10-Q 1 q093001.txt 10-Q ENDED 09/30/01 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2001 Commission File No. 000-26611 GLENGARRY HOLDINGS LIMITED (Exact name of Registrant as specified in its Charter) Bermuda N/A --------------------------------- ------------------------------------ (State or jurisdiction of (IRS Employer Identification No.) incorporation or organization) P.O. Box HM 1154, 10 Queen Street, Hamilton, Bermuda HMEX ---------------------------------------------------- ------ (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code: (441) 292-8822 --------------------------------------------------- Former name, former address and former fiscal year, if changed since last report: N/A -------------------------------------------------------------------------------- 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 a 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 [ ] As of November 14, 2001, there were 40,793,650 shares of Common Stock outstanding. PART I - FINANCIAL INFORMATION Item 1: Financial Statements

GLENGARRY HOLDINGS, LTD. ~~and~~AND ~~SUBSIDIARY~~SUBSIDIARIES BALANCE SHEETS ~~March~~September 3130, June 30, ~~ASSETS~~2001 2001 ~~2000~~ ------------------------ ------------------------ ASSETS CURRENT ASSETS Cash $ ~~165~~3,107,001 $ ~~165~~439,251 Restricted Cash 3,520,780 Accounts Receivable - Trade 464,455 18,112 Interest Receivable 16,873 16,108 ------------------------ ------------------------ TOTAL CURRENT ASSETS ~~165~~3,588,329 ~~165 NONCURRENT ASSETS Property~~3,994,251 ~~Plant~~PROPERTY &AND ~~Equipment~~EQUIPMENT (net of accumulated depreciation of(Notes ~~$897~~1 as& of2) ~~March 31~~109,456 ~~2001) 26~~88,~~022~~658 ------------------------ ------------------------ ~~Net~~OTHER ~~assets~~ASSETS ofOther ~~discontinued~~Receivables ~~operations~~44,657 ~~(Note~~Mortgage 2)Debentures -Receivable -6,541,414 6,270,695 ------------------------ ------------------------ TOTAL ASSETS $ 2610,~~187~~283,856 $ ~~165~~10,353,604 ======================== ======================== LIABILITIES AND SHAREHOLDERS' ~~(DEFICIT)~~EQUITY CURRENT LIABILITIES Accounts payable ~~151~~$ 40,~~583~~423 ~~117~~$ 222,~~388~~155 Notes and Loans Payable ~~591~~3,~~025~~387,080 -3,196,290 Accrued Expenses 1,633 8,450 ------------------------ ------------------------ TOTAL LIABILITIES ~~742~~3,~~608~~429,136 ~~117~~3,~~388~~426,895 SHAREHOLDERS' ~~DEFICIT~~EQUITY Preferred stock, $.005 par value, authorized 50,000,000 shares; no shares issued and outstanding at September 30, 2001 and June 30, 2001 Common ~~Stock~~stock, $.05 par value, authorized 50,000,000 shares; 40,793,650 shares issued and outstanding at ~~Par~~September 1630,~~534~~ 162001,~~534~~ and 40,793,650 shares issued and outstanding at June 30, 2001. 2,039,682 2,039,682 Additional paid-in capital 17,~~530~~321,~~130~~929 17,~~530~~321,~~130~~929 Accumulated deficit (2,~~263~~741,~~085~~740) (12,~~663~~434,~~887~~902) Accumulated other comprehensive income: Cumulative foreign currency translation adjustments 234,849 ------------------------ ------------------------ Total shareholders' ~~Deficit~~Equity ~~(716~~6,~~421)~~854,720 ~~(117~~6,~~223)~~926,709 ------------------------ ------------------------ TOTAL LIABILITIES AND SHAREHOLDER'S ~~DEFICIT~~EQUITY $ 2610,~~187~~283,856 $ ~~165~~10,353,604 ======================== ========================

GLENGARRY HOLDINGS, LTD. ~~and~~AND ~~SUBSIDIARY~~SUBSIDIARIES ~~STATEMENT~~STATEMENTS OF OPERATIONS For the three months ended ~~For~~September ~~the nine months ended March 31~~30, ~~March 31,~~ 2001 2000 ~~2001 2000~~ ----------- -------~~---~~ ----------- -------~~---~~ Gross ~~Receipts~~receipts $ -464,455 $ ~~- $~~ 36,720 ~~$ -~~ Less: Returns and allowances - - ----------- -------~~---~~ ----------- -------~~---~~ Net ~~Sales~~sales -464,455 - 36,720 - Cost of ~~Sales~~sales - - - - ----------- -----~~-----~~ ----------- -------~~---~~ Gross ~~Profit~~profit -464,455 - 36,720 - Selling, ~~General~~general and ~~Administrative~~administrative ~~Expenses~~expenses ~~282~~641,~~485~~504 ~~- 624~~27,~~311~~442 - ----------- ------~~----~~ ----------- -------~~---~~ Income (~~Loss~~loss) from ~~Operations~~operations (~~282~~177,~~485~~049) ~~- (587~~9,~~591)~~278 - Other ~~Income~~income and (~~Expenses~~expenses) ~~Interest Income~~ - -Interest -income -68,400 ~~Other Income - - - -~~ Interest ~~Expense~~expense (942,~~763~~310) - (~~11,607~~15) -Foreign ~~-----------~~currency ~~----------~~transaction ~~-----------~~loss ~~----------~~(155,879) Income (~~Loss~~loss) before income taxes (~~292~~306,~~248~~838) ~~- (599~~9,~~198)~~293 - Provision for income taxes - (Note 36) - - - - ----------- -----~~-----~~ ----------- -------~~---~~ Net income (~~Loss~~loss) from continuing operations (~~292~~306,~~248~~838) ~~- (599~~9,~~198)~~293 - Discontinued operations: Income (loss) from operations of vitamins and personal care products line disposed of (net of income taxes) - (Note 2) - 1,671 - 101,695 ----------- ---------- ----------- ---------- Net income $ (~~292,248~~loss) $ ~~1,671 $~~ (~~599~~306,~~198~~838) $ ~~101~~9,~~695~~293 =========== =======~~===~~ =========== =======~~===~~ Income (loss) per share amounts: Basic: Net income (loss) from continuing operations $ (0.8801) $ ~~(1.81) Net income (loss) from discontinued operations $~~ 0.0103 ~~$ 0.31~~ Diluted: Net income (loss) from continuing operations ~~n/a~~$ ~~n/a Net income~~ (~~loss~~0.01) ~~from discontinued operations n/a~~ $ 0.3103 Weighted average common and common equivalent shares: Basic ~~330~~40,~~688 330~~793,~~688~~650 330,688 ~~330,191~~ =========== =======~~===~~ =========== =======~~===~~ Diluted ~~n/a~~40,793,650 ~~n/a n/a~~ 330,~~191~~688 ================== ================== STATEMENT OF COMPREHENSIVE INCOME For the three months ended June 30, 2001 2000 ------------------ ------------------ Net income(loss) $ (306,838) $ 9,293 Other comprehensive income: Currency translation adjustment 234,849 - ------------------ ------------------ Comprehensive income(loss) $ (71,989) $ 9,293 ================== ==================

GLENGARRY HOLDINGS, LTD. ~~and~~AND ~~SUBSIDIARY~~SUBSIDIARIES STATEMENTS OF CASH FLOWS For the ~~nine~~three months ended ~~March~~September 3130, ~~CASH FLOWS FROM OPERATING ACTIVITIES:~~ 2001 2000 ----~~-----------~~ ----~~----------~~ CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ (~~599~~306,~~198~~838) $ ~~101~~9,~~695~~263 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & ~~Amortization~~amortization ~~897~~572 3(Increase) in mortgage debentures receivable (270,~~200~~719) (Increase) Decrease in ~~prepaid~~accounts ~~expenses~~receivable -(446,343) - (Increase) (Decrease) in ~~deferred~~interest ~~revenue~~receivable -(765) (~~212~~Increase) Decrease in other receivables (44,~~499~~657) Increase (Decrease) in accounts payable 34(181,~~195~~732) (~~116~~9,~~145~~263) Increase (Decrease) in accrued expenses (6,817) ------------------- -------------------- - NET CASH USED IN OPERATING ACTIVITIES (~~564~~1,~~106) (223~~257,~~749~~299) ------------------- -------------------- CASH ~~FLOWS~~FLOW FROM INVESTING ACTIVITIES ~~Purchase~~- Purchases of ~~property~~furniture, ~~plant~~fixtures & equipment (2621,~~919~~370) - ------------------ -------------------- ~~NET~~ CASH USED INFOR INVESTING ACTIVITIES (2621,~~919~~370) ~~- --------------- --------------~~ CASH FLOW FROM FINANCING ACTIVITIES ~~Proceeds from issuance of common stock - 2,089~~ Increase in loans payable ~~591~~190,~~025~~790 - ~~Advances from (Repayments to) shareholders~~ - ~~(75,388)~~ ------------------ -------------------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES ~~591~~190,~~025~~790 ~~(73,299)~~- ------------------- -------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 234,849 NET CHANGE IN CASH - (~~297~~853,~~048~~030) CASH AT BEGINNING OF ~~PERIOD~~YEAR ~~165 355~~3,~~434~~960,031 165 ------------------- -------------------- CASH AT END OF ~~PERIOD~~YEAR $ ~~165~~3,107,001 $ ~~58,386~~165 =================== ==================== ~~Interest~~Supplemental ~~expense~~Cash ~~paid~~Flow ~~during the period was~~Information: -Interest -expense ~~Income taxes~~ paid during the period was: -$ -42,310 $ 15

GLENGARRY HOLDINGS, LTD. ~~and~~AND ~~SUBSIDIARY~~SUBSIDIARIES STATEMENTS OF ~~SHAREHOLDER~~SHAREHOLDERS'S DEFICIT Additional Accumu- Cumulative Net Common Stock paid in lated Translation Shareholders' Shares Amount Capital Deficit Adjustment Deficit ---------------- -------------- -------------- --------------- ---------------- -------------- Balance at June 30, ~~2000~~2001 ~~330~~40,~~688~~793,650 $ 162,~~534~~039,682 $ 17,~~530~~321,~~130~~929 $ (12,~~663~~434,~~887~~902) $ - $ 6,926,709 Net Income for Period (~~117~~306,~~223~~838) (306,838) Foreign Currency Translation 234,849 234,849 ------- ---------- ----------- ---~~---------~~ ----------- ~~Net Income (Loss) for Period~~ - - - ~~(599,198) (599,198)~~ ------- ---------- ----------- ----- ------- -------~~----~~ Balance at ~~March~~September 3130, 2001 ~~330~~40,~~688~~793,650 $ 162,~~534~~039,682 $ 17,~~530~~321,~~130~~929 $ (2,~~263~~741,~~085~~740) $ ~~(716~~234,~~421)~~849 $ 6,854,720 ================ ============== ============== =============== ================ ==============

GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND JUNE 30, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Glengarry Holdings Ltd. a Bermuda Company was incorporated in November of 2000. In February 2001 Endless Youth Products, Inc., (the historical issuer) was merged into EYPI Merger Corp., a Nevada Subsidiary of Glengarry Holdings Ltd. The shareholders of Endless Youth Products Inc. became shareholders of Glengarry Holdings Ltd. EYPI Merger Corp. was dissolved, Endless Youth Products Inc. became a wholly owned subsidiary of Glengarry Holdings Ltd. and the name of Endless Youth Products Inc. was changed to Glengarry Holdings (US) Limited. In June of 2001 Glengarry Holdings Ltd. disposed of its interest in Glengarry Holdings (US) Limited. Glengarry Holdings Ltd. and its subsidiaries (The Company) is engaged in selling computer software systems, system financing and advisory services with special consideration to Internet technology. Basis of Consolidation The consolidated financial statements include the accounts of Glengarry Holdings, Ltd. and its domestic and foreign subsidiaries. Inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation. Foreign Subsidiaries The local foreign currency is the functional currency for Online Advisory, Ltd. Assets and liabilities are translated into U.S. dollars at the rate of exchange existing at year-end. Translation gains and losses are included as a component of shareholders' equity. Transaction gains and losses are included in the statement of operations. Cash Equivalents The Company considers all highly liquid certificates of deposit with an original maturity of three months or less to be cash equivalents. Depreciation and Amortization Depreciation of property and equipment is computed using the straight-line method based on estimated useful lives ranging as follows: Furniture and Fixtures 7 years Computer Equipment 5 years Revenue Recognition Revenue from product sales is recognized upon shipment or at the time services are provided. GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND JUNE 30, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes Provisions (benefits) for federal and state income taxes are calculated on reported financial statement income (loss) based on current tax law and also include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions (benefits) differ from the amounts currently payable because certain items of income and expense, known as temporary differences, are recognized in different tax periods for financial reporting purposes than for income tax purposes. NOTE 2 - PROPERTY, PLANT AND EQUIPMENT Property, Plant and Equipment consist of the following at: Septmeber 30, June 30, 2001 2001 ---------------- -------------- Furniture and Fixtures $ 56,979 $ 35,609 Computer Equipment $ 55,138 $ 55,138 less: Accumulated Depreciation $ (2,661) $ (2,089) -------------- -------------- $109,456 $ 88,658 ============== ============== Depreciation expense charged to operations was $572, for the three months ended September 30, 2001 and $3,200 for the year ended June 30, 2001. NOTE 3 - NOTES AND LOANS PAYABLE At September 30, 2001 the Company had a loan payable in the amount of JPY 400,000,000 Japanese Yen which translates to $3,375,820 U.S. dollars. This loan accrues interest at 1.5% per annum and is due in June 2002. GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND JUNE 30, 2001 NOTE 4 - INCOME TAXES There is no current or deferred income tax expense for the three months ended September 30, 2001 and September 30, 2000. The Company currently conducts its business activities in Bermuda, a non-taxable foreign jurisdiction. SFAS 109 requires that the future tax benefit of net operating loss carryforwards be recorded as an asset using current tax rates to the extent that management assesses the utilization of such carryforwards to be more likely than not. The following reconciles the federal statutory income tax rate to the effective rate of the provision for income taxes. September 30, 2001 June 30, 2001 -------------------- --------------- Federal Statuatory rate 34 % 34 % Adjustment for business conducted in nontaxable foreign jurisdiction (34) % Valuation allowance adjustment 0 % (34) % --------------- --------------- Effective rate 0 % 0 % =============== =============== 9 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis should be read in conjunction with the Company's financial statements and the notes thereto set forth in this Form 10-Q. General Glengarry Holdings, Ltd. and subsidiaries, (the "Company") engages in the business of selling computer software systems and advisory services with special emphasis on Internet technology. The following discussion is based on the financial statements for the three months ending September 30, 2001 and 2000. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States. Results of Operations Net Sales. Net sales for the three months ended September 30, 2001 increased by $427,735 or 1165% compared to the three months ended September 30, 2000. Net sales for the three months ended September 30, 2001 primarily consisted of software sales and consulting and financing services. The increase in sales is the result of the Company's expansion in the sale of software systems and services, which has been supplemented by the acquisition of Online Advisory Limited in June of 2001. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $614,042 during the three months ended September 30, 2001 compared to the three months ended September 30, 2000. This increase was due to increased sales and marketing activity, and miscellaneous non- recurring expenses related to the Company's expansion into new facilities. Net Income. The Company realized a net loss $(306,838) for the three months ended September 30, 2001 compared to net income of $9,293 for the corresponding period of the prior year. The increased losses were due to the increased selling, general and administrative expenses discussed above as well as a realized loss of $155,879 related to transactions in foreign currency. Adjustments of $234,849 related to currency translations resulting from the difference in the value of liabilities owed in foreign currency and assets held in foreign currency compared to the value of the U.S. dollar, reduced the comprehensive loss to $(71,989). Liquidity and Capital Resources Although the Company has a history of operating losses, management believes working capital obtained through its recent acquisitions will be sufficient to fund the Company's operations and capital requirements for the 2002 fiscal year. In addition, the Company's subsidiary has entered into a borrowing arrangement with a Hong Kong financial institution. At September 30, 2001, there was $3,387,080 outstanding under the loan. The loan was a fixed facility of JPY400,000,000 which accrues interest at 1.5% per month and is due June 2002. Although the Company does not have any commitment for additional working capital loans, it believes that its cash is sufficient to meet its capital requirements at the present time. Forward Looking Statements This report on Form 10-Q 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. These forward-looking statements relate to matters such as the Company's future operation results and liquidity. Such forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. Such statements are based on management's current expectations and are subject to certain risks, uncertainties and assumptions. Should one or more risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by such forward-looking statements. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report: None (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 15, 2001 GLENGARRY HOLDINGS LIMITED By: /s/ Jacqueline Antin ------------------------------ Jacqueline Antin, CFO

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