UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to __________
Commission File Number 0-26285
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AGE RESEARCH, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 87-0419387
- ------------------------------ ------------------------
State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
31103 Rancho Viejo Road, #2102, San Juan Capistrano, CA 92675
- ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (800) 597-1970
---------------
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
- ------------------ -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
Common Stock, par value $0.001
- ------------------------------
(Title of class)
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. (1) Yes [X] No [ ] (2)
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $7,894
1
State the aggregate market value of the voting stock held by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within
the past 60 days:
The market value of shares held by nonaffiliates is $531,075 based on
the bid price of $0.01 per share at March 19, 2003.
As of March 19, 2003, the Company had 68,759,301 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the form 10-KSB (e.g., part I, part II, etc.) into which the
document is incorporated: (1) Any annual report to security holders; (2) Any
proxy or other information statement; and (3) Any prospectus filed pursuant to
rule 424(b) or (c) under the Securities Act of 1933: NONE
2
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 1. DESCRIPTION OF BUSINESS
Since December 1987, the Company has marketed its RejuvenAge products to
physicians practicing skin therapy medical specialities. The RejuvenAge products
are non-prescription skin care products that do not contain Retin-A or any other
precription drug. In addition to the RejuvenAge products, the Registrant sells a
proprietary moisturizing shaving cream for sensitive or irritated beard
conditions called Bladium.
The Company owns the formulations for both the RejuvenAge and Bladium products.
The products are manufactured by independent contractors. In order to increase
its profitability and reduce expenses, in fiscal 1998 the Company reduced its
office expenses to a minimum and eliminated its advertising and salary expenses.
ITEM 2. DESCRIPTION OF PROPERTIES
None. The Company vacated its warehouse facility in May 2000. The remaining
minimal inventory is stored at the president's house.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company during the
fourth quarter of the fiscal year ended December 31, 2002.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The table below sets forth, for the respective periods indicated, the prices for
the Company's common stock in the over-the-counter market as reported by the
NASD's OTC Bulletin Board. The Company's common stock was cleared for quotations
on the OTCBB in January 2000 under the symbol "AGER". The bid prices represent
inter-dealer quotations, without adjustments for retail mark-ups, mark-downs or
commissions and may not necessarily represent actual transactions.
High Bid Low Bid
-------- -------
Fiscal Year Ended December 31, 2002
- -----------------------------------
First, Second, Third and Fourth Quarter .05 .00
Fiscal Year Ended December 31, 2001
- -----------------------------------
First, Second, Third, and Fourth Quarter .08 .03
Fiscal Year Ended December 31, 2000
- -----------------------------------
First, Second, Third, and Fourth Quarter .06 .03
At March 19, 2003, the bid and ask price for Company's Common Stock as quoted on
the OTC Bulletin Board was $0.01 and $0.01, respectively.
3
Since its inception, the Company has not paid any dividends on its Common Stock,
and the Company does not anticipate that it will pay dividends in the
foreseeable future. At March 19, 2003, the Company had approximately 275
shareholders of record based on information provided by the Company's transfer
agent.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
- ---------------------
Year ended December 31, 2001 Compared to December 31, 2000
- ----------------------------------------------------------
Revenues and Costs of Sales. For the fiscal year ended December 31, 2002, the
Company had sales of $7,894, with cost of goods sold of $1,211. For the fiscal
year ended December 31, 2001, the Company had sales of $8,277, with cost of
goods sold of $1,146. Selling, general and administrative expenses for 2002 were
$17,059, compared to selling, general and administrative expenses for 2001 of
$16,400. Management believes that for the Company to have any significant
increase in sales volume the Company will require substantial expenditures in
advertising. The expenses in 2002 and 2001 are primarily attributable to the
preparation and filing of periodic reports under Section 13 and/or 15(d) of the
Exchange Act. The slightly higher expenses in 2002 were attributed primarily to
higher accounting and legal expenses. The net loss from operations for 2002 was
$10,375 compared to net loss from operations for 2001 of $9,269.
Liquidity and Capital Resources
- -------------------------------
Historically, the Company has financed its operations through a combination of
cash flow derived from operations and debt and equity financing. At December 31,
2002, the Company had a working capital deficit of $15,867 based on current
assets of $1,062 consisting of cash $310, and accounts receivable of $752, and
current liabilities $16,929, consisting of accounts payable and accrued expenses
of $8,429 and officers' loan of $8,500.
Based on its current marketing program and sales, it is clear that the Company
will have to increase its sales volume significantly in order to have profitable
operations. At this time, however, the Company does not have any working capital
to expand its marketing efforts.
The Company proposes to finance its needs for additional working capital through
some combination of debt and equity financing. Given its current financial
condition, it is unlikely that the Company could make a public sale of
securities or be able to borrow any significant sum from either a commercial or
private lender. The most likely method available to the Company would be the
private sale of its securities. There can be no assurance that the Company will
be able to obtain such additional funding as needed, or that such funding, if
available, can be obtained on terms acceptable to the Company.
4
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth immediately following the
signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public accountants with
respect to accounting practices or procedures or financial disclosure.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The names of the Company's executive officers and directors and the positions
held by each of them are set forth below:
Name Position
- ---- --------
Richard F. Holt President and Director
Wendy E. Holt Vice President and Director
The term of office of each director is one year and until his or her successor
is elected at the Company's annual shareholders' meeting and is qualified,
subject to removal by the shareholders. The term of office for each officer is
for one year and until a successor is elected at the annual meeting of the board
of directors and is qualified, subject to removal by the board of directors.
Biographical Information
- ------------------------
Set forth below is certain biographical information with respect to each of the
Company's officers and directors.
Richard F. Holt, age 62, has been president and director of the Company since
August 1995. In 1963, Mr. Holt graduated from Stanford University with a
Bachelor of Science degree. Mr. Holt earned an MBA from UCLA School of Business
in 1968. From 1969 to 1985, Mr. Holt was the CEO of Modulearn, Inc., and Micro
General, Inc. From 1985 until 1995, when he became president of the Company, Mr.
Holt worked independently as an investor.
Wendy E. Holt, age 30, was appointed vice-president and director of the Company
in April 2000. Ms. Holt is a graduate of UCLA (1995) with degrees in business
and history. For the past six years she has worked for Tricon Food Services as a
creator and implementor of internet functions in the Human Resources department.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- -------------------------------------------------
The Company believes that under the SEC's rules for reporting of securities
transactions by directors and executive officers, all required reports have been
timely filed.
5
ITEM 10. EXECUTIVE COMPENSATION
The Company has not had a bonus, profit sharing, or deferred compensation plan
for the benefit of its employees, officers or directors. Except as noted below,
the Company has not paid any salaries or other compensation to its officers,
directors or employees for the years ended December 31, 2002, 2001 and 2009, nor
at any time during 2002, 2001 or 2000. Further, the Company has not entered into
an employment agreement with any of its officers, directors or any other persons
and no such agreements are anticipated in the immediate future. It is intended
that the Company's directors may be compensated for services provided to the
Company. As of the date hereof, no person has accrued any compensation from the
Company.
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Company's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at December 31, 2002, the
end of the Company's last completed fiscal year):
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
Richard F. Holt 2002 $ -0- -0- -0- -0- -0- -0- -0-
President 2001 $ -0- -0- -0- -0- -0- -0- -0-
2000 $ -0- -0- -0- -0- -0- -0- -0-
Options/SAR Grants in Last Fiscal Year
None.
Bonuses and Deferred Compensation
None.
Compensation Pursuant to Plans
None.
Pension Table
Not Applicable.
Other Compensation
None.
6
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables sets forth the number of shares of the Company's Common
Stock, par value $0.001, held by each person who is believed to be
the beneficial owner of 5% or more of the 68,759,301 shares of the Company's
common stock outstanding at March 19, 2003, based on the Company's transfer
agent's list, and the names and number of shares held by each of the Company's
officers and directors and by all officers and directors as a group.
Title of Name and Address Amount and Nature of Percent
Class Of Beneficial Owner Beneficial Ownership of Class
- -------- ------------------- --------------------- --------
Common Mark A. Scharmann(1) 5,193,100 7.55
1661 Lakeview Circle
Ogden, UT 84403
Common Wendy E. Holt (2) 5,000,000 7.27
205 1/2 Agate Street
Balboa Island, CA 92662
Common Richard B. Holt (3) 5,400,000 7.85
24382 Antilles Way
Dana Point, CA 92629
Common Jean Armstrong 8,026,050 11.67
P.O. Box 6743
Pine MTN. Club, CA 93222
Common Eldridge D. Huntington 6,000,000 8.73
5314 Anaheim Road
Long Beach, CA 90815
Common Richard F. Holt (4) 10,651,833 15.49
1 Strawberry Lane
San Juan Capistrano, CA 92675
Officers and Directors
- ----------------------
Common Richard F. Holt, ---- see above ----
President/director
Common Wendy E. Holt (2) ---- see above ----
Vice-president/director
All Officers, Directors,
as a Group (2 Persons) 15,651,833 22.76
==================== =====
- -----------------------
(1) Includes 13,100 held of record by Troika Capital Investments, an entity
controlled by Mr. Scharmann.
(2) Wendy E. Holt is the adult daughter of Richard F. Holt.
(3) Richard B. Holt is the adult son of Richard F. Holt.
(4) Richard F. Holt's share numbers include 6,537,290 shares held in a family
trust and 50,000 shares held in a trust by his spouse.
7
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our president, Richard F. Holt, is currently making payments to purchase
inventory on behalf of the Company. As of December 31, 2002 and 2001, the
balance due him related the purchases was $1,231 and $223. The Company also has
notes payable to him in the amount of $8,500, accruing interest at 6% per annum.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a)(1)FINANCIAL STATEMENTS. The following financial statements are included in
this report:
Title of Document Page
- -----------------
Independent Auditors' Report of Harold Y. Spector,
Certified Public Accountant 12
Balance Sheet as of December 31, 2002 and 2001 13
Statements of Operations for the years ended
December 31, 2002 and 2001 14
Statements of Changes in Stockholders' Equity for the years ended
December 31, 2002 and 2001 15
Statements of Cash Flows for the years ended December 31, 2002 and 2001 16
Notes to Financial Statements 17
(a)(2)FINANCIAL STATEMENT SCHEDULES. The following financial statement schedules
are included as part of this report:
None.
(a)(3)EXHIBITS.
Exhibit 99 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(b) REPORTS ON FORM 8-K. None.
ITEM 14. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We believe our disclosure
controls and procedures (as defined in Sections 13a-14(c) and 15d-14(c) of the
Securities Exchange Act of 1934, as amended) are adequate, based on our
evaluation of such disclosure controls and procedures on March 3, 2003.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated:
8
Date: April 7, 2003 By /S/ Richard F. Holt, President,
Principal Accounting Officer, and
Director
Date: April 7, 2003 BY /S/ Wendy E. Holt, Director
9
CERTIFICATIONS
I, Richard F. Holt, certify that:
1. I have reviewed this annual report on Form 10-KSB of Age Research, Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function);
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether of not there were 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.
Date: April 7, 2003 /S/ Richard F. Holt
Principal Executive Officer
Principal Financial Officer
10
HAROLD Y. SPECTOR
Certified Public Accountant
(888)584-5577 80 S. LAKE AVENUE
FAX (626)584-6447 SUITE 723
hspectorcpa@earthlink.net PASADENA, CA 91101
- -------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and stockholders of Age Research, Inc.
I have audited the accompanying balance sheet of Age Research, Inc. (a
Delaware corporation) as of December 31, 2002, and the related statements of
operations, changes in stockholders' deficit, and cash flows for the years ended
December 31, 2002 and 2001. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with auditing standards generally
accepted in the United States. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Age Research, Inc.
as of December 31, 2002, and the results of its operations and its cash flows
for the years ended December 31, 2002 and 2001, in conformity with accounting
principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating losses raises
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 2. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Harold Y Spector, CPA
Pasadena, California
March 12, 2003
11
AGE RESEARCH, INC.
BALANCE SHEET
December 31, 2002
ASSETS
Current Assets
Cash $ 310
Accounts Receivable 752
-----------
Total Current Assets 1,062
-----------
Property and Equipment, net of
accumulated depreciation of $7,354 -
-----------
TOTAL ASSETS $ 1,062
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 8,429
Officers' Loan 8,500
-----------
Total Current Liabilities 16,929
-----------
Stockholders' Deficit
Common stock, $.001 par value, 100,000,000
shares authorized, 68,759,301 shares
issued and outstanding 68,759
Paid-in Capital 736,264
Accumulated Deficit (820,890)
-----------
(15,866)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,062
===========
See notes to financial statements.
12
AGE RESEARCH, INC.
STATEMENTS OF OPERATIONS
For the years ended December 31, 2002 and 2001
2002 2001
------------- ----------------
Sales $ 7,894 $ 8,277
Cost and Expenses
Cost of Goods Sold 1,211 1,146
Selling General and Administrative
Expenses 17,059 16,400
------------- ----------------
18,269 17,546
Operating (loss) (10,375) (9,269)
Other Income (Expense)
Interest Income 0 6
Interest Expense (458) (203)
------------- ----------------
Total Other Income (Expenses) (458) (197)
------------- ----------------
Net (loss) before taxes (10,833) (9,466)
Provision for Income Taxes 800 800
------------- ----------------
Net (loss) $ (11,633) $ (10,266)
============= ================
Net (loss) per share-Basic and Diluted $ (0.00) $ (0.00)
============= ================
Weighted Average Number of Shares 67,884,301 67,259,301
============= ================
See notes to financial statements.
13
AGE RESEARCH, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT For The Years Ended December 31,
2001 and 2000
Paid
Common in Accumulated
Shares Stock Capital Deficit Total
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2000 67,259,301 $ 67,259 $ 730,264 $ (798,990) $ (1,467)
Net (loss) (10,266) (10,266)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2001 67,259,301 67,259 730,264 (809,256) (11,733)
Issuance of stock for cash 1,500,000 1,500 6,000 7,500
Net (loss) (11,633) (11,633)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2002 68,759,301 $ 68,759 $ 736,264 $ (820,889) $ (15,866)
============ ============ ============ ============ ============
See notes to financial statements.
14
AGE RESEARCH, INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2002 and 2001
2002 2001
------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (11,633) $ (10,266)
Adjustment to reconcile net income to
net cash provided by operating
activities
Depreciation - 65
Decrease in:
Accounts Receivable 177 884
Inventory 253 923
Increase (Decrease) in:
Accounts Payable and Accrued Expenses (256) 2,341
------------- ----------------
Net cash flows (used in) Operating
activities (11,459) (6,053)
------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock 7,500 -
Proceeds from Officers' Loan 2,300 6,200
------------- ----------------
Net Cash Provided by Financing
Activities 9,800 6,200
------------- ----------------
NET INCREASE (DECREASE)IN CASH (1,659) 147
CASH AT BEGINNING OF YEAR 1,970 1,823
------------- ----------------
CASH AT END OF YEAR $ 310 $ 1,970
============= ================
Supplemental Disclosure of Cash Flow
Information:
Income Taxes Paid $ 800 $ 800
See notes to financial statements.
15
AGE RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND CRITICAL ACCOUNTING POLICIES
Nature of Business. Age Research, Inc. (the "Company') produces and sells a line
of premium skin care products to physicians and mail order. The Company has
developed its own line of dermatologist-formulated skin care products including
moisturizers, cleaners, sunscreens, and anti-aging emollients with glycolic
acid. The products are sold under the name of RejuvenAge, which is trademarked
in United States and United Kingdom, and name of Bladium, which is trademarked
in United States. The trademark in United Kingdom will be expired in September
2006.
Use of estimates. The preparation of the accompanying financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make certain estimates and assumptions that directly
affect the results of reported assets, liabilities, revenue, and expenses.
Actual results may differ from these estimates.
Revenue Recognition. The Company generally recognizes product revenue when
persuasive evidence of an arrangement exists, delivery has occurred, the fee is
fixed or determinable, and collection is probable. In instances where final
acceptance of the product is specified by the customer, revenue is deferred
until all acceptance criteria have been met. No provisions were established for
estimated product returns and allowances based on the Company's historical
experience.
Accounts Receivable. Management of the Company considers accounts receivable to
be fully collectible, accordingly, no allowance for doubtful accounts is
required. If amounts become uncollectible, they will be charged to operations
when that determination is made. Bad debt expense for years ended December 31,
2002 and 2001 was $97 and $105, respectively.
Computation of Net Income (Loss) per Share. Basic net income (loss) per share is
computed using the weighted average number of common stock outstanding during
the period. Diluted net income per share is computed using the weighted average
number of shares and dilutive potential common shares outstanding during the
period. Diluted net loss per share is computed using the weighted average number
of common shares and excludes dilutive potential common shares outstanding, as
their effect is anti-dilutive.
Other Significant Accounting Policies
Cash Equivalents. For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments with an original maturity of three
months or less to be cash equivalents.
Fair Value of Financial Instruments. The carrying amounts of the financial
instruments have been estimated by management to approximate fair value.
Inventories. Inventory consists of products already packaged and ready for
shipments to customers, and are stated at cost, using the first-in, first-out
method.
16
AGE RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND CRITICAL ACCOUNTING POLICIES (Continued)
Property and Equipment. Property and Equipment are valued at cost. Maintenance
and repair costs are charged to expenses as incurred. Depreciation is computed
on the straight-line method based on the following estimated useful lives of the
assets: 5 to 7 years for computer and office equipment, and 7 years for
furniture and fixtures. Depreciation expense was $0 and $65 for 2002 and 2001,
respectively. Property and Equipment are fully depreciated as of 12/31/01.
Income Taxes. Income tax expense is based on pretax financial accounting income.
Deferred tax assets and liabilities are recognized for the expected tax
consequences of temporary differences between the tax bases of assets and
liabilities and their reported amounts.
Shipping and Handling Costs. The Company historically has included inbound
shipping charges in cost of sales and classified outbound shipping charges as
operating expenses. For years ended December 31, 2002 and 2001, the outbound
shipping charges included as operating expenses were $747 and $830,
respectively.
Derivatives. In June 1998, Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended by SFAS No. 138,
which was issued in June 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments. The Company currently does not use
derivative financial products for hedging or speculative purposes and as a
result, does not anticipate any impact on the Company's financial statements.
New Accounting Standards:
On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition to SFAS No. 123's fair value method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure provisions of
SFAS No. 123 and APB Opinion No. 28, "Interim Financial Reporting," to require
disclosure in the summary of significant accounting policies of the effects of
an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial
statements. While SFAS No. 148 does not amend SFAS No. 123 to require companies
to account for employee stock options using the fair value method, the
disclosure provisions of SFAS No. 148 are applicable to all companies with
stock-based employee compensation, regardless of whether they account for that
compensation using the fair value method of SFAS No. 123 or the intrinsic value
method of APB Opinion 25.
In June 2002, FASB issued Statement No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." The standard 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. Previous
accounting guidance provided by EITF Issue No. 94-3, "Liability
17
AGE RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND CRITICAL ACCOUNTING POLICIES (Continued)
Recognition for Certain employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring) is replaced by
this Statement. Statement 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. Management does not anticipate
that the adoption of this Statement will have a significant effect on the
Company's financial statements.
In April 2002, FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This
Statement updates, clarifies and simplifies existing accounting pronouncements.
The provisions of this Statement related to the rescission of Statement No. 4
are to be applied for fiscal years beginning after May 15, 2002. Any gain or
loss on extinguishments of debt that was classified as an extraordinary item in
prior periods presented that does not meet the criteria in Opinion No. 30 for
classification as an extraordinary item should be reclassified. Provisions of
the Statement related to the amendment of Statement No. 13 should be applied for
transactions occurring after May 15, 2002, and all other provisions should be
applied for financial statements issued on or after May 15, 2002. Management
does not anticipate that the adoption of this Statement will have a significant
effect on the Company's financial statements.
In October 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. The Statement supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, however it retains the fundamental provisions of that statement related to
the recognition and measurement of the impairment of long-lived assets to be
"held and used." In addition, SFAS No. 144 provides more guidance on estimating
cash flows when performing a recoverability test, requires that a long-lived
asset (group) to be disposed of other than by sale (e.g., abandoned) be
classified as "held and used" until it is disposed of, and establishes more
restrictive criteria to classify an asset (group) as "held for sale." The
adoption of SFAS No. 144 did not have an impact on the Company.
NOTE 2 - GOING CONCERN
The Company's financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. As shown in the accompanying
financial statements, the Company suffered losses of $11,633 and $10,266 for
years ended December 31, 2002 and 2001, respectively, and as of December 31,
2002, the Company's current liabilities exceeded its current assets by $15,867
and its total liabilities exceeded its total assets by $15,866.
In the near term, the Company expects operating costs to continue to exceed
funds generated from operations. As a result, the Company expects to continue to
incur operating losses and may not have enough money to grow its business in the
future. The Company can give no assurance that it will achieve profitability or
be capable of sustaining profitable operations. As a result, operations in the
near future are expected to continue to use working capital.
18
AGE RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - GOING CONCERN (Continued)
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Currently the Company does not stock any inventory. Purchases are incurred and
charged through loan from an officer when products are sold to customer. In
addition, the Company has generated approximately $7,500 in additional operating
capital through sales of its common stock during August 2002.
NOTE 3 - INCOME TAXES
Provision for income tax for years ended December 31, 2002 and 2001 consisted of
$800 minimum state franchise tax each year.
As of December 31, 2002, the Company has net operating loss carryforwards,
approximately, of $654,408 to reduce future taxable income. To the extent not
utilized, the carryforwards will begin to expire through 2022. The Company's
ability to utilize its net operating loss carryforwards is uncertain and thus a
valuation reserve has been provided against the Company's net deferred tax
assets.
The deferred net tax assets consist of the following at December 31:
2002 2001
----------- -----------
Net Operating Loss Carryforwards $ 227,644 $ 218,813
Valuation Allowance (227,644) (218,813)
----------- -----------
Net deferred tax assets $ 0 $ 0
=========== ===========
NOTE 4 - NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net (loss)
per share:
2002 2001
----------- -----------
Numerator:
Net (Loss) $ (11,633) $ (10,266)
----------- -----------
Denominator:
Weighted Average Number of Shares 67,884,301 67,259,310
----------- -----------
Loss per share-Basic and Diluted $ (0.00) $ (0.00)
19
AGE RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - SEGMENT INFORMATION
SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information" requires that a publicly traded company must disclose information
about its operating segments when it presents a complete set of financial
statements. Since the Company has only one segment; accordingly, detailed
information of the reportable segment is not presented.
NOTE 6 - RELATED PARTY TRANSACTIONS
An officer is currently making payments to purchase inventory on behalf of the
Company. As of December 31, 2002 and 2001, the balance due to the officer
related the purchases was $1,231 and $223. The Company also has notes payable to
the officer in the amount of $8,500, accruing interest at 6% per annum.
20