UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2002
Or
[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 000-33187
ATR Search Corporation
(Exact name of registrant as specified in its charter)
Nevada 91-2105842
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
29 E. 31st Street, 2nd Floor, New York, NY 10016
(Address of principal executive offices) (Zip Code)
(212) 725-6150
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
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.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes
of common stock as of the most recent practicable date:
21,755,000
/1/
ATR Search Corporation
(A Development Stage Company)
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets March 31, 2002 (unaudited) and December 31, 2001 4
Statements of Operations For the Three Months Ending March 31, 5
2002 (unaudited) and For the Period March 2, 2001 (Inception)
to March 31, 2001 (unaudited) and For the Period March 2, 2001
(Inception) to March 31, 2002 (unaudited)
Statements of Cash Flows For the Three Months Ending March 31, 6
2002 (unaudited) and For the Period March 2, 2001 (Inception)
to March 31, 2001 (unaudited) and For the Period March 2, 2001
(Inception) to March 31, 2002 (unaudited)
Notes to Financial Statements 7
Item 2. Management's Discussion and Plan of Operation 10
PART II - OTHER INFORMATION
Item 6. Exhibits 13
SIGNATURES 14
/2/
ATR Search Corporation
(A Development Stage Company)
Consolidated Balance Sheets
as of
March 31, 2002 (unaudited)
and December 31, 2001
and
Consolidated Statements of Operations
and
Cash Flows
for the Three Months Ending
March 31, 2002 (unaudited) and 2001 (unaudited),
and For the Period
March 31, 2001 (Inception) to March 31, 2002 (unaudited)
/3/
ATR Search Corporation
(a Development Stage Company)
Consolidated Balance Sheets
(unaudited)
March 31, December 31,
Assets 2002 2001
---------- ----------
Current assets:
Cash and equivalents $ - $ 25,693
Accounts receivable 169,282 168,650
Other current assets 30,766 30,766
---------- ----------
Total current assets 200,048 225,109
---------- ----------
Fixed assets, net 10,906 11,362
Acquired technology, net 1,200,000 1,275,000
---------- ----------
$1,410,954 $1,511,471
========== ==========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Checks written in excess of cash $ 19,593 $ -
Accounts payable 6,990 -
Accrued payroll taxes 29,211 -
Accrued interest 115,000 86,250
Accrued interest - related party 3,750 2,696
Short-term note payable 50,000 50,000
Current portion of capital lease obligation 120,000 120,000
---------- ----------
Total current liabilities 344,534 258,946
Capital lease obligation, net of current portion 1,030,000 1,030,000
---------- ----------
1,374,534 1,288,946
---------- ----------
Stockholders' equity (deficit):
Common stock, $0.001 par value; 100,000,000
shares authorized, 21,755,000 and 19,180,000
shares issued and outstanding as of 3/31/02
and 12/31/01, respectively 21,755 19,180
Additional paid-in capital 948,645 692,095
Deferred compensation (193,479) -
(Deficit) accumulated during development stage (740,501) (488,750)
---------- ----------
36,420 222,525
---------- ----------
$1,410,954 $1,511,471
========== ==========
The accompanying Notes are an integral part of these financial statements.
/4/
ATR Search Corporation
(a Development Stage Company)
(unaudited)
Consolidated Statements of Operations
Three Months March 2, 2001 March 2, 2001
Ending (Inception) to (Inception) to
March 31, 2002 March 31, 2001 March 31, 2002
-------------- -------------- --------------
Revenue $ 175,658 $ 93,002 $ 1,116,279
-------------- -------------- --------------
Cost of services:
Subcontractors 46,566 29,916 385,074
Consultants 39,252 1,307 246,871
Other costs 14,069 - 50,085
-------------- -------------- --------------
Total costs of services 99,887 31,223 682,030
-------------- -------------- --------------
Gross profit 75,771 61,779 434,249
-------------- -------------- --------------
Expenses:
General and administrative
expenses 96,735 30,433 463,444
Consulting fees 65,646 - 216,896
Depreciation and amortization 75,456 - 301,063
Organizational costs 59,881 - 72,131
-------------- -------------- --------------
Total expenses 297,718 30,433 1,053,534
-------------- -------------- --------------
Net operating income (loss) (221,947) 31,346 (619,285)
Other (expense):
Interest expense (28,750) - (117,466)
Interest expense - related party (1,054) - (3,750)
-------------- -------------- --------------
Net income (loss) $ (251,751) $ 31,346 $ (740,501)
============== ============== ==============
Weighted average number of
common shares outstanding -
basic and fully diluted 20,123,611 16,100,000
============== ==============
Net (loss) per share -
basic & fully diluted $ (0.02) $ 0.00
============== ==============
The accompanying Notes are an integral part of these financial statements.
/5/
ATR Search Corporation
(a Development Stage Company)
(unaudited)
Consolidated Statements of Cash Flows
Three Months March 2, 2001 March 2, 2001
Ending (Inception) to (Inception) to
March 31, 2002 March 31, 2001 March 31, 2002
-------------- -------------- --------------
Cash flows from operating activities
Net income (loss) $ (251,751) $ 31,346 $ (740,501)
Stock issued to acquire
technology - 350,000 350,000
Stock issued for services 259,125 - 410,375
Depreciation and amortization 75,456 - 301,063
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
(Increase) decrease in
accounts receivable (632) (93,002) (169,282)
(Increase) in other
current assets - - (30,766)
Increase in checks written
in excess of cash 19,583 - 19,583
Increase in accounts payable 6,990 - 6,990
Increase in accrued payroll 29,211 9,383 29,211
taxes
Increase in accrued interest 28,750 - 115,000
Increase in accrued interest -
related party 1,054 - 3,750
-------------- -------------- --------------
Net cash provided by
operating activities 167,786 297,727 295,423
-------------- -------------- --------------
Cash flows from investing activities
Short-term note payable - - 50,000
Long-term debt - 1,150,000 1,150,000
Purchase of fixed assets - - (11,969)
Acquired technology - (1,500,000) (1,500,000)
-------------- -------------- --------------
Net cash (used) by
investing activities - (350,000) (311,969)
-------------- -------------- --------------
Cash flows from financing activities
Issuances of common stock - 64,500 210,025
Increase in deferred
compensation (193,479) - (193,479)
-------------- -------------- --------------
Net cash provided (used)
by financing activities (193,479) 64,500 16,546
-------------- -------------- --------------
Net increase (decrease) in cash (25,693) 12,227 -
Cash - beginning 25,693 - -
-------------- -------------- --------------
Cash - ending $ - $ 12,227 $ -
============== ============== ==============
Supplemental disclosures:
Interest paid $ - $ - $ 329
============== ============== ==============
Income taxes paid $ - $ - $ -
============== ============== ==============
Non-cash transactions:
Number of shares issued to
acquire technology - 3,500,000 3,500,000
============== ============== ==============
Number of shares issued
for services 2,575,000 - 1,600,000
============== ============== ==============
The accompanying Notes are an integral part of these financial statements.
/6/
ATR Search Corporation
(a Development Stage Company)
Notes
Note 1 - Basis of presentation
The consolidated interim financial statements included herein,
presented in accordance with United States generally accepted
accounting principles and stated in US dollars, have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading.
These statements reflect all adjustments, consisting of normal
recurring adjustments, which, in the opinion of management, are
necessary for fair presentation of the information contained
therein. It is suggested that these consolidated interim
financial statements be read in conjunction with the consolidated
financial statements of the Company for the period ended December
31, 2001 and notes thereto included in the Company's Form 10-KSB.
The Company follows the same accounting policies in the
preparation of consolidated interim reports.
Results of operations for the interim periods are not indicative
of annual results.
Note 2 - Going concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. As noted above, the
Company is in the development stage and, accordingly, has not yet
generated a proven history of operations. Since its inception,
the Company has been engaged substantially in financing
activities and developing its product line, incurring substantial
costs and expenses. As a result, the Company incurred accumulated
net losses from March 2, 2001 (inception) through the period
ended March 31, 2002 of $(740,501). In addition, the Company's
development activities since inception have been financially
sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets
or satisfy its liabilities.
Note 3 - Fixed assets
As of March 31, 2002 the Company had the following assets:
Furniture & fixtures $ 1,969
Leasehold improvements 10,000
--------
$ 11,969
Depreciation expense totaled $456 for the three-month period
ended March 31, 2002.
Note 4 - Intellectual Property, Patents, and Other Intangibles
As of March 31, 2002, the Company had the rights to use
technology known as "human resource compiler based search
recognition software and hardware" from Sarcor Management, SA, a
British Virgin Islands corporation, in exchange for a lease
agreement and the issuance of 3,500,000 common shares of stock
valued at $350,000.
Amortization expense totaled $75,000 for the three-month period
ended March 31, 2002.
/7/
ATR Search Corporation
(a Development Stage Company)
Notes
Note 5 - Short term note payable
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000, which is due in 2 years. Interest in accrued on a
quarterly basis at an interest rate of 8% per annum. On May 5,
2003, the unpaid balance of principal and accrued interest will
convert into common stock at a ratio of one share of the
Company's $0.001 par value common stock for each $5. During the
three-month period ended March 31, 2002, interest expense was
$1,054. As of March 31, 2002 the balance in accrued interest was
$3,750.
Note 6 - Capital lease and rent obligations
10% capital lease payable to Sarcor Management, SA with monthly
interest-only
payments beginning in April 2001 of $5,000, increasing to $10,000
in April 2002,
$15,000 in April 2003, and $19,100 thereafter, secured by
software licensing rights, due March 2011. $1,150,000
Less current portion (120,000)
----------
Total long-term debt $1,030,000
==========
Summary of Future Minimum Lease Payments:
Fiscal Year Amount
----------- ---------
2001 $ 15,000
2002 150,000
2003 180,000
2004 229,200
2005 229,200
Thereafter 1,173,000
---------
Total lease payments
over the contractual period $1,976,400
Less: Interest (476,400)
---------
Original cost 1,500,000
Interest expense for the capital lease totaled $75,000 for the
three-month period ended March 31, 2002. As of March 31, 2002
the balance in accrued interest was $115,000. Of which none has
been paid as of March 31, 2002.
On April 1, 2001, the Company entered into a sublease agreement
to rent office space for a period of four years at a rate of
$2,502 per month. Rent expense totaled $7,555 for the period
ended March 31, 2002.
Note 7 - Stockholder's equity
On February 17, 2002, the Company executed a business consulting
agreement with MLSA whereby the Company issued 1,350,000 shares
of its $0.001 par value common stock to Mark Lancaster for
consulting services valued at $162,000. The consulting services
are to be rendered over a period of 90 days with an automatic
three-month renewal provision. Amounts included in expense were
$54,000 for the three-month period ended March 31, 2002. As of
March 31, 2002, the unamortized amount was included in the
accompanying balance sheet as "Deferred compensation."
On February 26, 2002, the Company executed a consulting agreement
with Qurag, Inc. whereby the Company issued 475,000 shares of its
$0.001 par value common stock to Chaim Drizin, a shareholder of
the Company, for consulting services valued at $30,875. The
consulting services are to be rendered over a period of 90 days
with an automatic three-month renewal provision. Amounts
included in expense were $10,292 for the three-month period ended
March 31, 2002. As of March 31, 2002, the unamortized amount was
included in the accompanying balance sheet as "Deferred
compensation."
/8/
ATR Search Corporation
(a Development Stage Company)
Notes
On March 1, 2002, the Company executed a consulting agreement
with Corporate Regulatory Services, LLC (CRS), a shareholder of
the Company, whereby the Company issued 250,000 shares of its
$0.001 par value common stock to CRS, for consulting services
valued at $16,250. The consulting services are to be rendered
over a period of approximately 1 year. Amounts included in
expense were $1,354 for the three-month period ended March 31,
2002. As of March 31, 2002, the unamortized amount was included
in the accompanying balance sheet as "Deferred compensation."
On March 27, 2002, the Company executed a consulting agreement
with Promark, Inc. whereby the Company issued 500,000 shares of
its $0.001 par value common stock to Ken Lowman for consulting
services valued at $50,000. The consulting services are to be
rendered over a period of 90 days with an automatic three-month
renewal provision.
There have been no other issuances of common stock.
Note 8 - Related party transactions
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000. (See Note 8 above.)
On May 24, 2001, the Company issued 150,000 shares of its $0.001
par value common stock to Mary Lou Cox, mother of Robert Cox, the
Company's president, for consulting services valued at $15,000.
On February 26, 2002, the Company executed a consulting agreement
with Qurag, Inc. whereby the Company issued 475,000 shares of its
$0.001 par value common stock to Chaim Drizin, a shareholder of
the Company, for consulting services valued at $30,875. The
consulting services are to be rendered over a period of 90 days
with an automatic three-month renewal provision. Amounts included
in expense were $10,292 for the three-month period ended March
31, 2002. As of March 31, 2002, the unamortized amount was
included in the accompanying balance sheet as "Deferred
compensation."
On March 1, 2002, the Company executed a consulting agreement
with Corporate Regulatory Services, LLC (CRS), a shareholder of
the Company, whereby the Company issued 250,000 shares of its
$0.001 par value common stock to CRS, for consulting services
valued at $16,250. The consulting services are to be rendered
over a period of approximately 1 year. Amounts included in
expense were $1,354 for the three-month period ended March 31,
2002. As of March 31, 2002, the unamortized amount was included
in the accompanying balance sheet as "Deferred compensation."
On March 27, 2002, the Company executed a consulting agreement
with Promark, Inc. whereby the Company issued 500,000 shares of
its $0.001 par value common stock to Ken Lowman for consulting
services valued at $50,000. The consulting services are to be
rendered over a period of 90 days with an automatic three-month
renewal provision.
Note 9 - Warrants
As of March 7, 2002, the Company issued 62,500 warrants to CRS, a
shareholder of the Company, to purchase the Company's $0.001 par
value common stock on a one-for-one basis. The warrant exercise
price is $0.10 per share of common stock and substantially all
warrants will expire on or before March 7, 2007.
As of March 31, 2002, no warrants have been exercised to acquire
additional shares of common stock.
/9/
Item 2. Management's Discussion and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements
about our business, financial condition and prospects that
reflect our assumptions and beliefs based on information
currently available. We can give no assurance that the
expectations indicated by such forward-looking statements will be
realized. If any of our assumptions should prove incorrect, or
if any of the risks and uncertainties underlying such
expectations should materialize, our actual results may differ
materially from those indicated by the forward-looking
statements.
The key factors that are not within our control and that may
have a direct bearing on operating results include, but are not
limited to, acceptance of our services, our ability to expand our
customer base, our ability to raise capital in the future, the
retention of key employees and changes in the regulation of our
industry. There may be other risks and circumstances that we are
unable to predict. When used in this Quarterly Report, words
such as, "believes," "expects," "intends," "plans,"
"anticipates," "estimates" and similar expressions are intended
to identify forward-looking statements, although there may be
certain forward-looking statements not accompanied by such
expressions. All forward-looking statements are intended to be
covered by the safe harbor created by Section 21E of the
Securities Exchange Act of 1934.
General
We were formed as a Nevada corporation under the name ATR
Search Corporation on March 2, 2001. We are a development stage
company engaging in the placement of information technology
("IT") professionals with technology sector companies on a
temporary or permanent basis. We seek to recruit qualified IT
professionals for placement with our clients in a timely manner.
These candidates are skilled primarily in the following areas:
1. Computer programming;
2. Project management;
3. System design, analysis and administration;
4. Network and systems management; and
5. Software and documentation development.
We provide human capital to IT companies located in the
greater New York area, extending into the tri-state area of New
York, New Jersey and Connecticut. Our IT consulting services are
focused on solving our customer's organizational problems, which
typically include:
1. General business and technology consulting;
2. Programming;
3. Organizational analysis;
4. Strategic planning; and
5. Network and systems integration and management.
Our recruits provide innovative ideas, insight and experience
to address the client's organizational problems, and then work
with the client to implement strategic solutions on a temporary
or permanent basis. Temporary IT consulting engagements may
typically last six months to one year, and require the services
of several specialized consultants. We receive compensation on a
contracted per project or per hourly fee arrangement for our
consulting services. Full time placements of technology
personnel are structured as a transactional fee paid by the
client, which ranges from 20-30% of the base compensation package
afforded to the new employee.
/10/
Results of Operations
We generated $175,658 in revenues for the three-month period
ended March 31, 2002. As our inception date was March 2, 2001,
the period ended March 31, 2001 was not a complete quarter and
therefore cannot be used for comparative purposes. Our revenues
are based entirely on the placement of our IT professionals.
Total cost of services, which includes the fees paid to our
subcontractors, consultants and other related costs, amounted to
$99,887 for the three months ended March 31, 2002 and $682,030
since March 2, 2001 (inception).
Total operating expenses for the three months ended March 31,
2002 were $297,718 and $1,053,534 since March 2, 2001
(inception). Total operating expenses for the three-month period
ended March 31, 2002 were entirely related to general and
administrative expenses, consulting fees, depreciation and
amortization, and organizational costs. These expenses were
largely incurred as a result of the following:
On February 17, 2002, we executed a business consulting
agreement with MLSA whereby we issued 1,350,000 shares of our
$0.001 par value common stock to Mark Lancaster for consulting
services valued at $162,000. These consulting services are to be
rendered over a period of 90 days with an automatic three-month
renewal provision. Amounts included in expense were $54,000 for
the three-month period ended March 31, 2002. As of March 31,
2002, the unamortized amount was included in the accompanying
balance sheet as "Deferred compensation."
On February 26, 2002, we executed a consulting agreement with
Qurag, Inc. whereby we issued 475,000 shares of our $0.001 par
value common stock to Chaim Drizin, a shareholder of the Company,
for consulting services valued at $30,875. The consulting
services are to be rendered over a period of 90 days with an
automatic three-month renewal provision. Amounts included in
expense were $10,292 for the three-month period ended March 31,
2002. As of March 31, 2002, the unamortized amount was included
in the accompanying balance sheet as "Deferred compensation."
On March 1, 2002, we executed a consulting agreement with
Corporate Regulatory Services, LLC (CRS), a shareholder of the
Company, whereby we issued 250,000 shares of our $0.001 par value
common stock to CRS, for consulting services valued at $16,250.
The consulting services are to be rendered over a period of
approximately 1 year. Amounts included in expense were $1,354
for the three-month period ended March 31, 2002. As of March 31,
2002, the unamortized amount was included in the accompanying
balance sheet as "Deferred compensation."
On March 27, 2002, we executed a consulting agreement with
Promark, Inc. whereby we issued 500,000 shares of our $0.001 par
value common stock to Ken Lowman for consulting services valued
at $50,000. The consulting services are to be rendered over a
period of 90 days with an automatic three-month renewal
provision.
Future Business
We have commenced operations, and have begun generating
revenues. However, we expect the industry to become increasingly
competitive, despite the size and growth expected in the market.
We intend to compete by targeting specific market segments such
as technology companies whose business cycle may require the
permanent or seasonal hiring of additional IT employees, or those
in need of IT consulting services. Our main goal is to ensure
client satisfaction with our services and to develop an
outstanding reputation for client service. If we fail to market
and distribute our services and generate sufficient revenues, we
may be unable to continue as a going concern.
/11/
Liquidity and Capital Resources
We believe our projected revenues will be sufficient to fund
ongoing fiscal 2002 and 2003 operations and provide for our
working capital needs, however, we have negative working capital
of $344,534. Our accountant has issued a note concerning our
ability to continue as a going concern. As we are still
considered to be in the development stage, our prospects of
continuing as a going concern are contingent upon our ability to
achieve and maintain profitable operations. Revenues generated
over and above expenses will be used for further development of
our services, to provide financing for marketing and promotion,
to secure additional customers, equipment and personnel, and for
other working capital purposes.
To date, we have financed our cash flow requirements through a
public issuance of common stock and through the revenues
generated from our IT placement services. During our normal
course of business, we will experience net negative cash flows
from operations, pending receipt of revenues. Further, we may be
required to obtain financing to fund operations through
additional common stock offerings and bank borrowings, to the
extent available, or to obtain additional financing to the extent
necessary to augment our available working capital.
All investor inquiries should be directed to Mr. Robert Cox,
President, ATR Search Corp. 29 E. 31st Street, 2nd Floor, New
York, New York 10016, phone 212-725-6150, fax 212-725-6228.
/12/
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company
filed March 2, 2001. Incorporated by
reference to the exhibits to the Company's
General Form For Registration Of Securities
Of Small Business Issuers on Form 10-SB,
previously filed with the Commission.
(b) Certificate of Amendment to the Articles
of Incorporation of the Company filed May 9,
2001. Incorporated by reference to the
exhibits to the Company's General Form For
Registration Of Securities Of Small Business
Issuers on Form 10-SB, previously filed with
the Commission.
(c) By-Laws of the Company adopted March 16,
2001. Incorporated by reference to the
exhibits to the Company's General Form For
Registration Of Securities Of Small Business
Issuers on Form 10-SB, previously filed with
the Commission.
/13/
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ATR Search Corporation
-----------------------------------------------------------------
(Registrant)
Date: May 21, 2002
------------
By: /s/ Robert Cox
---------------------------
Robert Cox, President and CEO
/14/