UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
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Commission File Number: 000-49620
Togs for Tykes, Inc.
--------------------
(Exact name of small business issuer as specified in its charter)
Nevada 91-1868007
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1030 Wooster, Suite 4, Los Angeles, California 90035
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(Address of principal executive offices)
(714) 273-6124
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of May 15, 2002 there were 5,532,000
shares of the issuer's $.001 par value common stock issued and outstanding.
1
PART I. FINANCIAL INFORMATION
TOGS FOR TYKES, INC.
(A Development Stage Company)
BALANCE SHEET
March 31,
2002
-------------
(unaudited)
ASSETS
TOTAL CURRENT ASSETS - Cash $ 2,400
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 356
Due to stockholder 6,718
-------------
TOTAL CURRENT LIABILITIES $ 7,074
-------------
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value;
5,000,000 shares authorized;
none issued and outstanding -
Common stock, $.001 par value;
20,000,000 shares authorized;
5,532,000 shares issued and
outstanding 5,532
Additional paid-in capital 28,268
Deficit accumulated during the
the development stage (38,474)
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TOTAL STOCKHOLDERS' EQUITY (4,674)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,400
=============
The accompanying notes are an integral part of the financial statements.
2
TOGS FOR TYKES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
from
For The Three Months September 26, 1997
Ended March 31, (inception) to
------------------------ March 31,
2002 2001 2002
--------- ---------- ---------------
REVENUE $ - $ - $ -
ADMINISTRATIVE EXPENSES 5,428 - 38,474
--------- ---------- ----------------
NET LOSS $ (5,428) $ - $ (38,474)
========= ========== ===============
NET LOSS PER COMMON SHARE
- basic and diluted $ (0.001) $ - $ (0.006)
========= ========== ===============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING
- basic and diluted 5,532,000 1,032,000 5,532,000
========= ========== ===============
The accompanying notes are an integral part of the financial statements.
3
TOGS FOR TYKES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During the Total
------------------- Paid In Development Stockholders'
Shares Amount Capital Stage Equity
--------- -------- ------------ ----------- ------------
Balance, September 26, 1997 - $ - $ - $ - $ -
Issuance of common stock
for cash
November 11, 1997 at $0.017 900,000 900 14,100 - 15,000
November 24, 1997 at $0.017 132,000 132 2,068 - 2,200
Net loss - - - (17,200) (17,200)
--------- -------- ------------ ----------- ------------
Balance, December 31, 1997 1,032,000 1,032 16,168 (17,200) -
Net loss - - - - -
--------- -------- ------------ ----------- ------------
Balance, December 31, 1998 1,032,000 1,032 16,168 (17,200) -
Net loss - - - - -
--------- -------- ------------ ----------- ------------
Balance, December 31, 1999 1,032,000 1,032 16,168 (17,200) -
Net loss - - - - -
--------- -------- ------------ ----------- ------------
Balance, December 31, 2000 1,032,000 1,032 16,168 (17,200) -
Issuance of shares for services
June 30, 2001 at $0.003 4,500,000 4,500 10,500 - 15,000
Net loss - - - (15,846) (15,846)
--------- -------- ------------ ----------- ------------
Balance, December 31, 2001 5,532,000 5,532 26,668 (33,046) (846)
Net loss - - - (5,428) (5,428)
Contribution by officer - - 1,600 - 1,600
--------- -------- ------------ ----------- ------------
Balance, March 31, 2002
(unaudited) 5,532,000 5,532 28,268 (38,474) (4,674)
========= ======== =========== =========== ============
The accompanying notes are an integral part of the financial statements.
4
TOGS FOR TYKES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period
from
For Three Months Ended September 26, 1997
March 31, (inception) to
------------------------ March 31,
2002 2001 2002
--------- ---------- ---------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (5,428) $ - $ (38,474)
Adjustment to reconcile net
loss to net cash used in
operating activities:
Shares issued for services - - 29,700
Services contributed by
Officer 1,600 - 1,600
Decrease in prepaid expenses 5,872
Increase in accounts payable 356 - 356
--------- --------- -------------
Net cash provided by (used in)
operating activities 2,400 - (6,818)
--------- --------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common
stock for cash - - 2,500
Advances from stockholder - - 6,718
--------- --------- -------------
Net cash provided by financing
activities - - 9,218
--------- --------- -------------
Net change in cash
and cash equivalents 2,400 - 2,400
--------- --------- -------------
Cash and cash equivalents
- beginning of period - - -
--------- --------- -------------
Cash and cash equivalents
- ending of period $ 2,400 $ - $ 2,400
========= ========= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year -
Interest paid $ - $ - $ -
========= ========= =============
Income taxes paid $ - $ - $ -
========= ========= =============
The accompanying notes are an integral part of the financial statements.
5
TOGS FOR TYKES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002 (UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
--------------------
Togs for Tykes, Inc. (the "Company") is currently a development
stage company under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 7. The Company was incorporated
under the laws of the State of Nevada on September 26, 1997. It
is management's objective to seek a merger with an existing
operating company.
Basis of Presentation
---------------------
The accompanying unaudited interim financial statements of the
Company have been prepared in accordance with accounting
principles generally accepted in the United States for interim
financial information. Accordingly, they do not include all of
the information and notes required by accounting principles
generally accepted in the United States for complete financial
statements. The accompanying financial statements reflect all
adjustments (consisting of normal recurring accruals), which are,
in the opinion of management, considered necessary for a fair
presentation of the results for the interim periods presented.
Operating results for the quarter ended March 31, 2002 are not
necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 2002. These financial
statements should be read in conjunction with the audited
financial statements included in the Company's Annual Report on
Form10-KSB.
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has no established source of revenue. This
factor raises substantial doubt about the Company's ability to
continue as a going concern. Without realization of additional
capital, it would be unlikely for the Company to continue as a
going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amount, or amounts and classification of
liabilities that might be necessary should the Company be unable
to continue in existence. It is management's objective to seek
additional capital through a merger with an existing operating
company.
6
TOGS FOR TYKES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002 (UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Pronouncements
--------------------------------
In July 2001, the FASB issued SFAS No. 141 "Business
Combinations." SFAS No. 141 supersedes Accounting Principles
Board ("APB") No. 16 and requires that any business combinations
initiated after June 30, 2001 be accounted for as a purchase;
therefore, eliminating the pooling-of-interest method defined in
APB 16. The statement was effective for any business combination
initiated after June 30, 2001 and shall apply to all business
combinations accounted for by the purchase method for which the
date of acquisition is July 1, 2001 or later. The adoption did
not have a material impact on the Company's financial position or
results of operations since the Company has not participated in
such activities covered under this pronouncement.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangibles." SFAS No. 142 addresses the initial recognition,
measurement and amortization of intangible assets acquired
individually or with a group of other assets (but not those
acquired in a business combination) and addresses the
amortization provisions for excess cost over fair value of net
assets acquired or intangibles acquired in a business
combination. The statement is effective for fiscal years
beginning after December 15, 2001, and is effective July 1, 2001
for any intangibles acquired in a business combination initiated
after June 30, 2001. The Company adopted this statement on
January 1, 2002 and the adoption had no material impact to the
Company's financial position or results of operations.
7
TOGS FOR TYKES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002 (UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Pronouncements, continued
-------------------------------------------
In October 2001, the FASB recently issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," which requires
companies to record the fair value of a liability for asset
retirement obligations in the period in which they are incurred.
The statement applies to a company's legal obligations associated
with the retirement of a tangible long-lived asset that results
from the acquisition, construction, and development or through
the normal operation of a long-lived asset. When a liability is
initially recorded, the company would capitalize the cost,
thereby increasing the carrying amount of the related asset. The
capitalized asset retirement cost is depreciated over the life of
the respective asset while the liability is accreted to its
present value. Upon settlement of the liability, the obligation
is settled at its recorded amount or the company incurs a gain or
loss. The statement is effective for fiscal years beginning after
June 30, 2002. The Company does not expect the adoption to have a
material impact to the Company's financial position or results of
operations.
In October 2001, the FASB issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". Statement 144
addresses the accounting and reporting for the impairment or
disposal of long-lived assets. The statement provides a single
accounting model for long-lived assets to be disposed of. New
criteria must be met to classify the asset as an asset
held-for-sale. This statement also focuses on reporting the
effects of a disposal of a segment of a business. This statement
is effective for fiscal years beginning after December 15, 2001.
The Company adopted this statement on January 1, 2002 and the
adoption had no material impact to the Company's financial
position or results of operations.
NOTE 2 - RELATED PARTY TRANSACTION
The Company neither owns nor leases any real or personal
property. A stockholder of the Company provides office services
without charge. Such costs are immaterial to the financial
statement and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other
business activities and may, in the future, become involved in
other business opportunities. If a business opportunity becomes
available fo the Company, such persons may face a conflict in
selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of
such conflicts.
8
Item 2. Plan of Operation
--------------------------
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
We are a new business that has generated no revenues to date. We intend to
design, source and market apparel primarily for children from infants to five
years old. Our initial focus will be sales over the Internet. Our president,
Becky Bauer, has experience in the fashion industry. She will provide most of
the design services to us. We hope to become an online marketer of branded
products for infants and toddlers through our proposed website. Our target
market will be parents who look for quality, durability, and fashion innovation.
We believe that in order to be successful in the children's wear business, we
must continue to develop and improve quality, durability, and style. We believe
these are the factors that have permitted certain retailers of children's
apparel to gain market share in the branded children's wear industry. We propose
to incorporate these themes into the design, sourcing and marketing of our
proposed product line. We also believe that the name of our brand "Togs for
Tykes" is unique and we have the potential to expand our brand recognition.
For the three month period ended March 31, 2002.
------------------------------------------------
Liquidity and Capital Resources. We had cash of $2,400 as at March 31, 2002. Our
total assets were approximately $2,400 as at March 31, 2002. Our total current
liabilities were approximately $7,074 as at March 31, 2002, all of which were
represented by accounts payable of $356 and funds due to a stockholder of
$6,718. At March 31, 2002, our liabilities exceeded our assets by $4,674.
Results of Operations.
Revenues. From our inception on September 26, 1997, through March 31, 2002, we
had not realized any revenues. We hope to generate revenues in the next twelve
months through the sale of our planned first line of clothing. However, we
cannot guarantee that our first line will be completed or that we will earn any
revenues within the next 12 months. We anticipate the majority of revenues will
be earned via the Internet.
9
Operating Expenses. For the three months ended March 31, 2002, our total
expenses were approximately $5,438 compared to $0 for the corresponding period
in 2001. Our expenses from inception on September 26, 1997 to March 31, 2002
were $38,474. The expenses for the three months ended March 31, 2002 were
represented by administrative expenses. For the three months ended March 31,
2002, we experienced a net loss of approximately $5,428 compared to a net loss
of $0 for the corresponding period in 2001. Our net loss from our inception on
September 26, 1997 to March 31, 2002 were $38,474.
Our Plan of Operation for the Next Twelve Months. We have not yet generated any
revenues from operations. In our opinion, to effectuate our business plan in the
next twelve months, the following events must occur:
As of May 15, 2002, we had $2,400 in cash resources. We believe that our current
cash resources are sufficient to pay our operating expenses through July 2002.
Our forecast of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary as a result of a number
of factors. Such factors will include those factors discussed in our "Risk
Factor" section below in addition to the following factors:
o General Economic Conditions. We believe that when the economy suffers,
discretionary spending suffers as well. In times of poor economic
conditions, we will likely sell fewer products which will harm our
ability to earn revenues. A lack of revenues will force us to use our
resources more quickly than anticipated.
o Increased Operating Expenses. Our forecast is based on an estimate of
our operating expenses. If we are forced to incur unforeseen legal
fees, accounting fees, or other unexpected fees or if prices for raw
materials rise more quickly than anticipated, our current resources may
not be sufficient to cover such increased expenses.
o Delays in Production. If we are not able to bring our first product
line to market as quickly as expected, our ability to earn revenue will
be harmed. If we are unable to earn revenues, our current resources
will be strained to cover any revenue shortfall.
There may be other unforeseen factors which affect our forecast. We will attempt
to anticipate, as best as possible, such factors. Our plan of operation is
materially dependent on our ability to complete the development of our website
and raise additional capital to market our products by means of our proposed
website. We believe that we will need approximately $10,000 to market our
products. Within the next twelve months, we must complete the design of our
first line of products and complete the development of our website. We believe
we need approximately $12,000 to complete the design of our first line of
products and the development of our website. We have hired a third party to
complete the development of our website. We will need approximately $2,000 to
complete the development of our website. We must also enter into arrangements
with manufacturers to manufacture our planned product line. Finally, we must
raise additional working capital either through the sale of our capital stock or
through loans. There is no guarantee that we will be able to raise additional
capital through the sale of our common stock. Moreover, there is no guarantee
that we will be able to arrange for loans on favorable terms, or at all.
We will use our current cash resources to pay the following expenses: website
development, legal and accounting and initial marketing expenses. Our inability
to access the capital markets or obtain acceptable financing could have a
material adverse effect on our results of operations and financial condition. To
the extent that additional capital is raised through the sale of equity or
equity-related securities, the issuance of such securities could result in
dilution of our stockholders. We cannot guaranty that additional funding will be
available on favorable terms. If adequate funds are not available within the
next 12 months, we may be required to limit our proposed website development
activities or to obtain funds through entering into arrangements with
collaborative partners. If adequate funds are not available, we believe that our
officers and directors will contribute funds to pay for our expenses. Our belief
that our officers and directors will pay our expenses is based on the fact that
our officers and directors collectively own 4,500,000 shares of our common
stock, which equals approximately 81.34% of our total issued and outstanding
common stock. We believe that our officers and directors will continue to pay
our expenses as long as they maintain their ownership of our common stock. If
our officers and directors loan us operating capital, we will either execute
promissory notes to repay the funds or issue stock to those officers and
directors. We have not formulated specific repayment terms. We will negotiate
the specific repayment terms and whether repayment will be in the form of stock
when, and if, funds are advanced by any of our officers and directors.
10
In order to raise additional working capital, we plan on conducting a private
placement of 1,000,000 shares of our common stock at a purchase price of $0.05
per share in transactions which we believe will satisfy the requirements of that
certain exemption from the registration and prospectus delivery requirements of
the Securities Act of 1933, which exemption is specified by the provisions of
Section 4(2) of that act and Rule 506 of Regulation D promulgated pursuant to
that act by the Securities and Exchange Commission.
Our prospects must be considered speculative, considering the risks, expenses,
and difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development of electronic commerce. Our
plan of operation is materially dependent on our ability to generate revenues.
Any revenues generated will be used to expand our operations. There is no
guaranty we will be able to generate significant revenues.
We are not currently conducting any research and development activities, other
than the development of our website and the design of our first line of
clothing. We do not anticipate that we will purchase or sell any significant
equipment. In the event that we generate significant revenues and expand our
operations, then we may need to hire additional employees or independent
contractors.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
--------------------------
None.
Item 2. Changes in Securities.
------------------------------
None.
Item 3. Defaults Upon Senior Securities
----------------------------------------
None.
Item 4. Submission of Matters to Vote of Security Holders
----------------------------------------------------------
None.
Item 5. Other Information
--------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
None.
11
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Togs for Tykes, Inc.,
a Nevada corporation
May 15, 2002 By: /s/ Becky Bauer
-----------------------------------
Becky Bauer
Its: Chief Executive Officer, President,
Director