UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2006
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
Commission File Number: 000-50754
IFSA STRONGMAN, INC.
--------------------
(Name of small business issuer in its charter)
- --------------------------------------- ---------------------------------------
Delaware 20-0929024
- --------------------------------------- ---------------------------------------
State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization
- --------------------------------------- ---------------------------------------
28-32 Wellington Road
London, NW8 9SP, United Kingdom
(Address of principal executive office)
Issuer's telephone number: +44 20 7060 4372
----------------
N/A
(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 [_]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 15, 2006 - 29,146,994
shares of common stock
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
Transitional Small Business Disclosure Format (check one): Yes[_] No [X]
IFSA STRONGMAN, INC.
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of March 31, 2006 (unaudited) 2
Statements of Operations (unaudited) 3
Statements of Cash Flows (unaudited) 4
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis or Plan of Operations 6
Item 3. Controls and Procedures 7
PART II. OTHER INFORMATION 8
Item 1. Legal Proceedings 8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits 8
SIGNATURES 9
1
IFSA STRONGMAN, INC.
(formerly Synerteck Incorporated)
Balance Sheets
ASSETS
------
March 31, December 31,
2006 2005
----------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 484,183 $ 369,664
Accounts receivable, net 36,306 26,354
Other current assets 4,318 51,944
----------- -------------
Total Current Assets 524,807 447,962
----------- -------------
PROPERTY AND EQUIPMENT - NET 87,886 90,152
----------- -------------
GOODWILL 1,325,610 1,325,610
----------- -------------
TOTAL ASSETS $ 1,938,304 $ 1,863,724
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 253,320 $ 377,471
Notes payable 450,000 --
----------- -------------
Total Current Liabilities 703,320 377,471
----------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares
authorized, 50,000 issued and outstanding 50 50
Common stock, $0.001 par value; 100,000,000 shares
authorized, 29,146,994 and 28,896,994 issued
and outstanding, respectively 29,147 28,897
Additional paid-in capital 2,781,762 2,682,012
Accumulated deficit (1,767,695) (1,405,601)
Foreign currency translation adjustment 191,719 180,895
----------- -------------
Total Stockholders' Equity 1,234,983 1,486,253
----------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,938,304 $ 1,863,724
=========== =============
2
IFSA STRONGMAN, INC.
(formerly Synerteck Incorporated)
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
----------------------------
2006 2005
------------ ------------
SALES $ 32,243 $ 317,847
COST OF SALES 16,394 251,116
------------ ------------
GROSS MARGIN 15,849 66,731
------------ ------------
OPERATING EXPENSES
Salaries and benefits 130,708 345,404
Selling, general and administrative 78,563 109,179
Professional fees 167,684 55,198
------------ ------------
Total Operating Expenses 376,956 509,781
------------ ------------
LOSS FROM OPERATIONS (361,106) (443,050)
------------ ------------
OTHER INCOME (EXPENSES)
Interest income 112 --
Gain (loss) on foreign currency
transactions (1,100) 1,366
Interest expense -- (40)
------------ ------------
Total Other Income (Expenses) (988) 1,326
------------ ------------
LOSS BEFORE INCOME TAXES (362,094) (441,723)
INCOME TAX EXPENSE -- --
------------ ------------
NET LOSS $ (362,094) $ (441,723)
============ ============
BASIC AND DILUTED:
Net loss per common share $ (0.01) $ (0.04)
============ ============
Weighted average shares outstanding 28,990,786 10,886,625
============ ============
OTHER COMPREHENSIVE INCOME
NET LOSS $ (362,094) $ (441,723)
Foreign currency translation adjustment (10,824) (23,378)
------------ ------------
COMPREHENSIVE LOSS $ (372,919) $ (465,101)
============ ============
3
IFSA STRONGMAN LIMITED
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
----------------------
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(362,094) $(441,723)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense 5,840 530
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (9,952) 67,708
Increase in due from related parties -- 54,837
(Increase) decrease in other assets 47,625 (12,570)
Increase (decrease) in accounts payable and
accrued expenses (124,150) 325,239
--------- ---------
Net Cash Used in Operating Activities (442,731) (5,979)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,574) (5,302)
--------- ---------
Net Cash Used by Investing Activities (3,574) (5,302)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 450,000
Proceeds from issuance of stock 100,000 --
--------- ---------
Net Cash Provided by Financing Activities $ 550,000 $ --
--------- ---------
EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT 10,824 23,378
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 114,519 $ 12,097
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 369,664 337,852
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 484,183 $ 349,949
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Interest $ -- $ --
Income taxes $ -- $ --
4
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company 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 U.S.
generally accepted accounting principles have been condensed or omitted in
accordance with such rules and regulations. The information furnished in
the interim consolidated financial statements include normal recurring
adjustments and reflects all adjustments, which, in the opinion of
management, are necessary for a fair presentation of such financial
statements. Although management believes the disclosures and information
presented are adequate to make the information not misleading, it is
suggested that these interim consolidated financial statements be read in
conjunction with the Company's audited financial statements and notes
thereto included in its Form 10KSB filed on March 30, 2006. Operating
results for the three months ended March 31, 2006 are not necessarily
indicative of the results to be expected for the year ending December 31,
2006.
NOTE 2 - FINANCING ACTIVITIES
During the quarter ended March 31, 2006, the Company issued 250,000 shares
of common stock for $100,000 cash.
During the quarter ended March 31, 2006, the Company issued convertible
notes payable for $450,000 cash. The note matures in six months and
carries 16% annual interest.
NOTE 3 - GOING CONCERN CONSIDERATIONS
The accompanying consolidated financial statements have been prepared
using 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. As reported in the
consolidated financial statements, the Company has incurred losses of
approximately $1,400,000 from inception of the Company through December
31, 2005, has negative cash flows from operations, and has a limited
operating history. These factors combined, raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
to address and alleviate these concerns are as follows:
The Company's management continues to develop a strategy of exploring all
options available to it so that it can develop successful operations and
have sufficient funds to be able to operate over the next twelve months.
As a part of this plan, management is currently in negotiations with their
target industries' key players to develop additional business
opportunities. In addition, management is exploring options in order to
raise additional operating capital through debt and/or equity financing.
No assurance can be given that funds will be available, or, if available,
that it will be on terms deemed satisfactory to management.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plans described in the
preceding paragraph and eventually attain profitable operations. The
accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that
might result from the outcome of these uncertainties.
5
Item 2. Management's Discussion and Analysis or Plan of Operations
Forward-Looking Statements
The information in this report contains forward-looking statements. All
statements other than statements of historical fact made in this report are
forward looking. In particular, the statements herein regarding industry
prospects and future results of operations or financial position are
forward-looking statements. These forward-looking statements can be identified
by the use of words such as "believes," "estimates," "could," "possibly,"
"probably," anticipates," "projects," "expects," "may," "will," or "should" or
other variations or similar words. No assurances can be given that the future
results anticipated by the forward-looking statements will be achieved.
Forward-looking statements reflect management's current expectations and are
inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction with
our financial statements, included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management.
Corporate History
On December 9, 2005, Synerteck Incorporated consummated a Share Exchange
Agreement with IFSA Strongman Ltd. whereby all of the shareholders in IFSA
Strongman Ltd. had their shares converted into 20,000,000 shares of Synerteck.
On December 28, 2005, to effect a name change, Synerteck executed a merger
document with its wholly owned subsidiary IFSA Strongman, Inc., a newly formed
Delaware corporation. This effectively changed the registrant's name from
Synerteck Incorporated to IFSA Strongman, Inc.
Overview
We are an integrated media, entertainment and athlete representation
company, principally engaged in the development, production and marketing of
television programs, live events and the licensing and sale of branded consumer
products. The content of our entertainment and consumer products is centered on
the various strongman competitions and events world-wide.
Results of Operations
Following is management's discussion of the relevant items affecting
results of operations for the quarters ended March 31, 2006 and 2005. These
results are in no way indicative of expected future operations.
Revenues. The Company generated net revenues of $32,243 during the three
months ended March 31, 2006, which represents a 90% decrease compared to
$317,847 in net revenues during the first quarter of 2005. This decrease was
mainly due to not organizing the Arnold's Classic event in 2006 which had been a
losing effort in the past. The Classic alone constituted over $220,000 in
revenue during the first quarter of 2005.
Cost of Sales. Cost of sales for the three months ended March 31, 2006
were $16.394, a 93% decrease from $251,116 during the first quarter of 2005.
This decrease corresponds with the decrease in revenues for the same period. As
discussed above, the Arnold's Classic event was not held in 2006 and the cost of
sales for this event was over $220,000 in 2005.
Salaries and Benefits. Salaries and benefits expense for the three months
ended March 31, 2006 were $130,708, a 62% decrease compared to $345,404 for the
first quarter of 2005. This decrease was primarily due to renegotiation of
contracts with the top athletes. In 2005, fixed payments to athletes amounted to
approximately $68,000 per month. In 2006, payments to athletes are fully
dependent on performance and are included in cost of sales.
6
Selling, General and Administrative Expenses. Our selling, general and
administrative expenses have been comprised of administrative wages and
benefits; occupancy and office expenses; travel and other miscellaneous office
and administrative expenses. Selling, general and administrative expenses for
the three months ended March 31, 2006 were $78,563, a 28% decrease compared to
$109,179 during the first quarter of 2005. This decrease was primarily due to a
meeting of the top athletes in London in 2005 as well as extra administrative
and travel costs associated with the Arnold's Classic. Both of these events
contributed to the higher expenses in 2005 but the expenses were not incurred in
2006. The Company endeavors to cut or optimize any unnecessary costs associated
with contract labor, and rent and occupancy-related expenses. However, as the
business grows, these expenses will increase.
Professional Fees. Professional fees for the three months ended March 31,
2006 were $167,684, a 204% increase compared to $55,198 during the first quarter
of 2005. This increase is the result of accounting and legal fees associated
with the audit of the financial statements and filings with the Securities and
Exchange Commission. Furthermore, the combination of Synerteck and IFSA required
increased professional services in accounting, legal and outside consultants.
Other Income (Expense). The Company incurred net other expenses of $988
for the three months ended March 31, 2006 compared to net other income of $1,326
during the first quarter of 2005. The change is mainly the result of gains and
losses on foreign currency transactions.
Liquidity and Capital Resources
As of March 31, 2006, the Company's primary source of liquidity consisted
of $484,183 in cash and cash equivalents. The Company holds most of its cash
reserves in local sweep accounts with local financial institutions. Since
inception, the Company has financed its operations through a combination of
short and long-term loans, and through the private placement of its Common
Stock.
Off-Balance Sheet Arrangements
IFSA Strongman is not subject to any off-balance sheet arrangements.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to
make judgments, estimates, and assumptions that affect the reported amounts of
assets, liabilities, revenue and expenses, and related disclosure of contingent
assets and liabilities. An accounting policy is considered to be critical if it
requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimate is made, and if different
estimates that reasonably could have been used, or changes in the accounting
estimates that are reasonably likely to occur periodically, could materially
impact the financial statements.
Because of our limited level of operations, we have not had to make
material assumptions or estimates other than our assumption that we are a going
concern. If our business increases, our principal estimates will involve whether
engagements in process will be profitable.
Item 3. Controls and Procedures
As of the end of the period covered by this report, we conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and principal financial officer of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon this evaluation, our chief executive officer and principal
financial officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms. There was no change in our internal controls or in other
factors that could affect these controls during our last fiscal year that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On March 21, 2006, the Company issued a convertible loan note ("the Note")
to Pacemaker Fund, LLC, for the principle amount of $500,000. The Note matures
in six months, and carries sixteen percent annual interest. The Note converts
into equity in all circumstances where the Company is unable to redeem it in
cash at an expected price of $0.40 or more per share. As part of the transaction
that resulted in the issuance of the Note, the Company also issued options to
Pacemaker Fund, LLC to acquire 50,000 newly issued shares in the Company at any
time during the five years following the date of the Note for a price of $0.40
per share.
Item 6. Exhibits
Exhibit Description of Exhibit
Number
3.1 Registrant's Certificate of Incorporation (incorporated by reference
to the exhibits to Registrants Form 10-SB filed on September 15,
2004).
3.2 Certificate of Ownership of Synerteck Incroporated and IFSA
Strongman, Inc. (incorporated by reference to the exhibits to
Registrants Form 8-K filed on December 28, 2005).
3.3 Registrant's By-Laws (incorporated by reference to the exhibits to
Registrants Form 10-SB filed on September 15, 2004).
10.1 Share Exchange Agreement by and among Synerteck Incorporated, and
IFSA Strongman Ltd. and the shareholders of IFSA Strongman Ltd.
(incorporated by reference to the exhibits to Registrants Form 8-K
filed on December 15, 2005).
10.2 $500,000 Convertible Loan Note, dated March 21, 2006, issued to
Pacemaker Fund, LLC 31.1 Certification of Principal Executive Officer
pursuant to Rule 3a-14 and Rule 15d-14(a), promulgated under the
Securities and Exchange Act of 1934, as amended
31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14
and Rule 15d 14(a), promulgated under the Securities and Exchange Act
of 1934, as amended
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer)
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer)
8
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
IFSA STRONGMAN, INC.
By: /s/ Jussi Laurimaa
--------------------------------------------
Jussi Laurimaa
Chief Executive Officer (Principal Executive
Officer)
By: /s/ Jaime Alvarez
--------------------------------------------
Jaime Alvarez
Chief Financial Officer
(Principal Financial and Accounting Officer)
9