UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2003
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ---- to -----
Commission File Number 0-49915
HERBALORGANICS.COM, INC.
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(Exact name of registrant as specified in its charter)
Nevada 88-0045023
- -------------------------- -----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
7708 - 119A St., Delta, B.C., Canada V4C 6N6
- ----------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(604) 649-5595
None
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Former Name, Address and 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
The number of shares outstanding of the registrant's common stock as
of June 30, 2003 was 1,800,000. Registrant's original registration
statement on Form 10-KSB and all exhibits thereto, filed under SEC
File Number 0-49915, on June 30, 2003, are incorporated herein
by reference.
1
PART 1
Financial Information
- ---------------------
Item 1. Financial Information
The consolidated financial statements for HerbalOrganics.com, Inc.
(the Company) included herein are unaudited but reflect, in managements
opinion, all adjustments, consisting only of normal recurring adjustments,
that are necessary for a fair presentation of the Company's financial
position and the results of its operations for the interim periods
presented. Because of the nature of the Company's business, the results
of operations for the six months ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the full
fiscal year. The financial statements included herein should be read in
conjunction with the financial statements and notes thereto included in
the Form 10-KSB for the year ended December 31, 2002.
2
HerbalOrganics.com, Inc.
(A Development Stage Company)
Balance Sheet
ASSETS
------
June 30 December 31
2003 2002
---- ----
(Unaudited) (Audited)
Current Assets
- --------------
Cash $ 11,914 $ 16,631
-------- --------
Total Current Assets 11,914 16,631
-------- --------
Total Assets $ 11,914 $ 16,631
======== ========
LIABILITIES
-----------
Current Liabilities
- - -----------------
Accounts Payable $ 600 $ 500
Officer Advances 100 100
-------- --------
Total Current Liabilities 700 600
-------- --------
Total Liabilities 700 600
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
--------------------
Common Stock 1,800 1,800
50,000,000 authorized shares,
par value $.001
1,800,000 shares issues and outstanding
Preffered Stock
10,000,000 authorized preferred shares,
par value $.01
Nil shares issued and outstanding
Additional Paid-In-Capital 38,200 38,200
Accumulated Deficit during the
Development Period (28,786) (23,969)
-------- --------
Total Stockholders' Equity
(Deficit) 11,214 16,031
-------- --------
Total Liabilities and
Stockholders' Equity $ 11,914 $ 16,631
======== ========
3
HerbalOrganics.com, Inc.
(A Development Stage Company)
Statement of Operations
(Unaudited)
------------------------------
For the Six Months Ended
June 30
------------------------------
2003 2002
============= =============
Revenues:
- ---------
Revenues - -
---------- -----------
Total Revenues $ - $ -
Expenses:
- ---------
Professional Fees 1,461 1,357
Operating Expenses 732 -
---------- -----------
Total Expenses 2,193 1,357
Net Income before Taxes $ (2,193) $ (1,357)
Provision for Income Taxes:
- ---------------------------
Income Tax Benefit - -
Net Income (Loss) $ (2,193) $ (1,357)
========== ===========
Basic and Diluted Earnings
Per Common Share (0.0012) (0.0008)
---------- -----------
Weighted Average number of
Common Shares used in per
calculations 1,800,000 1,800,000
========== ===========
The accompanying notes are integral part of the consolidated
financial statements.
4
HerbalOrganics.com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
As of June 30, 2003
Accumulated
Deficit During
$0.001 Paid-In Development Stockholders'
Shares Par Value Capital Period Equity
--------- -------- -------- ---------- ------------
Balance, April 16, 1999 - $ - $ - $ - $ -
Issuance of common stock 1,000,000 1,000 2,000 - 3,000
Net Income (Loss) - -
--------- -------- -------- ---------- ----------
Balance,December 31,1999 1,000,000 1,000 2,000 - 3,000
Net Income (Loss) (2,463) (2,463)
--------- -------- -------- ---------- ----------
Balance,December 31,2000 1,000,000 1,000 2,000 (2,463) 537
--------- -------- -------- ---------- ----------
Issuance of common stock 800,000 800 36,200 - 37,000
Net Income (Loss) (11,165) (11,165)
--------- -------- -------- ---------- ----------
Balance,December 31,2001 1,800,000 1,800 38,200 (13,628) 26,372
========= ======== ======== ========== ==========
Net Income (Loss) (10,341) (10,341)
--------- -------- -------- ---------- ----------
Balance,December 31,2002 1,800,000 1,800 38,200 (23,969) 16,031
========= ======== ======== ========== ==========
Net Income (Loss) (2,624) (2,624)
--------- -------- -------- ---------- ----------
Balance,March 31,2003 1,800,000 1,800 38,200 (26,593) 13,407
========= ======== ======== ========== ==========
Net Income (Loss) (2,193) (2,193)
--------- -------- -------- ---------- ----------
Balance, June 30, 2003 1,800,000 1,800 38,200 (28,786) 11,214
========= ======== ======== ========== ==========
The accompanying notes are integral part of the consolidated
financial statements.
5
HerbalOrganics.com, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
------------------------------
For the Six Months Ended
June 30
------------------------------
2003 2002
============= =============
Cash Flows from Operating Activities:
- -------------------------------------
Net Income (Loss) $ (4,817) $ (3,920)
Adjustments to reconcile net
loss to net cash provided(used)
to operating activities:
Increase(Decrease)in
Accounts Payable 100 (595)
--------- ----------
Total Adjustments 100 (595)
--------- ----------
Net Cash Used in
Operating Activities $ (4,717) $ (4,515)
Cash Flows from Financing Activities:
- -------------------------------------
Payments on Stockholder Advance - -
Proceeds from Issuance of Stock - -
Costs Incurred to Raise Capital - -
--------- ----------
Net Cash Provided for
Financing Activities $ - $ -
--------- ----------
Net Increase(Decrease)in Cash $ (4,717) $ (4,515)
Cash Balance, Begin Period 16,631 27,067
--------- ----------
Cash Balance, End Period $ 11,914 $ 23,552
========= ==========
Supplemental Disclosures:
Cash Paid for interest $ - $ -
Cash Paid for income taxes $ - $ -
Stock Issued for Option to Purchase - -
Stock Issued for Repayment of Shareholder - -
The accompanying notes are integral part of the consolidated
financial statements.
6
HerbalOrganics.com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
- -----------------------------------------------------
Organization
- ------------
The Company was organized April 16, 1999, under the laws of the State of
Nevada as Terlingua Industries, Ltd. It was formed to engage in the
marketing and distribution of organic herbal supplements in an international
market. The Company is in the development stage as its operations
principally involve research and development, market analysis, and other
business planning activities, and no revenue has been generated from its
business activities. In January 2000 the Company changed its name to
HerbalOrganics.com, Inc. The company has a total of 25,000,000 authorized
common shares with a par value of $.001 per share and with 1,800,000 common
shares issued and outstanding as of June 30, 2003 and December 31, 2002.
The company has a total of 10,000,000 authorized preferred shares with a
par value of $.01 per share no shares are outstanding as of June 30, 2003
and December 31, 2002.
These financial statements have been prepared assuming that the Company
will continue as a going concern. The Company is currently in
the development stage, and existing cash and available credit are
insufficient to fund the Company's cash flow needs for the next year.
The officers and directors have committed to advancing the operating
costs of the Company interest free.
Development Stage Enterprise
- ----------------------------
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned
principal operations have not commenced, and, accordingly, no revenue has
been derived during the organizational period.
Fixed Assets
- ------------
The Company has no fixed assets at this time.
Federal Income Tax
- ------------------
The Company has adopted the provisions of Financial Accounting Standards
Board Statement No. 109, Accounting for Income Taxes. The Company accounts
for income taxes pursuant to the provisions of the Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes", which
requires an asset and liability approach to calculating deferred income
taxes. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and
the tax basis of assets and liabilities.
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 on 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.
7
HerbalOrganics.com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (cont'd)
- --------------------------------------------------------------
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method
of accounting. Revenues are recognized when earned and expenses when
incurred. Fixed assets are stated at cost. Depreciation and amortization
using the straight-line method for financial reporting purposes and
accelerated methods for income tax purposes.
Earnings per Common Share
- -------------------------
The Company adopted Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share," which simplifies the computation of earnings per share
requiring the restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive
securities having an anti-dilutive effect on diluted earnings per share are
excluded from the calculation.
Comprehensive Income
- --------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except
those resulting from investments by owners and distributions to owners.
Among other disclosures, SFAS No.130 requires that all items that are
required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The
Company does not have any assets requiring disclosure of comprehensive
income.
Segments of an Enterprise and Related Information
- -------------------------------------------------
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures
about Segments of an Enterprise and Related Information, supersedes SFAS
No. 14, "Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards
for disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of a company
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. The Company has evaluated this
SFAS and does not believe it is applicable at this time.
8
HerbalOrganics.com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (cont'd)
- --------------------------------------------------------------
Recent Accounting Pronouncements
- --------------------------------
In June 2001, the FASB issued SFAS No. 143, "Accounting for
Asset Retirement Obligations". SFAS No. 143 addresses financial
accounting and reporting for obligations associated with the retirement
of tangible long-lived assets and the associated asset retirement costs.
SFAS No. 143 is effective for fiscal years beginning after June 15,
2002. The Company does not expect that there will be a material
impact from the adoption of SFAS No. 143 on its financial position,
results of operations, or cash flows.
In August 2001, the FASB issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. It supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed
Of", and the accounting and reporting provisions of Accounting Principles
Board Statement("APB") 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business. The
Company is required to adopt SFAS No. 144 on October 1, 2002. The
Company does not expect that the adoption of SFAS No. 144 will have a
material effect on its financial position, results of operations or
cash flows.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4,44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". SFAS No. 145 requires the classification of gains and
losses from extinguishments of debt as extraordinary items only if they
meet certain criteria for such classification in APB No. 30, "Reporting the
Results of Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual, and Infrequently Occurring Events and
Transactions". Any gain or loss on extinguishments of debt classified as an
extraordinary item in prior periods that does not meet the criteria must be
reclassified to other income or expense. These provisions are effective for
fiscal years beginning after May 15, 2002. Additionally, SFAS No.145
requires sale-leaseback accounting for certain lease modifications that have
economic effects similar to sale-leaseback transactions. These lease
provisions are effective for transactions occurring after May 15, 2002.
The Company does not expect the adoption of SFAS No. 145 to have a material
effect on its financial position, results of operations or cash flows.
In July 2002, the FASB issued SFAS No. 146 , "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS No. 146 replaces "Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)". SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity.
SFAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company does not expect the adoption
of SFAS No. 146 to have a material effect on its financial position, results
of operations or cash flows.
9
HerbalOrganics.com, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (cont'd)
- --------------------------------------------------------------
Fair Value of Financial Instruments
- -----------------------------------
The Financial Accounting Standards Board ("FASB") Statement No. 107.
"Disclosure About Fair Value of Financial Instruments" is a part of a
continuing process by the FASB to improve information on financial
statements. The carrying amounts reported in the balance sheets for the
Company's assets and liabilities approximate their fair values as of
June 30, 2003 and December 31, 2002.
Note 2 - Common Stock
- -----------------------
In April 1999, the President of the Company acquired 1,000,000 shares of
the Company's common stock for $3,000 in cash. In January 2001, a further
800,000 shares of the Company's common stock were sold to unrelated parties
for $40,000, less $3,000 in issue costs.
At June 30, 2003 and December 31, 2002 the Company had 1,800,000
Common shares issued and outstanding.
At June 30, 2003 and December 31, 2002 the Company had no Preferred
shares issued and outstanding.
Note 3 - Organization Costs
- ---------------------------
The Company has incurred legal, accounting, and other formation costs.
These costs were expenses as incurred.
Note 4 - Related Parties
- --------------------------
At June 30, 2003 and December 31, 2002, the Officer has advanced the
Company advanced a total of $100 to the Company which was used to pay
general operating expenses.
Note 5 - Subsequent Events
- ----------------------------
There were no other material subsequent events that have occurred since
the balance sheet date that warrants disclosure in these financial
statements.
10
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A) The following exhibits marked with an asterisk and required to be
filed herein are incorporated by reference and can be found in their
entirety in Registrant's original Form 10SB registration statement,
filed on February 13, 2002, under SEC File Number 0-49628:
<s> <c>
Exhibit No. Description
- - ---------- -----------
* 3(i) Articles of Incorporation
* 3(ii) Bylaws
99 Sec. 906 Certification
B) There were no reports on Form 8-K filed during the quarter.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf the undersigned thereunto duly authorized.
HerbalOrganics.com,
a Nevada corporation (Registrant)
Dated: August 10, 2003 /s/ Thomas C. Whalen, President,
CEO, Secretary, Treasurer, CFO and
Chairman of the Board of Directors
CERTIFICATION PURSUANT TO SECTION 302 OF THE ACT
------------------------------------------------
I, Thomas C. Whalen hereby certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Herbal
Organics.com
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.
11
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 HerbalOrganics.com as of, and for, the
periods presented in this quarterly report.
4. As the sole officer and director of HerbalOrganics.com, I am
solely responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for HerbalOrganics.com and have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to HerbalOrganics.com
including its consolidated subsidiaries, if any,
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 Herbal Organic'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 our
auditors:
(a) that there were no significant deficiencies in the design
or operation of internal controls which could adversely affect
our ability to record, process, summarize and report financial
data and have advised there are no material weaknesses in
internal controls; and
(b) that there is no fraud that involves management or other
employees who have a significant role in our internal
controls.
6. I have indicated in this quarterly report that there were no
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.
August 10, 2003 /s/ Thomas C. Whalen
----------------------------------------
Thomas C. Whalen, Chief Executive Officer,
President, Treasurer, Chief Financial
Officer, Secretary, and Chairman of
the Board of Directors
12