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 Quarter Ended: June 30, 2003
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from _____________ to ____________
Commission File Number: 0-26285
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AGE RESEARCH, INC.
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(Name of Small Business Issuer in its charter)
Delaware 87-0419387
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(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
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(Address of principal executive offices and Zip Code)
(800) 597-1970
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, Par Value $0.001 81,759,301
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Title of Class Number of Shares Outstanding
as of June 30, 2003
Table of Contents
Filing Sections
Cover Page.......................................................................................................1
Part I...........................................................................................................2
Financial Statement Item.........................................................................................2
Financial Statements.............................................................................................2
Balance Sheet....................................................................................................2
Income Statement.................................................................................................3
Cashflow Statement...............................................................................................4
Financial Footnotes............................................................................................5-7
Management Discussion & Analysis.................................................................................8
Controls and Procedures..........................................................................................8
Part II..........................................................................................................9
Legal Proceedings................................................................................................9
Changes in Securities............................................................................................9
Defaults Upon Securities.........................................................................................9
Submission to a Vote.............................................................................................9
Other Information................................................................................................9
Exhibits and Reports.............................................................................................9
List of Exhibits.................................................................................................9
Signatures....................................................................................................9-11
Exhibits
Exhibits.....................................................................................................10-11
Additional Exhibits..........................................................................................10-11
ITEM 1. FINANCIAL STATEMENTS
AGE RESEARCH, INC.
BALANCE SHEET
June 30, 2003 and December 31, 2002
ASSETS June 30, 2003 December 31, 2002
(unaudited) (audited)
Current Assets
Cash $ 455 $ 310
Accounts Receivable 1,043 752
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Total Current Assets 1,498 1,062
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Property and Equipment, net of accumulated
depreciated of $7,354 - -
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TOTAL ASSETS $ 1,498 $ 1,062
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 8,401 $ 8,429
Officer's loan 13,700 8,500
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Total Current Liabilities 22,101 16,929
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Stockholders' Deficit
Common stock, $.001 par value, 100,000,000
shares authorized, 81,759,301 shares and
68,759,301 issued and outstanding respectively 81,759 68,759
Paid-in Capital 853,264 736,264
Unamortized Expenses (56,761) -
Accumulated Deficit (898,865) (820,890)
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Total Stockholders' Deficit (20,603) (15,866)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,498 $ 1,062
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See notes to interim unaudited financial statements.
2
AGE RESEARCH, INC.
STATEMENTS OF OPERATIONS (Unaudited)
Three Months ended Six Months ended
June 30, June 30,
2003 2002 2003 2002
---------- ---------- ---------- ----------
SALES $ 1,731 $ 1,888 $ 3,913 $ 4,961
COST OF GOODS SOLD 202 265 532 724
---------- ---------- ---------- ----------
GROSS PROFIT 1,529 1,623 3,381 4,237
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 76,700 3,881 80,328 9,065
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OPERATING (LOSS) (75,171) (2,258) (76,947) (4,828)
OTHER INCOME (EXPENSES)
Interest and other income 97 - 97 -
Interest expense (187) (109) (325) (201)
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(90) (109) (228) (201)
NET LOSS BEFORE TAXES (75,261) (2,367) (77,175) (5,029)
PROVISION FOR INCOME TAXES - - 800 800
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NET LOSS $ (75,261) (2,367) (77,975) (5,829)
========== ========== ========== ==========
LOSS PER SHARE - BASIC AND DILUTED $ (0.03) $ (0.00) $ (0.04) $ (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES 77,425,968 67,259,301 73,092,634 67,259,301
========== ========== ========== ==========
See notes to interim unaudited financial statements.
3
AGE RESEARCH, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended
June 30,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 77,975) $ (5,829)
Adjustment to reconcile net
(loss)to net cash (used in)
operating activities:
Stock for services 130,000 -
(Increase) Decrease in:
Accounts Receivable (291) (341)
Inventory - 158
Unamortized stock expenses (56,761) -
Increase (Decrease)in:
Accounts Payable and Accrued Expenses (28) 2,087
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Net Cash Flows (Used in)
Operating Activities (5,055) (3,925)
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CASH FLOWS FROM INVESTING ACTIVITIES - -
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Officer's Loan 5,200 2,300
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Net Cash Flows Provided by
Financing Activities 5,200 2,300
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NET INCREASE(DECREASE) IN CASH 145 (1,625)
CASH AT BEGINNING OF PERIOD 310 1,970
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CASH AT END OF PERIOD $ 455 $ 345
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See notes to interim unaudited financial statements.
4
AGE RESEARCH, INC.
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT 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.
Presentation of Interim Information: The financial information at June 30, 2003
and for the three and six months ended June 30, 2003 and 2002 is unaudited but
includes all adjustments (consisting only of normal recurring adjustments) that
the Company considers necessary for a fair presentation of the financial
information set forth herein, in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") for interim financial
information, and with the instructions to Form 10-QSB. Accordingly, such
information does not include all of the information and footnotes required by
U.S. GAAP for annual financial statements. For further information refer to the
Financial Statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2002.
The results for the six months ended June 30, 2003 may not be indicative of
results for the year ending December 31, 2003 or any future periods.
Net Loss Per Share Basic net loss per share includes no dilution and is computed
by dividing net loss available to common stockholders by the weighted average
number of common stock outstanding for the period. Diluted net loss per share
does not differ from basic net loss per share due to the lack of dilutive items
in the Company.
New Accounting Standards: In April 2003, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities," which is generally effective for contracts entered into or modified
after June 30, 2003 and for hedging relationships designated after June 30,
2003. SFAS 149 clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative as discussed in SFAS No.
133, clarifies when a derivative contains a financing component, amends the
definition of an "underlying" to conform it to the language used in FASB
Interpretation No. 45, "Guarantor Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" and amends
certain other existing pronouncements. The Company does not have any derivative
financial instruments. The Company does not anticipate that the adoption of SFAS
No. 149 will have an impact on its balance sheet or statements of operations and
cash flows.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity." This Statement
requires that certain instruments that were previously classified as equity on
the Company's statement of financial position now be classified as liabilities.
The Statement is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The Company currently has no
instruments impacted by the adoption of this statement and therefore the
adoption did not have an effect on the Company's financial position, results of
operations or cash flows.
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. 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.
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.
NOTE 3 - PENDING BUSINESS COMBINATION
In May 2003, the Company announced to acquire all the issued and outstanding
shares of common stock of The Varsity Group, Inc. ("VARS", a Missouri
corporation) in exchange for 9,343,920 post split shares of the Company's common
stock. This acquisition will be accounted for as a purchase and is expected to
close in the third quarter of fiscal 2003.
NOTE 4 - PENDING REVERSE SPLIT
In connection with the acquisition, the Board of Directors authorized a reverse
stock split of 1 for 35 shares of stock prior to theclosing date of acquisition
and increase the capitalization to 750,000,000 shares.
NOTE 5 - NONCASH EXPENSES
On May 22, 2003, the Company issued 13,000,000 shares of the Company's common
stock for services rendered by nonemployees. The stocks are fully vested and
nonforfeitable. The Company recorded the stock transactions at their fair market
value, capitalized the costs of transactions, and amortized them over the length
of the services. The total cost for the services was $130,000. As of June 30,
2003, the balance of unamortized expense was $56,761. The unamortized expense
was included in equity section as a contra-equity.
NOTE 6 - NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per
share for the periods:
5
Three Months ended Six Months ended
June 30, June 30,
2003 2002 2003 2002
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Numerator:
Net (Loss) $ (75,261) $ (2,367) $ (77,975) $ (5,829)
------------ ------------ ------------ ------------
Denominator:
Weighted Average Number of Shares 77,425,968 67,259,301 73,092,634 67,259,301
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Loss per share-Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ =========== ============ ============
NOTE 7 - SEGMENT INFORMATION
The Company is currently managed and operated as one business. The entire
business is managed by a single management team that reports to the Company's
President. The Company does not operate separate lines of business or separate
business entities with respect to any of its product candidates. Accordingly,
the Company does not prepare discrete financial information with respect to
separate product areas or by location and dose not have separately reportable
segments as defined by SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information".
NOTE 8 - RELATED PARTY TRANSACTIONS
An officer is currently making payments to purchase inventory on behalf of the
Company. As of June 30, 2003, the balance due to the officer related the
purchases was $1,813. The Company also has notes payable to the officer in the
amount of $13,700, accruing interest at 6% per annum. Accrued interest to the
officer as of June 30, 2003 is $986.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
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Three and Six Months Ended June 30, 2003 compared to June 30, 2002
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For the three and six month period ended June 30, 2003, our revenues were
approximately $1,731 and $3,913 respectively, for a decrease of $157 and
$1,048 respectively from the same periods in 2002.
Cost of goods sold for the three and six month period ended June 30, 2003,
were $202 and $532 respectively, for a decrease of $63 and of $192 respectively
from the same periods in 2002.
Gross profit for products and services was $1,529 and $3,381 for the three
and six months ended June 30, 2003, a decrease of $94 and $856 the same periods
prior year.
Selling General & Administrative expense for three and six month period ended
June 30, 2003 were $76,700 and $80,328 respectively, for an increase of $72,819
and $71,263 from the same periods in 2002.
The net losses from operations for the three and six months ended June 30, 2003
were $75,171 and $76,947 respectively, for an increase of $72,913 and $72,119
from the same periods prior year.
Liquidity and Capital Resources
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Historically, we have financed our operations through a combination of cash
flow derived from operations and debt and equity financing. At June 30,
2003, we had a working capital deficit of $20,603 based on current assets of
$1,498 and current liabilities of $22,101.
Based on our current marketing program and sales, it is clear that we will
have to increase our sales volume significantly in order to have profitable
operations. At this time, however, we do not have any working capital to
expand our marketing efforts.
We propose to finance our needs for additional working capital through some
combination of debt and equity financing. Given our current financial
condition, it is unlikely that we 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 us would be the private sale of our
securities. There can be no assurance that we will be able to obtain such
additional funding as needed, or that such funding, if available, can be
obtained on terms acceptable to us.
ITEM 3. 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 May 1, 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 28th we filed a preliminary proxy in which notice was given that the
following actions will be taken pursuant to the written consent of a majority of
our shareholders, dated May 28, 2003, in lieu of a special meeting of the
shareholders. The SEC has requested that we add more information and refile the
proxy. Once effective, the following actions will be taken:
1. To approve the acquisition of The Varsity Group, Inc., a
Missouri corporation, where the total consideration paid is
9,343,920 authorized and unissued post reverse split common
shares, where that number of shares is to equal 80% of the
total outstanding after the acquisition.
2. Amend our certificate of incorporation to change the Company
name from AGE Research, Inc. to Enstruxis, Inc., and
concurrently to change the Company's OTCBB trading symbol.
3. Amend our certificate of incorporation to provide for a stock
combination (reverse split) of the Common Stock in an exchange
ratio to be approved by the Board, ranging from one newly
issued share for each two outstanding shares of Common Stock
to one newly issued share for each thirty outstanding shares
of Common Stock.
4. Amend our Certificate of Incorporation to increase the
authorized number of shares of our common stock from
100,000,000 to 750,000,000.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
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31.1 Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to Rule 13a-14(a) ( Section 302 of the Sarbanes-Oxley
Act of 2002)
32.1 Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley
Act of 2002)
(b) Reports on Form 8-K.
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May 22, 2003 Item 2: Acquisition of The Varsity Group, Inc
by Age Research Inc. on May 22, 2003
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 by the
undersigned thereunto duly authorized.
Age Research, Inc.
Dated: August 19, 2003 By:/S/Richard F. Holt, President
(Chief Executive and Financial Officer)
8