 from the date of inception through May
31, 2001.
As of May 31, 2001 we had working capital of $22,684. This was
enough to meet the cash requirements of the Company for
approximately six months following May 31, 2001.
For the next 12 months, the Company will continue to seek out
business opportunities in which it can engage and/or operating
companies that it can acquire. 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
Exchange Act of 1934. 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.
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
. The availability and timing of receipt of necessary outside
capital
. Other risk factors described from time to time in the
Company's filings with the Securities
6
<Page>
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.
7
<Page>
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) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorised.
SUPERIOR NETWORKS, INC.
Date: August 24, 2001
By: /S/ Randy White
--------------------------
Randy White, President and
Chief Executive Officer and Director
8