UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
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[ X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended August 31, 2001
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[ ] 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.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0339543
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 1000-355 Burrard Street, Vancouver,
British Columbia, Canada V6C 2G8
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-519-6556
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None
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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 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 October 14, 2001.
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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 August 31, 2001 are
not necessarily indicative of the results that can be expected for the
year ending November 30, 2001.
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
AUGUST 31, 2001
(Stated in U.S. Dollars)
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEET
(Stated in U.S. Dollars)
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AUGUST 31 NOVEMBER 30
2001 2000
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ASSETS
Current
Cash $ 2,182 $ 41,610
Accounts receivable - 496
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2,182 42,106
Software Development Costs 4,807 3,460
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$ 6,989 $ 45,566
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LIABILITIES
Current
Accounts payable $ 4,262 $ -
Loan payable 6,500 6,500
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10,762 6,500
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SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 common shares,
par value $0.001 per share
Issued and outstanding:
7,435,000 common shares 7,435 7,435
Additional paid in capital 39,315 39,315
Deficit (50,523) (7,684)
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(3,773) 39,066
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$ 6,989 $ 45,566
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Approved by the Board of Directors:
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND DEFICIT
(Stated in U.S. Dollars)
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INCEPTION
MAY 24
THREE MONTHS ENDED NINE MONTHS ENDED 2000 TO
AUGUST 31 AUGUST 31 AUGUST 31
2001 2000 2001 2000 2001
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Expenses
Consulting $ 2,000 $ - $ 2,000 $ - $ 4,675
Professional
fees 10,891 1,935 40,067 1,935 44,303
Office and
sundry 227 - 772 - 1,545
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Net Loss
For The
Period 13,118 1,935 42,839 1,935 $ 50,523
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Deficit,
Beginning
Of Period 37,405 - 7,684 -
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Deficit,
End Of
Period $50,523 $ 1,935 $ 50,523 $ 1,935
=================================================
Net Loss
Per Share $ 0.01 $ 0.01 $ 0.01 $ 0.01
=================================================
Weighted
Average
Number
Of Common
Shares
Out-
standing 7,435,000 869,565 7,435,000 808,081
=================================================
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
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INCEPTION
MAY 24
THREE MONTHS ENDED NINE MONTHS ENDED 2000 TO
AUGUST 31 AUGUST 31 AUGUST 31
2001 2000 2001 2000 2001
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Cash Flows
From
Operating
Activities
Net loss
for the
period $(13,118) $ (1,935) $(42,839) $ (1,935) $(50,523)
Adjustments
To Reconcile
Net Loss To
Net Cash By
Operating
Activities
Accounts
receivable - - 496 - -
Accounts
payable (7,384) 835 4,262 835 4,262
Loan
payable - 6,500 - 6,500 6,500
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(20,502) 5,400 (38,081) 5,400 39,761
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Cash Flows
From
Financing
Activity
Common
stock
issued - 5,000 - 5,000 46,750
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Cash Flows
From
Investing
Activity
Software
development
costs - - (1,347) - (4,807)
Increase
(Decrease)
In Cash (20,502) 10,400 (39,428) 10,400 2,182
Cash,
Beginning
Of Period 22,684 - 41,610 - -
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Cash, End
Of Period $ 2,182 $ 10,400 $ 2,182 $ 10,400 $ 2,182
========================================================================
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2001
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of August 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.
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 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.
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SUPERIOR NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 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.
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Item 2. Management's Discussion and Analysis or Plan of Operations
Plan of Operations
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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.
We have insufficient funds to commence development of our initial
product. We will require additional financing in order to implement our
full business plan. At August 31, 2001 we had enough cash for one
month of operations. In October, 2001, Randy White, the President of
the Company loaned a nominal amount of money to the Company in order to
meets its immediate financial obligations. The Company has not reached
an agreement with Mr. White to pay any interest on such loans. Should
interest be paid, the Company expects it will carry a nominal interest
rate. Although Mr. White has loaned money to the Company, there can be
no assurances that Mr. White will continue to do so in the future. To
complete our objectives over the next 12 months we require additional
funding. The amount of additional financing we will require to
sustain our business operations 12 months from now will depend on the
level of revenues we 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.
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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.
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.
Future Products
Young Adult Training. We plan on developing a training application
providing young adults with a menu of free courses that provide
instruction about setting up bank accounts, obtaining credit, renting
property, and managing household affairs. The training content of this
program presents the opportunity to create particularly strong ties to
consumer purchases. The young adult training program is still in the
initial planning stages. We will not focus on developing this
application until our initial drivers training program is developed.
At this time we do not have a target date for being operational on this
particular website.
Equipment Rental Made Easy. Equipment Rental Made Easy will offer
courses on safety and operation for consumers who rent power equipment,
such as chain saws, floor sanders, and carpet cleaning equipment. We
will sell access to these courses to equipment rental companies thereby
making it primarily a business to business application. The
equipment rental companies will then have access to the courses as a
resource they can pass along to a client at the time the client
rents a piece of equipment for which a course would be important. We
have not started development of the equipment rental made easy website
at this time and do not as yet have a target date of when it will be
operational.
Other Applications. Other applications we intend to develop include:
- New Moms;
- Simple Etiquette;
- Sexual Harassment;
- Boating Safety; and
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- Insurance.
None of these applications are under development at the present time
and we do not have target dates at which they will be operational.
They are applications we intend to explore in the future once we have
found success with our initial product development. As each new course
is developed and made available to the public, we intend to charge a
$5.00 fee per participant per course.
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 August 31, 2001 we expect to incur $10,000
in research or development expenditures for the development of our
website. Such expenditure is entirely dependent upon our ability to
raise additional capital.
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 August 31,
2001 will be approximately $10,000. Such expenditure is entirely
dependent upon our ability to raise additional capital.
Employees and Consultants
For the six months after August 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. Such contracts are entirely
dependent upon our ability to raise additional capital.
Results Of Operations
We did not earn any revenues from the date of inception through the
period ending August 31, 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
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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 $42,067 for the nine-
month period ended August 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 $50,523
from the date of inception through August 31, 2001.
Currently, we are not able to operate our business according to plan
because of cash constraints. Failure to raise the necessary capital in
the immediate future will, at a minimum, cause us to not be able to
fully develop our initial product or, in the worst case, cause our
business to fail. We are actively pursuing candidates for a strategic
alliance or possible acquisition of a business interest. Although, we
are pursuing these avenues, it cannot be guaranteed that such
arrangements can be reached in such a time or manner that will enable
us to continue to develop our product. For the next 12 months, the
Company will continue to seek out business opportunities in which it
can engage.
Even though the Company does not at the present time have any
understandings or agreements with any persons or entities to provide
such funding, shareholders having an interest in seeing that the
Company remains a viable business entity have been willing to provide
funds to the Company in the past either through purchasing additional
stock or by loaning money to the Company. However, there can be no
assurances to that effect, as the Company has no revenues and the
Company's need for capital may change dramatically if it acquires an
interest in a business opportunity during that period. It should also
be noted that the Company is now obligated to satisfy the costs
associated with filing the required reports under the 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 and Exchange Commission.
<Page>
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.
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
99. Risk Factors
(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: October 12, 2001
By: /s/ Randy White
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Randy White, President and
Chief Executive Officer and Director