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 June 30, 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 August 10th, 2006 - 29,279,742
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
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 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
Item 3. Controls and Procedures
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
June 30, December 31,
2006 2005
----------- ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 158,410 $ 369,664
Accounts receivable, net 85,671 26,354
Other current assets 20,359 51,944
----------- -----------
Total Current Assets 264,440 447,962
----------- -----------
PROPERTY AND EQUIPMENT - NET 98,737 90,152
----------- -----------
GOODWILL 1,325,610 1,325,610
----------- -----------
TOTAL ASSETS $ 1,688,787 $ 1,863,724
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 230,018 $ 377,471
Notes payable 450,000 --
----------- -----------
Total Current Liabilities 680,018 377,471
----------- -----------
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, 29,279,742 and 28,896,994 issued
and outstanding, respectively 29,280 28,897
Additional paid-in capital 2,834,129 2,682,012
Accumulated deficit (2,065,010) (1,405,601)
Foreign currency translation adjustment 210,320 180,895
----------- -----------
Total Stockholders' Equity 1,008,769 1,486,253
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,688,787 $ 1,863,724
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
IFSA STRONGMAN, INC.
(formerly Synerteck Incorporated)
Statements of Operations
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
SALES $ 150,936 $ 331,388 $ 183,179 $ 649,235
COST OF SALES 84,340 288,478 100,734 539,594
------------ ------------ ------------ ------------
GROSS MARGIN 66,596 42,910 82,445 109,641
------------ ------------ ------------ ------------
OPERATING EXPENSES
Salaries and benefits 188,728 358,908 319,437 704,312
Selling, general and administrative 48,059 235,213 126,622 344,392
Professional fees 117,172 72,702 284,856 127,900
------------ ------------ ------------ ------------
Total Operating Expenses 353,959 666,823 730,914 1,176,603
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (287,363) (623,913) (648,469) (1,066,962)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES)
Interest income 798 -- 910 --
Gain (loss) on foreign currency transactions 939 5,418 (161) 6,784
Interest expense (11,689) (1,604) (11,689) (1,644)
------------ ------------ ------------ ------------
Total Other Income (Expenses) (9,952) 3,814 (10,940) 5,140
------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAXES (297,315) (620,099) (659,409) (1,061,822)
INCOME TAX EXPENSE -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (297,315) $ (620,099) $ (659,409) $ (1,061,822)
============ ============ ============ ============
BASIC AND DILUTED:
Net loss per common share $ (0.01) $ (0.06) $ (0.02) $ (0.10)
============ ============ ============ ============
Weighted average shares outstanding 29,157,319 11,222,267 29,027,156 11,054,446
============ ============ ============ ============
OTHER COMPREHENSIVE INCOME
NET LOSS $ (297,315) $ (620,099) $ (659,409) $ (1,061,822)
Foreign currency translation adjustment 210,320 (23,378) (29,425) (23,378)
------------ ------------ ------------ ------------
COMPREHENSIVE LOSS $ (86,995) $ (643,477) $ (688,834) $ (1,085,200)
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
3
IFSA STRONGMAN LIMITED
Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
---------------------------
2006 2005
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (659,409) $(1,061,822)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense 6,665 1,060
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (59,317) 201,455
Decrease in due from related parties -- 4,975
(Increase) decrease in other assets 31,584 (21,673)
Increase (decrease) in accounts payable and accrued expenses (94,951) 352,229
----------- -----------
Net Cash Used in Operating Activities (775,428) (523,776)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (15,250) (128,508)
----------- -----------
Net Cash Used by Investing Activities (15,250) (128,508)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 450,000 --
Proceeds from issuance of stock 100,000 470,096
----------- -----------
Net Cash Provided by Financing Activities $ 550,000 $ 470,096
----------- -----------
EFFECT OF FOREIGN CURRENCY TRANSLATION ADJUSTMENT 29,425 23,378
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (211,254) $ (158,810)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 369,664 337,852
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 158,410 $ 179,042
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Interest $ -- $ --
Income taxes $ -- $ --
The accompanying notes are an integral part of these financial statements.
4
IFSA STRONGMAN, INC.
Notes to the Financial Statements
June 30, 2006
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 and six months ended
June 30, 2006 are not necessarily indicative of the results to be
expected for the year ending December 31, 2006.
NOTE 2 - FINANCING ACTIVITIES
During the six months ended June 30, 2006, the Company issued
250,000 shares of common stock for $100,000 cash.
During the six months ended June 30, 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 $2,000,000 from inception of the
Company through June 30, 2006, 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 periods ended June 30, 2006 and 2005. These
results are in no way indicative of expected future operations.
Revenues. The Company generated net revenues of $150,936 during the three
months ended June 30, 2006, which represents a 54% decrease compared to $331,388
in net revenues during the second quarter of 2005. For the six month period
ended June 30, 2006, net revenues were $183,179, representing a 72% decrease
compared to $649,235 in net revenues during the first six months of 2005. This
was mainly due to this year policy of refraining to organize non-strategic
loss-making events such as the Arnold's Classic. An increase in activity is
expected in the second half as the World Championships and other strategic
events take place.
Cost of Sales. Cost of sales for the three months ended June 30, 2006 were
$84,340, representing a 71% decrease from $288,478 during the second quarter of
2005. For the six month period ended June 30, 2006, cost of sales was $100,734,
representing a 81% decrease from $539,594 during the first six months of 2005.
This decrease corresponds with the decrease in revenues for the same period. The
change is mainly due to the decrease on loss-making activities described above.
Salaries and Benefits. Salaries and benefits expense for the three months
ended June 30, 2006 were $188,728, representing a 47% decrease compared to
$358,908 for the second quarter of 2005. For the six month period ended June 30,
2006, salaries and benefits were $319,437, representing a 55% decrease from
$704,312 during the first six months of 2005. 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 June 30, 2006 were $48,059, representing a 80% decrease
compared to $235,213 during the second quarter of 2005. For the six month period
ended June 30, 2006, selling, general and administrative expenses were $126,622,
representing a 63% decrease from $344,392 during the first six months of 2005.
This decrease was primarily due to the efforts of the Company 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 June 30,
2006 were $117,172, representing a 61% increase compared to $72,702 during the
second quarter of 2005. For the six month period ended June 30, 2006,
professional fees were $284,856, representing a 123% increase from $127,900
during the first six months of 2005. This increase is the result of legal,
accounting and audit fees associated with the filings required by the Securities
and Exchange Commission.
Other Income (Expense). The Company incurred net other expenses of $10,940
for the six months ended June 30, 2006 compared to net other income of $5,140
during the first six months of 2005. The change is mainly the result of interest
expense on notes payable which were issued during the first quarter of 2006.
Liquidity and Capital Resources
As of June 30, 2006, the Company's primary source of liquidity consisted
of $158,410 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
None.
Item 6. Exhibits
Exhibit
Number Description of Exhibit
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 (incorporated by reference to the exhibits to
Registrants Form 10-QSB filed on May 15, 2005).
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-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