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 JUNE 30, 2001
( )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: 000-32319
JPAL, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 33-0851302
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
17620 Oak Street, Fountain Valley, California, 92708
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(Address of principal executive offices)
(714) 785.2095
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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 August 13, 2001, there were
8,645,260 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
INDEX TO QUARTERLY REPORT ON
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
PAGE
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PART I - FINANCIAL INFORMATION 3
Item 1. Condensed Financial Statements (Unaudited) 3
Condensed Balance Sheet at June 30, 2001 3
Condensed Statements of Operations for the three months and six months ended
June 30, 2001 and 2000 4
Condensed Statements of Cash Flows for the six months ended June 30, 2001 and
2000 5
Notes to the Condensed Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
PART II - OTHER INFORMATION 12
SIGNATURE 13
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
JPAL, INC.
CONDENSED BALANCE SHEET
June 30, 2001
(unaudited)
ASSETS
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CURRENT ASSET
Cash and cash equivalents $ 333
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Total current asset 333
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PROPERTY AND EQUIPMENT, net 1,779
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Total assets $ 2,112
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LIABILITY AND STOCKHOLDERS' EQUITY
----------------------------------
CURRENT LIABILITY $ ---
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value
5,000,000 shares authorized
No shares issued or outstanding
Common stock, $.001 par value;
50,000,000 shares authorized,
8,645,260 shares issued and outstanding 1,729
Additional paid-in capital 53,872
Accumulated deficit (53,489)
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Total stockholders' equity 2,112
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Total liability and stockholders' equity $ 2,112
================
See the accompanying notes to these condensed financial statements
3
JPAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
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2001 2000 2001 2000
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REVENUES
Rental commissions $ 640 $ --- $ 1,039 $ 660
Listing fees --- --- --- 630
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640 --- 1,039 1,290
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
4,444 3,624 18,735 4,481
OTHER EXPENSE
Depreciation 149 153 295 300
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4,593 3,777 19,030 4,781
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LOSS BEFORE PROVISION FOR INCOME TAXES
(3,953) (3,777) (17,991) (3,491)
PROVISION FOR INCOME TAXES --- --- --- ---
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NET LOSS $ (3,953) $ (3,777) $ (17,991) $ (3,491)
============ ============= ============ ============
BASIC AND DILUTIVE LOSS PER SHARE
$ (.00) $ (.00) $ (.00) $ (.00)
============ ============= ============ ============
BASIC AND DILUTIVE WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING
8,645,260 15,000,000 8,645,260 15,000,000
============= ============= ============= ============
See the accompanying notes to these condensed financial statements
4
JPAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
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Six Months Ended June 30,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (17,991) $ (3,491)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation 295 300
Goods and services and rent provided in exchange for additional
paid-in capital 17,104 500
Changes in operating assets and liabilities
Decrease in prepaid expenses 609 ---
Decrease in accounts payable (97) (384)
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Net cash used in operating activities (80) (3,075)
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CASH FLOWS FROM FINANCING ACTIVITIES
Additional paid-in capital 2,068 ---
Proceeds from issuance of common stock --- 3,020
Redemption of common stock (2,068) ---
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Net cash provided by financing activities --- 3,020
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NET DECREASE IN CASH AND CASH EQUIVALENTS (80) (55)
CASH AND CASH EQUIVALENTS, beginning of period 413 884
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CASH AND CASH EQUIVALENTS, end of period $ 333 $ 829
================= =================
See the accompanying notes to these condensed financial statements
5
JPAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
-----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Six Months Ended June 30,
---------------------------------------
2001 2000
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Cash paid during the period for interest $ --- $ ---
Cash paid during the period for income taxes $ --- $ ---
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
During the period ended June 30, 2001, the Company recorded rent and computer
services of $1,500 and $4,625, respectively, and additional paid-in capital
of $6,125 for rent and services provided by a stockholder.
During the period ended June 30, 2001, the Company recorded $10,979 for
legal, accounting and other administrative expenses and additional
paid-in-capital of $10,979 for services paid directly by a stockholder.
See the accompanying notes to these condensed financial statements
6
JPAL, INC.
---------
NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 2001 AND 2000
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NOTE 1 - BASIS OF PRESENTATION
The management of JPAL, Inc. (the "Company") without audit has prepared
the financial statements included herein. The accompanying unaudited financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information.
Certain information and note disclosures normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted. In the opinion of the
management of the Company, all adjustments considered necessary for fair
presentation of the financial statements have been included and were of a normal
recurring nature, and the accompanying financial statements present fairly the
financial position as of June 30, 2001, and the results of operations for the
three and six months ended June 30, 2001 and June 30, 2000 and its cash flows
for the six months ended June 30, 2001 and June 30, 2000.
The Company was incorporated in the state of Nevada on March 31, 1999
to operate as an Internet based provider of vacation rental properties and
services with an elected December 31st fiscal year end. A majority of the
services are to properties located in Nevada.
The Company has experienced net losses since its inception over the
past two years and had an accumulated deficit of approximately $53,500 at June
30, 2001. Such losses are attributable to cash losses resulting from costs
incurred in the development of the Company's services and infrastructure. The
Company expects operating losses to continue for the foreseeable future as it
continues to develop and promote its services.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30, 2001:
Computer $ 1,791
Computer equipment 1,057
Furniture 205
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3,053
Less: accumulated depreciation (1,274)
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$ 1,779
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7
NOTE 3 - INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"). This statement mandates the liability
method of accounting for deferred income taxes and permits the recognition of
deferred tax assets subject to an ongoing assessment of realizability.
The components of the Company's income tax provision consist of:
Six Months Ended June 30,
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2001 2000
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Federal taxes (deferred) net operating loss benefit $ (2,700) $ (500)
Change in valuation account 2,700 500
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$ --- $ ---
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Deferred income taxes are provided for timing differences in the
recognition of certain income and expense items for tax and financial statement
purposes. The tax effect of the temporary differences giving rise to the
Company's deferred tax assets and liabilities as of June 30, 2001 are as
follows:
Deferred income taxes
Net operating loss benefit $ 8,000
Valuation allowance (8,000)
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$ ---
================
8
The Company has federal net operating loss carryforwards of
approximately $53,000 that will expire through 2020.
The Company's tax reporting year end is December 31st. If the Company
has a net operating loss carryforward from operations for the year ended
December 31, 2001, it will expire in 2021.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company is currently utilizing office space provided by the
Company's president (a stockholder). During the period ended June 30, 2001, the
Company has recorded rent expense of $1,500 which represents the Company's pro
rata share of the office space being provided by the Company's president. The
Company has also recorded computer consulting services of $4,625 which were
provided by the Company's president. The services were valued using hourly rates
at estimated fair market value of similar services. The Company has recorded
$10,979 for legal, accounting and other administrative expenses that were paid
for by the Company's president. The president has waived reimbursement of the
allocated rent, computer consulting services, legal, accounting and other
administrative services provided and has considered them as additional paid-in
capital.
9
NOTE 5 - COMMON STOCK
On June 14, 2001 the Company redeemed 2,068,417 shares of its common
stock for $2,068.
On July 2, 2001, the Company approved a 5 for 1 forward stock split of
its common stock. Accordingly, all share and per share amounts have been
retroactively restated in the consolidated financial statements to reflect this
split.
10
Item 2. Plan of Operation
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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 an Internet based provider of vacation rental properties and services. We
are currently redesigning our website to provide a wide range of services to
both vacationers and property owners. Our primary source of revenue has been
property rental fees, which are charged to the property owners as a percentage
of the vacationers' total rental price, and we anticipate that those fees will
continue to be our primary source of revenue, although we intend to attempt to
generate additional revenue sources such as Internet advertising. In order to
effectuate our business plan during the next three to six months, we need to
complete the redevelopment of our website.
Liquidity and Capital Resources. We had cash of $333 as of June 30, 2001. Our
total assets were approximately $2,112 and our total liabilities were
approximately $0 as of June 30, 2001. Our president, secretary, director and
principal shareholder, Frank Drechsler, has also agreed to pay our expenses in
the event that we do not generate revenues or obtain additional working capital.
Results of Operations.
Revenue. For the three months ended June 30, 2001, we generated revenues of
approximately $640 with 100% of those revenues being generated from operations
relating to our vacation rental properties and services in Las Vegas. Our
revenues have decreased significantly because we are currently redeveloping our
website and we have not conducted any marketing activities. Therefore, we do not
expect that we will generate any significant revenues until such time as our
website redevelopment is complete.
Operating Expenses. For the three months ended June 30, 2001, operating expenses
totaled $4,593, of which a majority of those expenses relate to general and
administrative expenses. We anticipate that we will continue to incur
significant general and administrative expenses. During the six months ended
June 30, 2001, we incurred operating expenses relating to rent and computer
services of $1,500 and $4,625 respectively, and paid-in capital of $6,125 for
rent and services provided by Ryan A. Neely, our former officer and director.
For the six-month period ended June 30, 2001, we also incurred $10,979 for
legal, accounting, and other administrative expenses and additional
paid-in-capital of $10,979 for services paid directly by Ryan A. Neely, our
former officer and director.
11
Our Plan of Operation for the Next Twelve Months. Our plan of operation is
materially dependent on our ability to complete the redevelopment of our website
so that we can generate more revenues. If we are able to complete the
redevelopment of our website and generate significant revenues, we anticipate
that those revenues will be used to market our website and provide us with
working capital and pay our legal and accounting fees for the next twelve
months.
In the opinion of management, available funds will satisfy our working capital
requirements through November 2001. Our forecast for the period for which our
financial resources will be adequate to support our operations involves risks
and uncertainties and actual results could fail as a result of a number of
factors. We anticipate that we may need to raise additional capital to develop
and conduct our operations. Such additional capital may be raised through
public or private financing as well as borrowings and other sources. We cannot
guaranty that additional funding will be available on favorable terms, if at
all. If adequate funds are not available, we believe that our officers and
directors will contribute funds to pay for our expenses. Therefore, we have not
contemplated any plan of liquidation in the event that we do not generate
revenues.
We are not currently conducting any research and development activities, other
than the redevelopment of our website. We do not anticipate conducting any other
such activities in the next twelve months. We do not anticipate that we will
purchase or sell any significant equipment in the next six to twelve months
unless we generate significant revenues.
We do not anticipate that we will hire any employees in the next six to twelve
months, unless we generate significant revenues. We believe our future success
depends in large part upon the continued service of our key personnel.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
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None.
Item 2. Changes in Securities.
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None.
Item 3. Defaults Upon Senior Securities
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None
Item 4. Submission of Matters to Vote of Security Holders
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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None
12
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.
JPAL, Inc.,
a Nevada corporation
August 13, 2001 By: /s/ Frank Drechsler
-----------------------------------
Frank Drechsler
Its: President, Secretary, Director