U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under section 13 or 15 (D) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31,
2003
[ ] Transition report under section 13 or
15 (d) of the Securities Exchange Act of
1934 for the transition period from _____ to _____
ADVANCED 3-D ULTRASOUND SERVICES, INC.
f/k/a YSEEK, INC.
(Name of small business issuer in its charter)
Florida 65-0783722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7732 N. Mobley Drive
Odessa, Florida 33556
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (813) 926-3298
Securities registered under Section 12(b) of the Exchange Act:
None
Name of exchange on which registered
OTC Bulletin Board
Securities registered under Section 12(g) of the Exchange Act:
Common stock, $.0001 par value
Check whether the issuer: (1) 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 ___
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
The issuer's revenue for the most recent fiscal year ending December 31,
2003, was $-0-.
The aggregate market value of the voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of February
23, 2004, was approximately $889,778.50.
The number of shares of the Company's common stock, par value $.0001 per
share, outstanding as of March 22, 2004, was 131,963.
Transitional Small Business Disclosure Format (Check One) Yes____ No X
Part I
Item 1. Description of Business
The Company
The Company intends to operate 3-D ultrasound centers for elective,
non-diagnostic purposes. Centers will be located in commercial office parks,
malls and shopping centers, rather than primarily near hospitals. Centers will
initially be located in the Tampa, Florida, area.
The Company was originally formed to develop, own and operate a chain
of full-service car washes and express oil change centers. The Company is a
successor to Steele Holdings, Inc., a Florida Corporation formed on August 13,
1997. Rachel Steele was the sole shareholder and President of Steele Holdings.
On January 20, 1998, the Company and Steele Holdings, Inc., were reorganized
with all the assets of Steele Holdings being transferred into the Company. All
6,000 authorized shares of common stock were exchanged on a one-to-one thousand
basis for shares in the Company. After the reorganization, all stock in the
Company was owned by the Company's president, Rachel Steele. Steele Holdings has
conducted no other business, held no other assets and was dissolved on October
16, 1998. On October 22, 1999, the Company changed its name to SwiftyNet.com,
Inc. On January 29, 2001, the Company changed its name to Yseek, Inc.
The Company constructed an oil change center in Palm Harbor, Florida on
real property owned by the Company (the "Center"). The approximately one (1)
acre site was purchased from Champion Hills by the Company's predecessor for
$312,500. The first Center was opened on January 18, 1999. The Center was sold
on April 19, 2000, for a cash sales price of $1,000,000. The sales price was
determined through arms-length negotiations. The car wash was purchased by In
and Out Express Lube, Inc. There were no material relationships between the
purchaser and the Company or its affiliates, or any officer or director, or any
associate of such officer or director.
Late in 2000, the Company launched an Internet search portal called
Yseek.com based on a ten-year software license it acquired in late 2000. In
January 2001, the Company used the software to begin operating the Yseek.com web
site. Yseek.com provided a free search engine and links by category to other
World Wide Web sites at [www.yseek.com]. During 2001 and 2002, the Company
entered into several short-term revenue sharing agreements with Internet host
sites to generate traffic to the site and generate revenues. The Company's
management with Internet related experience resigned from the Company in
September 2002. New management elected in September 2002 decided not to pursue
an Internet related business and therefore recognized an impairment loss for the
unamortized value of the search engine in the fourth quarter of 2002.
On March 12, 2003, the board of directors voted to amend the Company's
Articles of Incorporation changing the Company's name to Advanced 3-D Ultrasound
Services, Inc. The purpose of the name change is to reflect the Company's
emphasis on developing 3-D ultrasound centers.
Background
Ultrasound has been used during pregnancy for diagnostic purposes since
the late 1950's. Real-time scanners are currently used for such diagnostic
procedures which provide a continuous picture of a moving fetus on a monitor
screen.
Real-time scanners (2-D) use very high frequency sound waves between
3.5 and 7.0 megahertz and are generally used for diagnostic purposes. Sound
waves are emitted from a transducer which is placed on the mother's stomach and
moved to obtain an image of the fetus. The sound waves act much in the same
manner as the reflection and distortion as light, changing wave length and
direction as they cross the boundaries between media. Each sound wave emitted by
the transducer is reflected by the mother and fetus and the reflection is
recorded by the transducer. This occurs multiple times. The information obtained
from different reflections are recomposed on the monitor screen.
3-D ultrasound fetal imaging was first developed in 1986, but was not
practiced on a wide-spread basis until 1999, when new computer logarithms and
more powerful computers were developed. 3-D ultrasound imaging systems work in a
similar fashion as 2-D ultrasound systems, except that the transducer scans are
processed to a greater degree and an array of micro-processor controlled
transducers are used. The transducer array takes several hundreds or thousands
2-D ultrasound images over a 30-40 degree arc. Perception of a 3-D surface is
achieved when these 2-D images are combined by a combination of depth shading,
color mapping, texture mapping and ray tracing volume rendering, all of which
are performed in a computer. While certain medical conditions are more easily
diagnosed with a 3-dimensional scan, the primary purpose of such scanning is to
allow mothers to see their babies prior to birth, and thus, bond with them. This
use has been referred to as a "reassurance scan" or an "entertainment scan."
Equipment
The Company intends to purchase imaging equipment from National
Ultrasound, Inc. of Norcross, Georgia at an approximate price of $50,000 per
imaging system. The imaging equipment will be purchased for cash. The imaging
equipment is not proprietary to the Company and will be purchased from third
party suppliers. There are at least 6 suppliers of comparable equipment. As a
result, the Company believes it will be able to obtain adequate equipment from
numerous sources.
Employees
The Company anticipates that each center will have 3 full-time
employees being comprised of a technician and 2 persons to operate the office.
Governmental Regulations
Because the Company believes its market will be primarily elective,
non-diagnostic 3-D ultrasound scans, it does not anticipate significant Medicare
or insurance billing. While imaging equipment will be operated by licensed
technicians specifically trained in the operation of ultrasound equipment, the
operation through the ultrasound equipment per se is not otherwise regulated.
Government regulation of the operation of an elective, non-diagnostic 3-D
ultrasound center could have an adverse impact on the profitability of the
Company's centers.
Locations
The Company's centers will be primarily housed in malls and strip
shopping centers. The Company does not anticipate purchasing any of its offices,
rather renting them. Each center will be comprised of approximately 1,000 sq.
ft. which will include two examining rooms, a waiting room and a business
office. The Company has not yet entered into a lease for its first center , but
believes that leases suitable for use as a center can be obtained on terms
favorable to the Company, and does not anticipate any difficulty in obtaining
suitable space for its ultrasound centers.
On March 12, 2004, the Company rented offices located at 14502 North
Dale Mabry Highway, Tampa Florida for its corporate headquarters. The lease is
for a term of six months and on a month-to-month basis thereafter. The rental
under the lease is $600 per month. The leased space is approximately 183 square
feet.
Competition
The Company will compete with existing medical imaging centers. The
Company believes many of these centers do not yet have 3-D ultrasound equipment.
The Company will also compete with other companies which target the same
elective, non-diagnostic 3-D ultrasound market as the Company, such as Clearview
Ultrasound, Inc., FetalFotos, Inc. and BabyInsight, Inc. Since barriers to entry
in the elective, non-diagnostic 3-D ultrasound market are comparatively low, it
is anticipated that the Company will experience increased competition.
Item 2. Description of Property
None.
Item 3. Legal Proceedings
The Company is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None
Part IIItem 5. Market for Common Equity and Related Stockholder MattersThe
Company's common stock are traded on the Over-the-Counter Bulletin Board under
the symbol AVDU.OB. The high and low sales prices for each quarter since 2000
are as follows:
Common Stock
High* Low*
1st quarter 2000 $1,600.00 $625.20
2nd quarter 2000 1,425.32 600.00
3rd quarter 2000 737.60 350.00
4th quarter 2000 550.00 137.60
1st quarter 2001 287.60 287.60
2nd quarter 2001 152.00 75.20
3rd quarter 2001 136.00 32.00
4th quarter 2001 92.00 24.00
1st quarter 2002 18.12 16.64
2nd quarter 2002 8.04 7.80
3rd quarter 2002 6.80 6.56
4th quarter 2002 5.56 5.36
1st quarter 2003 24.00 4.00
2nd quarter 2003 20.00 8.00
3rd quarter 2003 24.00 12.00
4th quarter 2003 24.00 8.00
*All share prices adjusted to reflect 1-for-400 reverse stock split effective
December 29, 2003.
The approximate number of holders of record of common stock is 110. No dividends
have been declared to date. The future dividend policy will depend upon the
Company's earnings, capital requirements, financial condition and other factors
considered relevant by the Company's Board of Directors.
Recent Sales of the Company's Securities.
From September 2003 to March 2004, the Company sold a total of 21,959 common
shares as follows:
Name Number Common Shares Purchased Date Price/Share
W.L. Blakely 5001 10-02-03 $6.00
David/Jacqueline Halpern 2,5001 10-07-03 $6.00
William Kapner 6251 11-24-03 $6.00
David/Jacqueline Halpern 2,5001 11-26-03 $6.00
Steven Sattinger 8341 12-10-03 $6.00
Glenn M. Noble 2,000 01-30-04 $5.00
Elmer R./Maria Oma Orozco 2,000 02-02-04 $5.00
Douglas W. Kile 1,000 02-11-04 $5.00
Timothy Minnehan 10,000 03-04-04 $5.00
1Adjusted for 1-for-400 reverse split.
All sales were made pursuant to Section 4(2) of the 1933 Act. The proceedsof the
sale of these securities to provide operating capital and development costs.
On February 1, 2003, the Company entered into a consulting agreement with an
individual to investigate a potential business opportunity for a period of
ninety days. In exchange for services, the consultant will receive $10,000 and
2,500 common shares.
Special Note Regarding Forward Looking Statements.
This annual report on Form 10-KSB of Advanced 3-D Ultrasound Services, Inc.,
f/k/a Yseek, Inc. for the year ended December 31, 2003 contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, which are intended to be covered by the safe harbors created
thereby. To the extent that such statements are not recitations of historical
fact, such statements constitute forward-looking statements which, by
definition, involve risks and uncertainties. In particular, statements under the
Sections; Description of Business, Business Strategy and Management's Discussion
and Analysis of Financial Condition and Results of Operations contain
forward-looking statements. Where, in any forward-looking statement, the Company
expresses an expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished.
The following are factors that could cause actual results or events to differ
materially from those anticipated, and include but are not limited to: general
economic, financial and business conditions; changes in and compliance with
governmental regulations; changes in tax laws; and the costs and effects of
legal proceedings.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere in this
report. This report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Special
Note Regarding Forward-Looking Statements."
PLAN OF OPERATION
During the first eight months of 2002, the Company's board of directors and
officers were affiliated with companies and individuals with substantial
experience in the internet industry. Prior to 2002, strategic alliances and
consulting agreements had allowed the Company to acquire management and
marketing expertise with these individuals and companies. In September 2002
these officers and directors elected new officers and directors and then
resigned. The new officers and directors have been involved with the company
since its inception, except for the period from April 2001 to September 2002.
In late 2000, the Company acquired a ten-year software license for the use of a
keyword biddable search engine and related domain names. The Company entered
into two traffic promotion agreements whereby each promoter provided hits to the
Company web site. The Company issued stock in exchange for these agreements
enabling the Company to move forward on its plans without the use of any funds.
The stock issued under the traffic promotion agreements was returned in
September 2002. New management elected in September 2002 decided not to pursue
an Internet related business and therefore recognized an impairment loss for the
unamortized value of the search engine in the fourth quarter of 2002. Management
will attempt to sell the remaining term of the license however there is no ready
market and the ultimate proceeds, if any, cannot be determined.
The Company's plans include acquiring or developing profitable business
ventures. On February 1, 2003, the Company entered into a consulting agreement
with an individual to investigate a potential business opportunity for a period
of ninety days. In exchange for these services, the consultant will receive
$10,000 and 2,500 common shares. Currently the Company is actively pursuing the
business of 3-D fetal photography. 3-D fetal photography provides clear color
photographs of an unborn child. The Company believes recent improvements make
this technology practical and desired by parents. In response to the Company's
decision to pursue this business venture, the Company received shareholder
approval to pursue this venture and therefore changed its name to Advanced 3-D
Ultrasound Services, Inc. at its shareholders meeting on May 2, 2003.
The Company is currently working on the business model for a 3-D fetal
photography center and a marketing plan for the first center. The Company has
determined the design of the first center and has negotiated with vendors to
provide equipment. The Company is also pursuing trademark protection. The
Company is currently working on a business and marketing plan.
The Companies' plans to develop a profitable 3-D fetal photography business will
require additional funds.
The Company adopted a subscription agreement to raise $300,000 of which $200,000
was to be used for fetal photography development and $100,000 for working
capital. From September 2002 through December 2002, the Company received
$138,730 from sales of common stock, of which $35,000 was from one of the new
officers who is a major stockholder. This initial funding was used primarily to
pay off debts and to fund minimal administrative costs. In 2003, the Company
received $164,300 from sales of common stock. This funding was used to fund
administrative costs and to fund the consulting agreement noted in a preceding
paragraph. The Company plans to fund its near-term operations through additional
sales of common stock.
As of December 31, 2003 the Company had little available cash. However, the
Company's operations are currently minimal and the cash outflows have been
substantially reduced. Additionally the Company's officers and board members
have agreed to fund the Company's current level of operations if necessary.
Additionally, the Company sold stock subsequent to December 31, 2003 as noted
below.
In January 2004, the Company issued a private placement memorandum to issue up
to 1,000,000 common shares at $5.00 per share to raise up to $5,000,000 to
develop and operate imaging centers to provide ultrasound pictures of fetuses.
These centers will be for elective, non-diagnostic purposes and will be located
in commercial office parks, malls and shopping centers. The funds raised will be
used for development costs, equipment, salaries, marketing and future public
offering costs.
In October 2002 the Company entered into employment agreements with its vice
president and treasurer. The employment agreements are for the period October 1,
2002 through September 30, 2003. Compensation under both agreements will be
11,250 common shares valued at $.01 per share. Bonuses can be paid at the
discretion of the Board.
Item 7. Financial Statements
Advanced 3-D Ultrasound Services, Inc. (Formerly Yseek, Inc.)
FINANCIAL STATEMENTS
December 31, 2003
[letterhead for Ferlita, Walsh, & Gonzalez, P.A.]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Advanced 3-D Ultrasound Services, Inc.
f/k/a YSEEK, Inc.
We have audited the accompanying balance sheet of Advanced 3-D Ultrasound
Services, Inc. as of December 31,2003, and the related statement of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
The financial statements for the year ended December 31, 2002, were audited by
other accountants, and they expressed and unqualified opinion on them in their
report dated March 6, 2003, but they have not performed any auditing procedures
since that date. As discussed in Note 8 to the financial statements, the Company
has restated its 2002 financial statements during the current year to reflect a
reverse stock split in conformity with accounting principles generally accepted
in the United States of America. The other auditors reported on the 2002
financial statements before the restatement.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Advanced 3-D Ultrasound
Services, Inc. at December 31, 2003, and the results of its operations and its
cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
/S/
Ferlita, Walsh & Gonzalez, P.A.
Tampa, Florida
March 27, 2004
[letterhead for B2D Semago]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Advanced 3-D Ultrasound Services, Inc.
(Formerly known as Yseek, Inc)
Tampa, Florida
We have audited the accompanying balance sheet of Advanced 3-D Ultrasound
Services, Inc. (formerly known as Yseek, Inc.) as of December 31,2002, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the management of Advanced 3-D Ultrasound Services, Inc. (formerly known as
Yseek, Inc.) Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly the
financial position of Advanced 3-D Ultrasound Services, Inc. (formerly known as
Yseek, Inc.) as of December 31, 2002, and the results of its operations and cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
/S/
CERTIFIED PUBLIC ACCOUNTANTS
Tampa, Florida
March 6, 2003
Advanced 3-D Ultrasound Services, Inc. (Formerly Yseek, Inc.)
BALANCE SHEET
December 31, 2003
ASSETS
Current assets
Cash $ 3
Total Assets $ 3
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses $ 33,946
Commitments and contingencies
Stockholders' equity (deficit)
Common stock; $.0001 par value; 50,000,000 shares
authorized; 116,963 shares issued and outstanding 12
Paid-in capital 8,562,811
Accumulated deficit (8,596,766)
Total stockholders' equity (deficit) (33,943)
Total Liabilities and Stockholders' Equity (Deficit) $ 3
Advanced 3-D Ultrasound Services, Inc. (Formerly Yseek, Inc.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
Revenues
$ - $ -
Expenses
Selling, general and administrative 181,203 119,771
Total expenses
181,203 119,771
Other income (expense)
Interest expense (9) (2,952)
Total other income (expense)
(9) (2,952)
Loss from continuing operations
(181,212) (122,723)
Discontinued operations
Loss from discontinued operations
of internet business 593,558
-
Net loss $ $ (716,281)
(181,212)
Loss per common share
From continuing operations $ (1.72) $ (1.48)
Discontinued operations - loss
from operations (7.18)
-
Total loss per share $ (1.72) $ (8.66)
Weighted average common
shares outstanding
105,064 82,686
Advanced 3-D Ultrasound Services, Inc. (Formerly Yseek, Inc.)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
Balance, December 31, 2001 55,836 $ 6 $ 8,154,787 $ (7,699,273) $ 455,520
Common stock issued for services
22,500 2 89,998 - 90,000
Common stock issued for cash 23,042 2 138,728 - 138,730
Common stock returned (14,300) (1) 1 - -
Net loss
- - - (716,281) (716,281)
Balance, December 31, 2002
87,078 9 8,383,514 (8,415,554) (32,031)
Common stock issued for services
2,500 - 15,000 - 15,000
Common stock issued for cash
27,385 3 164,297 - 164,300
Net loss
- - - (181,212) (181,212)
Balance, December 31, 2003 116,963 $ 12 $ 8,562,811 $ (8,596,766) $ (33,943)
Advanced 3-D Ultrasound Services, Inc. (Formerly Yseek, Inc.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
Cash flows from operating activities
Net loss $ (181,212) $ (716,281)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued to consultants and employees
15,000 90,000
Depreciation and amortization
- 65,400
Writedown of software license due to impairment
- 517,754
Decrease in other receivables
- 2,025
Increase (decrease) in accounts payable and accrued expenses
(5,084) 4,133
Total adjustments
9,916 679,312
Net cash used in operating activities (171,296) (36,969)
Cash flows from financing activities
Proceeds from issuance of loans payable
- 22,564
Payments on notes payable
- (117,564)
Proceeds from sale of common stock
164,300 138,730
Net cash provided by financing activities
164,300 43,730
Net increase (decrease) in cash (6,996) 6,761
Cash, beginning of year
6,999 238
Cash, end of year $ 3 $ 6,999
Supplemental disclosures of noncash investing and financing activities:
In 2003 and 2002, the Company issued stock amounting to $15,000 and $90,000
respectively, for consultant services and employee compensation.
Cash flow information:
Cash paid for interest $ 9 $ 7,539
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
(1) Significant Accounting Policies:
The following is a summary of the more significant accounting policies and
practices of Advanced 3-D Ultrasound, Inc. (the Company) which affect the
accompanying financial statements.
(a) Organization--Advanced 3-D Ultrasound, Inc. was incorporated on
September 23, 1997. The Company was formerly know as Yseek, Inc. On March
12, 2003, the board of directors voted to amend the Company's Articles of
Incorporation changing the Company's name to Advanced 3-D Ultrasound
Services, Inc. The purpose of the name change was to reflect the Company's
emphasis on developing 3-D ultrasound centers.
(b) Operations--The Company intends to operate ultrasound centers for
elective, non-diagnostic purposes Centers will be located in commercial
office parks, malls and shopping centers The initial center is expected to
be located in Tampa, Florida
In late 1999, the Company acquired a company that developed a web site to
provide comparative statistical analysis of Internet advertising. This web
site and its technology was abandoned in early 2001. Late in 2000, the
Company launched an Internet search portal called Yseek.com. The Internet
search portal was abandoned as an operating asset in late 2002 and internet
operations were discontinued.
Originally the Company was formed to develop, own and operate a chain of
full-service car wash and express oil change centers. The Company owned and
operated one such center from January 1999 through April 2000. The center
was sold in April 2000. The Company discontinued this segment of business.
(c) Use of estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
(d) Cash--For the purposes of reporting cash flows, the Company considers
all highly liquid investments with an original maturity of three months or
less to be cash equivalents.
(e) Loss per common share--Loss per share is based on the weighted average
number of common shares outstanding during each period in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share. In
computing diluted earnings per share, warrants were excluded because the
effects were antidilutive.
(f) Deferred income taxes-- Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statements carrying amounts of existing
assets and liabilities and their respective income tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized as income in the
period that included the enactment date.
(g) Long-lived assets--Long-lived assets to be held and used are reviewed
for impairment whenever events or changes in circumstances indicate that
the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on the
excess of the asset's carrying amount over fair value of the asset and
long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
(2) Loss from Impairment of Software License and Discontinued Operations:
Late in 2000, the Company launched an Internet search portal called Yseek.com
based on a ten-year license it acquired in late 2000. During 2001 and 2002, the
Company entered into several short-term revenue sharing agreements with internet
host sites to generate traffic to the site and generate revenues. The Company's
management with internet related experience resigned from the Company in
September 2002.
In December 2002, current management determined they would dispose of their
software license for an Internet search portal called Yseek.com due to the lack
of revenues, experience of current management with internet businesses and due
to the lack of funds available to generate sufficient revenues from the site.
Management will attempt to sell the license however there is not an active
market for such an asset, and no buyer is presently identified. As of December
31, 2002, the net book value of the license was $517,754. The Company recognized
a loss from impairment of $517,754 in 2002 which is included in loss from
discontinued operations in the statement of operations. The Company discontinued
internet operations in December 2002.
Amortization expense on software license, which is included in loss from
discontinued operations was $65,400 in 2002.
Summarized results of internet operations for the years ended December 31, 2003
and 2002, are as follows:
Year Ended
December 31,
2003 2002
Net sales $ - $ 254
Operating loss $ - $ (593,558)
Loss from discontinued operations $ - $ (593,558)
(3) Income Taxes:
No provision for income taxes has been recorded for 2003 or 2002 due to net
losses incurred.
Temporary differences giving rise to the deferred tax assets consist primarily
of donated services recognized for financial statement purposes. Management has
established a valuation allowance equal to the amount of the deferred tax assets
due to the uncertainty of realization of the benefit of the net operating losses
against future taxable income. The components of deferred tax assets at December
31, 2003, consist of the following:
Deferred tax assets:
Net operating loss $ 2,207,000
Other temporary differences 27,000
Valuation allowance (2,234,000)
Net deferred tax asset ---------------
$ -
The Company has operating losses of approximately $8,056,000 which can be used
to offset future taxable income. These losses begin to expire in the year 2018
and expire in full in the year 2023.
(4) Stock Transactions:
During 2003, the Company sold 27,385 shares of common stock for cash of
$164,300. During 2002, the Company sold 23,042 shares of common stock for cash
of $138,730.
In 2000, the Company issued 14,300 shares of common stock under two traffic
promotion agreements, with two companies related to then officers or directors
of the Company. These agreements expired one year later. The Company recognized
an expense of $1,287,000 related to these agreements. In September 2002, the two
companies returned the entire 14,300 common shares. The companies executed
mutual releases from any future claims, losses or rights. The shares received by
the Company were recorded at cost, which was zero.
On January 15, 2003, the Company issued 2,500 shares of common stock under a
consulting agreement. The Company recognized an expense of $15,000 related to
this agreement which represents the market value of the shares issued. Market
value was determined based on recent sales of stock for cash as noted above.
On October 1, 2002, the Company issued 22,500 shares of common stock under
one-year employment agreements with two officers of the Company. The Company
recognized an expense of $90,000 related to these agreements, which represents
the market value of the shares less a discount because the shares are
unregistered and are not easily marketable.
(5) Commitments and Related Party Transactions:
The Company entered into several agreements with related parties as described in
Note 4.
During 2003, an officer and stockholder of the Company loaned the Company
$6,368. This amount was repaid in 2003 without interest.
The above related party agreements are not necessarily indicative of the
agreements that would have been entered into by independent parties.
(6) Warrants:
At December 31, 2002, the Company had outstanding exercisable warrants to
purchase 249,000 shares of the Company's common stock at various prices based
upon expiration dates. Warrants expiring in 2003 were exercisable at $7.00.
Prior to expiration, the warrants may be redeemed by the Company at a price of
$.01.
As of December 31, 2003 no warrants had been redeemed and all outstanding
warrants expired.
(7) Stock Options:
The Company granted options to consultants under various consulting agreements.
These agreements grant to the consultants the option to purchase shares of
Company common stock at a fixed price of $.50 per share. Management has
determined these per share prices equal or exceed fair market value. These
options expire on the third anniversary date of the execution date of the
respective agreement and are immediately vested.
A summary of consultant option activity follows:
Year Ended
---------------------------------
December 31,
2003 2002
Outstanding, beginning of year 3,075,000 3,075,000
Issued - -
Expired (3,075,000) -
---------------- ------------
Outstanding, end of year - 3,075,000
The Company follows SFAS 123 in accounting for stock options issued to
nonemployees. The fair value of each option granted is estimated using the
Black-Scholes stock option pricing model. The following assumptions were made in
estimating fair value: risk-free interest rate of 5.38% in 2001; no dividend
yield; expected life of one and one-half years; 9.53% volatility in 2001. There
was no compensation cost related to these options.
(8) Reverse Stock Split:
The Company authorized a reverse stock split of its common shares on a 1-for-400
basis effective December 29, 2003. All references in the accompanying financial
statements to the number of common shares and per-share amounts for 2002 and
2003 have been restated to reflect the reverse stock split.
(9) Subsequent Events:
Subsequent to December 31, 2003, the Company sold 15,000 shares of common stock
for $75,000.
On March 12, 2003, the Company entered into an operating lease agreement for
office space located in Tampa, Florida. The term of the lease is for six months
and commenced March 18, 2003, and continues thereafter on a month-to-month basis
for $50 per month. The total rent for the six months is $3,600 and the prorated
rent for the fourteen days in March is $271 and is payable in advance in equal
monthly installments of $600 plus applicable sales tax. In addition, a $600
deposit is due and payable in three equal installments upon the execution of the
lease agreement.
(10) Going Concern:
As shown in the accompanying financial statements, the Company has incurred
recurring losses from operations and at December 31, 2003, the Company's cash
balance was $3 and its current liabilities exceeded it's total assets by
$33,943.
Management has taken several actions to ensure that the Company will continue as
a going concern through December 31, 2004, including obtaining written
commitments from certain officers of the Company to fund future operations as
needed. In addition, the Company expects a substantial increase in funds from
the sale of its common stock within the quarter ending June 30, 2004. Management
believes that these actions will enable the Company to continue as a going
concern through December 31, 2004. There can be no assurance, however, that the
Company will raise funds from the sale of its securities beyond those disclosed
in these financial statements.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On October 31, 2003, Advanced 3-D Ultrasound Services, Inc. (hereinafter,
the "Registrant") engaged Ferlita, Walsh & Gonzalez, P.A., as its independent
auditors for the year ending December 31, 2003 to replace the firm of B2d
Semago, which was dismissed as its auditors effective October 31, 2003. The
decision to change auditors was approved by the Registrant's Board of Directors.
The reports of B2d Semago, on the financial statements of the Registrant
for the years ended December 31, 2001 and December 31, 2002, did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles.
There were no disagreements with B2d Semago, which disagreements, if not
resolved to the satisfaction of B2d Semago, would have caused it to make
reference to the subject matter of the disagreement in the report, on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope and procedures in connection with the audits of the Registrant's
consolidated financial statements for the two-year period ended December 31,
2002, or with regard to the Company's most recent 10-QSB filed August 14, 2003.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
The following is a brief description of the educational and business experience
of each director, executive officer and key employee of the Company:
Year First
Principal Occupations During Past Became
Name of Director Age Five Years; Certain Directorships Director
David Weintraub 40 1998-2000: Vice President-Marketing - Swifty Car Wash & Quik-Lube, Inc. 2002
2000-2001: Sales, Marketing - SwiftyNet.com, Inc.
2003-Present: CEO, Director - Yseek, Inc.
Rachel Steele 37 1998-2000: President, Secretary - Swifty Car Wash & Quik-Lube, Inc. 2002
2000-2002: President - SwiftyNet.com, Inc.
2000-2001: Director - SwiftyNet.com, Inc.
2002-Present: Vice President, Director - Yseek, Inc.
Glen Ostrowski 38 1998-2002: Vice President-Marketing - Animagic Animation 2002
2002-Present: President - Yseek, Inc.
Tanya Ostrowski 27 1995-2002: Administrative Assistant, Processor - Compass Bank 2002
2002-Present: Secretary, Treasurer, Director - Yseek, Inc.
No voting arrangements exist between the officers and directors. Mr. Weintraub
and Ms. Steele live together. The above persons were selected pursuant to
provisions in the Company's By-Laws, all holding office for a period of one year
or until their successors are elected and qualified. None of the officers or
directors of the Company have been involved in legal proceedings during the past
five years which are material to an evaluation of the ability or integrity of
any director, person nominated to become a director, or executive officer of the
issuer, including any state or Federal criminal and bankruptcy proceedings.
Item 10. Executive Compensation
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Securities All
Principal Annual Restricted Underlying Other
Position Compen Stock Options/ LTIP Compens-
Year Salary($) Bonus($) sation Awards($) SARs(#) Payouts($) sation($)
David Weintraub
Chief Executive Officer 0 0 0 0 0 0 0 0
Glen Ostrowski
President 0 0 0 0 0 0 0 0
Tanya Ostrowski
Secretary-Treasurer 0 0 0 0 0 0 0 $45,000(1)
Rachel Steele 0 0 0 0 0 0 0 $45,000(2)
Vice President
(1) Reflects issuance of 4,500,000 shares.
(2) Reflects issuance of 4,500,000 shares.
Committees of the Board of Directors
The Company's bylaws provide that the board may designate an executive
committee and other committees, each of which shall consist of one or more
directors. The board does not have an audit committee.
Compensation of Directors
Directors serve without compensation. Some directors are also employees of
the Company: Ms. Steele and Ms. Ostrowski have each received 11,250* common
shares for their services as Vice-President and Secretary-Treasurer,
respectively. During 2003, Mr. Ostrowski received compensation of $47,099.71,
Ms. Ostrowski received compensation of $17,548.20 and Ms. Steele received
compensation of $7,671.00.
Ms. Steele donated her 2000 and 2001 salary to the Company. No other
officer or directors have been compensated for their services in those
capacities. At this time, the Company does not plan on paying its Board of
Directors in return for their services as Directors.
Executive Compensation and Employment Arrangements
On October 1, 2002, the Company entered into identical employment
agreements with Rachel Steele and Tanya Ostrowski (the "Employment Agreements"),
which provided for annual compensation of 11,250* shares of Company's common
stock. Under the Employment Agreements, Ms. Steele and Ms. Ostrowski were
eligible for bonuses as determined by the Board of Directors. Both Employment
Agreements expired September 30, 2003. At present there are no written
employment or consulting agreements with any officer or director. During 2003,
Mr. Ostrowski received compensation of $47,099.71, Ms. Ostrowski received
compensation of $17,548.20 and Ms. Steele received compensation of $7,671.00.
Item 11. Security Ownership of Certain Beneficial Owners and Management
There are no officer or director groups. As a group, the officers and
directors of the Company own 27,282 common shares or 23.33% of the outstanding
shares of the Company. As of March 22, 2004, the stock ownership of the Officers
and Directors and 10% Shareholders was as follows.
Title Name and Amt and Percent
Of Address Nature of of
Class of Beneficial Owner Beneficial Ownership Class
Common Glen Ostrowski 250 0.19%
Stock 3645 Kings Road
Bldg 6, #104
Palm Harbor, FL 34685
Common Rachel Steele 16,682 12.64%
Stock 7732 N. Mobley Road
Odessa, FL 33556
Common David Weintraub 0 0%
7732 N. Mobley Road
Odessa, FL 33556
Common Tanya Ostrowski 10,350 07.84%
Stock 3645 Kings Road
Bldg 6, #104
Palm Harbor, FL 34685
Common
Stock Total 27,282 23.33%
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Exhibit Description Number
(2)Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession
(3)Articles of Incorporation and By-Laws
*(3.1)Articles of Incorporation
**(3.2)By-Laws
++(3.3)Articles of Amendment Name Change
(4)Instruments Defining the Rights of Security Holders
(a)Subscription Agreement
*(b)Warrant Agreement
++(c)Warrant Resolution dated March 2, 2000
(9)Voting Trust Agreement
(10)Material Contracts
*(10.1)Equipment Purchase Contract
*(10.2)Construction Contract
*(10.3)Architect Contract
*(10.4)Consulting Contract-Donald Hughes
*(10.5)Employment Contract-Stanley Rabushka *(10.6)Promissory Note - Swifty
*(10.7)Promissory Note - Steele *(10.8)Consulting Contract-John Oster
*(10.9)Raymond Lipsch Contract *(10.10)Land Purchase Contract
**(10.11) Stanley Rabushka Employment and Stock Agreement
**(10.12) Tampa Bay Buccaneers Agreement
***(10.13)Edgar Arvelo Consulting Contract
***(10.14)Richard Kleinberg Employment Contract
***(10.15)Vladimir Rafalovich
***(10.16)Martinez Consulting Contract
****(10.17)Purchase and Sale Contract between Jim Malak and/or Assigns and
SwiftyNet.com, Inc.
dated April 6, 2000
+(10.18)Consulting Agreement with Netelligent Consulting
dated October 11, 2000
+(10.19)Consulting Agreement with Frank Pinizzotto
dated September 19, 2000
+(10.20)Consulting Agreement with Gigi Pinizzotto
dated September 19, 2000
+(10.21)Professional Services Agreement with
Laurie Stern dated July 31, 2000
+(10.22)Consulting Agreement with Mark Daniel White
dated September 19, 2000
++(10.23)Consulting Agreement with Nick Trupiano
dated November 25, 2000
++(10.24)Consulting/Option Agreement with CandidHosting.com, Inc.
dated December 1, 2000
++(10.25)Consulting/Option Agreement with David S. Goldman
dated December 19, 2000
++(10.26)Consulting/Option Agreement with Voice Media, Inc.
dated December 1, 2000
++(10.27)Public Relations Agreement with Shoreliner
Capital Ltd. Partnership dated January 17, 2001
++(10.28 Traffic Promotion Agreement with Voice Media, Inc.
dated November, 2000
++(10.29)Traffic Promotion Agreement with CandidHosting.com,Inc.
dated December 1, 2000
++(10.30)Consulting Agreement with Paul Runyon
dated November 25, 2000
++(10.31)Non-Exclusive License Agreement with Norman J. Jester, III
dated November, 2000
++(10.31)Client Services Agreement with Markham/Novell
Communications, Ltd. dated January 9, 2001
++(10.32)Client Services Agreement with Novell Markham
Communications, Ltd. dated January 9, 2001
++(10.33)Stock Option Agreement with Mark P. Dolan
dated January 10, 2001
++(10.34)Assignment of Contract with Netelligent
dated December 7, 2000
++(10.35)Consulting Agreement with Marlene Trupiano
dated January 3, 2000
++(10.36)Consulting Agreement with Marlene Trupiano
dated November 25, 2000
+++(10.37)Promissory Note to 2D&H, Inc.
+++(10.38)Guaranty Agreement
+++(10.39)Termination Agreement Reformation Agreement with NeuTelligent, Inc.,
f/k/a CandidHosting.com, Inc.*
+++(10.40)Termination Agreement Reformation Agreement with Voice Media, Inc.
++++(10.41)Employment Agreement with Rachel L. Steele dated October 1, 2002
++++(10.42)Employment Agreement with Tanya Ostrowski dated October 1, 2002
(11)Statement re: computation of per share earnings Note 1 to
Financial
Statements
(13)Annual or Quarterly Reports, Form 10Q None
(16)Letter regarding Changes in Certifying Accountant None
(18)Letter on change in accounting principles None
(21)Subsidiaries of the registrant None
(22)Published report regarding matters submitted to vote None
(23)Consents of Experts and Counsel None
(24)Power of Attorney None
(99)Additional Exhibits None
+++++99.1 Certification of Chief Executive Officer and Chief Financial Officer
+++++99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
* Previously filed with Form 10-SB on November 23, 1998.
** Previously filed
with Form 10-SBA No. 1 on February 2, 1999.
*** Previously filed with Form
10-KSB filed on March 30, 2000.
**** Previously filed with Form 10-QSB filed May
15, 2000.
+ Previously filed with Form 10QSB filed 11-17-00.
++ Previously filed
with Form 10KSB filed March 29, 2001.
+++ Previously filed with Form 8-K filed
September 16, 2002.
++++ Previously filed with Form 10-QSB filed November 14,
2002.
+++++ Filed herewith.
Reports on Form 8-K
Report on Form 8-K, filed November 4, 2003, Item 4. Change In Independent
Accountants.
Item 14. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date (the
"Evaluation Date") within 90 days before the filing of this annual report, have
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were adequate and designed to ensure that the information required to
be disclosed in the reports filed or submitted by us under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported with in the
requisite time periods.
(b) Changes in internal controls.
There were no significant changes in our internal controls or in other factors
that could significantly affect our internal controls subsequent to the
Evaluation Date.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 29, 2004.
ADVANCED 3-D ULTRASOUND SERVICES, INC.
f/k/a Yseek, Inc.
By: ___________/s/__________________
DAVID WEINTRAUB,
Chief Executive Officer
In accordance with the requirements of the Exchange Act, this report
has been signed by the following persons in the capacities indicated on March
29, 2004.
SIGNATURE TITLE
__________/s/_______________________ Chief Executive Officer, Director
DAVID WEINTRAUB
__________/s/_______________________ President, Director
GLEN OSTROWSKI
__________/s/_______________________ Vice President, Director
RACHEL STEELE
__________/s/_______________________ Secretary, Treasurer, Director
TANYA OSTROWSKI