UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-25675
COMBINED PROFESSIONAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 88-0346441
(State of Organization) (I.R.S. Employer
Identification No.)
2700 North 29 Avenue, Suite 305, Hollywood, FL 33020
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (954) 927-5563
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) has 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 aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be 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 60 days prior to the
date of filings. (See definition of affiliate in Rule 405)
The aggregate market value of the voting stock held by non-affiliates
of the registrant is $22,325,000.
Note: If a determination as to whether a particular person or entity is an
affiliate cannot be made without involving unreasonable effort and expense,
the aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this form.
9,300,000 Common Shares, $0.001 Par Value, Issued and Outstanding
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Management's Discussion and Analysis
SEARCH FOR TARGET COMPANY
Our plan is to enter into a transaction with a target company in exchange for
the issuance of shares of our common stock. We have not engaged in any
negotiations with any specific entity regarding the possibility of a
transaction, nor engaged the services of any independent third party for such
purpose. Mr. Baker, our sole officer has agreed to fund the expenses associated
with the preparation and filing of any reports under the Exchange Act and has
funded the professional accounting fees associated with the preparation of this
Quarterly Report on Form 10-QSB. Any terms of repayment will be subject to
negotiations in connection with any business transaction.
The Company may enter into agreements with non-affiliated third party
consultants to assist in locating a target company. It may be anticipated that
such other consultants may also be issued shares of the Company. There is no
minimum or maximum amount of stock, options, or cash consideration that the
Company may grant, pay or agree to issue to such third party consultants.
The Company anticipates that it may seek to locate a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting firms,
investment bankers, financial advisors and similar persons, the use of one or
more World Wide Web sites and similar methods. No estimate can be made as to the
number of persons who may be contacted or solicited. To date, the Company has
not utilized solicitation, does not anticipate that it will do so, and expects
to rely solely on referrals of potential target companies from professionals,
including consultants, in the business and financial communities.
MANAGEMENT OF THE COMPANY
The Company has no full time employees. Mr. Baker, at present, are our sole
officer and directors and a control shareholder. Mr. Baker has agreed to
allocate a portion of their time to the activities of the Company, including
pursuit of a transaction. As a result potential conflicts may arise with respect
to the time commitment by Mr. Baker and the potential demands of the Company's
activities.
The amount of time devoted by Mr. Baker on the activities of the Company cannot
be predetermined. Such time may vary widely from an extensive amount when
reviewing a potential target company and effecting a transaction to an
essentially passive role when activities of management focus elsewhere, or some
amount in between. It is impossible to state with any precision the exact amount
of time Mr. Baker will actually be required to spend to locate a suitable target
company and negotiate a transaction. Mr. Baker estimates that the business plan
of the Company can be implemented by devoting cumulatively approximately 10 to
15 hours per month over the course of several months but such figure cannot be
stated with precision.
GENERAL BUSINESS PLAN
Our purpose is to seek, investigate and, if such investigation warrants, acquire
an interest in or 100% of another business entity, which entity desires to
pursue the perceived advantages of a transaction with a corporation which has a
class of securities registered under the Exchange Act. We will not restrict our
search to any specific business, industry, or geographical location and we may
participate in a business venture of virtually any kind or nature. We anticipate
that we may be able to participate in only one potential business venture
because at present we have only nominal assets and limited financial and
personnel resources. Reference is made to the financial statement and the notes
to the financial statements that are included as part of this Quarterly Report
on Form 10-QSB. This lack of diversification should be considered a substantial
risk to our investors.
We may seek to enter into a transaction with an entity which has recently
commenced operations, or which wishes to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes.
We anticipate that the selection of a business opportunity and transaction in
which we elect to participate may involve a high degree of risk. Mr. Baker
believes that there are business entities seeking the perceived benefits of a
transaction with a reporting corporation. Included among such perceived benefits
are: the ability to use our securities as a reporting company for the future
acquisition of assets and/or other businesses; the increased likelihood of being
able to find an underwriter for a subsequent IPO or other offering of securities
under the Act after a transaction and becoming a reporting company at terms more
acceptable and/or advantageous than would otherwise be available to a private
company; being able to become a reporting company under the Exchange Act with
less dilution of its equity securities; the potential for securing investment
capital, whether debt or equity, at terms more favorable than those available to
a private company; and being able to attract and retain key employees by having
available a stock option and/or stock incentive plan with securities registered
under the Exchange Act.
Business opportunities may be available in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities and potential target
companies difficult and complex for us.
We do not have, nor do we anticipate having, working capital or other liquid
assets to provide to the owners and operators of target companies. However,
management believes that we will be able to offer owners and operators of target
companies the opportunity to acquire a controlling ownership interest in us as a
reporting company under the Exchange Act, without incurring the costs and time
typically required to complete an IPO. However, we have not conducted market
research and are not aware of statistical data to support the perceived benefits
of a Transaction by a target company.
Analysis of potential target companies will be undertaken by Mr. Baker, non of
whom are professional business analysts or appraisers. In analyzing prospective
target companies, we may consider among other information regarding the target
company, the following: its available technical, financial and managerial
resources; its working capital and other financial requirements; its history of
operations, if any; its potential for the future growth in revenues and profits;
the nature of its present and potential future competition; the quality and
experience of its management; specific risk factors applicable or which may be
anticipated to become applicable to its activities; the perceived public
recognition or acceptance of its products, services, or other assets; and other
relevant factors. This discussion of the proposed criteria is not meant to be
restrictive on our virtually unlimited discretion to search for and enter into a
transaction.
We are subject to the reporting requirements under the Exchange Act. Included in
these requirements is the requirement to file with the SEC the audited financial
statements of the Company and the audited financial statements of an acquired
target company on a consolidated basis within 60 days following the filing of
our Form 8-K reporting the Transaction. The Form 8-K must be filed with the SEC
within 15 days following entering into an agreement for a transaction. It is our
intention to acquire or merge with a target company for which audited financial
statements are available or for which we believe audited financial statements
can be obtained within the required period of time. We further intend to reserve
the right in any acquisition or merger documentation for the transaction to void
the transaction if the audited financial statements are not timely available or
if the audited financial statements provided do not conform in all material
respects to the representations made by the target company.
We will not restrict our search for any specific kind of business entities, but
may acquire a venture which is in its development stage, which is already in
operation, or in essentially any stage of its business life. It is impossible
for us to predict at this time the status of any business in which we may enter
into a Transaction, in that such business may need to seek additional capital,
may desire to have the of the Company issued in a Transaction be available to be
publicly traded, or may seek other perceived advantages which we may offer.
Following a transaction, we may seek to engage the services of other
professionals for accounting and legal services, enter into investment banking
relationships and agreements for corporate public relations, among other
services and arrangements. We may also recommend one or more potential
underwriters, financial advisors, or other consultants to provide such services.
A potential target company may have a pre-existing agreements with third-party
consultants and others which require that the target company continue to utilize
the services of others following the conclusion of any transaction.
Additionally, this requirement may be a pre-condition to a target company being
presented to us for a potential transaction. The existence of such a requirement
for the continuation of the services of third-parties could be a factor in the
selection of a target company.
TERMS OF A TRANSACTION
In implementing a structure for a particular transaction, we may become a party
to a merger, consolidation, reorganization, joint venture, licensing agreement,
or other arrangement with another corporation or entity. In connection with a
transaction, it is likely that Mr. Baker will no longer be in control of the
Company. In addition, it is likely that Mr. Baker will resign, as part of the
terms of the Transaction, and be replaced by new officers and directors.
It is anticipated that any securities issued in any such transaction would be
issued in reliance upon exemption from registration under the Act and applicable
state securities laws. In some circumstances, however, as a negotiated element
of a transaction, we may agree to register all or a part of such securities
issued in a transaction, as well other securities that we have issued or agree
to issue, including shares issued to our present control shareholders,
immediately after the transaction is consummated or at a specified or times
thereafter. If such registration occurs, it will be undertaken by the surviving
entity after we have entered into an agreement for a transaction or have
consummated a transaction and are no longer deemed to be a non-operating
company. The issuance of additional securities and their potential sale into any
trading market which may develop in our securities may adversely effect any
trading market that may exist, and cause a decline in the market price of our
securities in the future, if any such market develops, of which there is no
assurance.
While the terms of a transaction which we may be a party cannot be predicted, it
is expected that the parties to any Transaction will desire to avoid the
creation of a taxable event. As a result, we believe that we will structure a
transaction in a "tax-free reorganization" under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended (the "Code"). However, it is possible
that we will elect to enter into a transaction that will not be structured as a
tax-free reorganization under the Code.
With respect to negotiations with a target company, we expect to focus on the
percentage of the Company which target company shareholders would acquire in
consideration for the acquisition of a target company. Any merger or acquisition
transaction that we complete can also be expected to have a significant dilutive
effect on the percentage of shares held by all our shareholders immediately
preceding the Transaction.
We intend to enter into a transaction only after appropriate due diligence and
the negotiation and execution of appropriate agreements. Although the terms of
such agreements cannot be predicted, generally such agreements will require
certain representations and warranties of the parties thereto, will contain
certain events of default, and set forth the terms of closing and the conditions
which must be satisfied by the parties prior to and after such closing among
other terms.
To date, Mr. Baker has paid on behalf of the Company expenses aggregating
approximately $3113 including accounting expenses. We will not borrow any
funds to make any payments to Mr. Baker. If Mr. Baker is unable to continue to
pay our operating expenses, however limited, we may not be able to continue to
file with the SEC on a timely manner the Quarterly and other reports required
under the Exchange Act after filing this Quarterly Report, nor we will be able
to effectively continue to search for an acquisition target with which to enter
into a transaction. In such event, we would seek alternative sources of funds or
services, primarily through the issuance of additional securities.
UNDERTAKINGS AND UNDERSTANDINGS REQUIRED OF TARGET COMPANIES
Prior to completion of a transaction, the Company will generally require that it
be provided with written materials regarding the target company containing such
items as a description of products, services and company history; management
resumes; financial information; available projections, with related assumptions
upon which they are based; an explanation of proprietary products and services;
evidence of existing patents, trademarks, or service marks, or rights thereto;
present and proposed forms of compensation to management; a description of
transactions between such company and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risks and
competitive conditions; a financial plan of operation and estimated capital
requirements; audited financial statements, or if they are not available,
unaudited financial statements, together with reasonable assurances that audited
financial statements will be available within a reasonable period of time not to
exceed 60 days following the filing of a Form 8-K reporting the Transaction; and
other information deemed relevant by us.
COMPETITION
We will remain a minor participant among the firms, which engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than us. In view of the Company's
combined extremely limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
Results of Operation
--------------------
During the quarters ended March 31, 2002 and 2001, we generated no revenues from
any business operations. We had general and administrative expenses of $650 in
2002 and $0 in 2001, and therefore had a net loss in the same amount.
Liquidity and Capital Resources
-------------------------------
At March 31, 2002 and December 31, 2001 we had total assets of $3,320,
consisting of held-to-maturity securities.
At March 31, 2002 and December 31, 2001, we had current liabilities of $3,462
and $2,813 respectively. Our current liabilities at March 31, 2002 consisted of
accounts payable of $350 and amounts due to officer of $3,113. At December 31,
2001, they consisted of accounts payable of $600 and amounts due to officer of
$2,213.
We had no long-term liabilities at March 31, 2002 or December 31, 2001.
During the quarters ended March 31, 2002 and 2001, we had a negative cash flow
from operations of $650 and $0, respectively. We did not have any capital
expenditures in 2002 and 2001.
We may determine to seek to raise funds from the sale of equity or debt
securities or other borrowings or a combination thereof as part of our business
plan to enter into a transaction.
There are currently no limitations on our ability to borrow funds or issue
restricted common stock to finance potential new business opportunities or in
connection with a transaction. However, our limited resources and lack of
operating history may make it difficult to do so. The amount and nature of any
borrowing by us will depend on numerous factors, including our capital
requirements, potential lenders' evaluation of our ability to meet debt service
on borrowing and the then prevailing conditions in the financial markets, as
well as general economic conditions. We do not have any arrangements with any
bank or financial institution to secure additional financing and there can be no
assurance that such arrangements, if required or otherwise sought, would be
available on terms commercially acceptable or otherwise in our best interests.
Our inability to borrow funds or to provide funds for an additional infusion of
capital may have a material adverse effect on our financial condition and future
prospects. To the extent that additional debt financing ultimately proves to be
available, any borrowing will subject us to various risks traditionally
associated with indebtedness, including the risks of interest rate fluctuations
and insufficiency of cash flow to pay principal and interest.
COMBINED PROFESSIONAL SERVICES, INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, December 31,
2002 2001
(Unaudited)
-------------- --------------
ASSETS
TOTAL CURRENT ASSETS $ - $ -
-------------- --------------
OTHER ASSETS
Investment-Held-to-Maturity Security 3,320 3,320
-------------- --------------
TOTAL ASSETS $ 3,320 $ 3,320
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable $ 350 $ 600
Due to Officer 3,113 2,213
-------------- --------------
TOTAL CURRENT LIABILITIES 3,463 2,813
============== ==============
STOCKHOLDERS' DEFICIT
Common Stock, $.001 par value
authorized 50,000,000 shares;
9,300,000 shares issued and
outstanding 9,300 9,300
Additional Paid in Capital 4,975 4,975
Deficit Accumulated During
Development Stage (14,418) (13,768)
-------------- --------------
TOTAL STOCKHOLDERS' DEFICIT (143) 507
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 3,320 $ 3,320
============== ==============
See accompanying notes to financial statements.
COMBINED PROFESSIONAL SERVICES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(UNAUDITED)
October 11, 1995
Three Months Ended (Inception)
March 31, to March 31,
2002 2001 2002
-------------- -------------- -------------------
INCOME
Revenue $ - $ - $ 10,609
-------------- -------------- -------------------
TOTAL INCOME - - 10,609
-------------- -------------- -------------------
OPERATING EXPENSES
General and Administrative 650 - 35,918
-------------- -------------- -------------------
TOTAL OPERATING EXPENSES 650 - 35,918
-------------- -------------- -------------------
INCOME (LOSS) FROM OPERATIONS (650) - (25,309)
OTHER INCOME - - 10,891
-------------- -------------- -------------------
NET INCOME (LOSS) $ (650) $ - $ (14,418)
============== ============== ===================
NET INCOME (LOSS) PER SHARE $ - $ - $ -
============== ============== ===================
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING 9,300,000 3,017,778 5,210,537
============== ============== ===================
See accompanying notes to financial statements.
COMBINED PROFESSIONAL SERVICES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(UNAUDITED)
October 11, 1995
Three Months Ended (Inception)
March 31, to March 31,
2002 2001 2002
-------------- -------------- -------------------
CASH FLOWS FROM
FROM OPERATING ACTIVITIES
Net Income (Loss) $ (650) $ - $ (14,418)
Increase in Accounts Payable (250) - 350
-------------- -------------- -------------------
NET CASH USED IN
OPERATING ACTIVITIES (900) - (14,068)
-------------- -------------- -------------------
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
-------------- -------------- -------------------
CASH FLOWS FROM
FROM FINANCING ACTIVITIES
Advances from Officer 900 - 3,113
Issue Common Stock - - 11,100
Treasury Stock - - (145)
-------------- -------------- -------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 900 - 14,068
-------------- -------------- -------------------
NET INCREASE
(DECREASE) IN CASH - - -
CASH, BEGINNING OF PERIOD - 296 -
-------------- -------------- -------------------
CASH, END OF PERIOD $ - $ 296 $ -
============== ============== ===================
See accompanying notes to financial statements.
COMBINED PROFESSIONAL SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation S-B of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with Notes
to Financial Statements contained in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 2001. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three months
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.
2. Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has sustained recurring
operating losses and has minimal assets. These factors raise substantial doubt
as to the Company's ability to continue as a going concern. The future of the
Company is dependent upon its ability to raise additional working capital and to
seek potential merger candidates.
SIGNATURE
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 hereunto duly authorized.
Date: May 3, 2002 By /s/ Marc Baker
-------------------------------------
Marc Baker, President