10-Q 1 q123101.txt 10-Q ENDED DECEMBER 31, 2001 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 Commission File No. 000-26611 December 31, 2001 GLENGARRY HOLDINGS LIMITED (Exact name of Registrant as specified in its Charter) Bermuda N/A ------------------------------------ -------------------------------------- (State or jurisdiction of (IRS Employer incorporation of organization) Identification No.) 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) 295-3511 ----------------------------------------------------- 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 February 1, 2002 there were 40,793,650 shares of Common Stock Outstanding Part I - FINANCIAL INFORMATION Item 1: Financial Statements

GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES BALANCE SHEETS ~~September~~(UNAUDITED) 30December 31, June 30, 2001 2001 ------------------~~------~~ ------------------~~------~~ ASSETS CURRENT ASSETS Cash $ 3,~~107~~509,~~001~~465 $ 439,251 Restricted ~~Cash~~cash 3,520,780 Accounts ~~Receivable~~receivable - ~~Trade~~trade ~~464,455~~189 18,112 Interest ~~Receivable~~receivable 16,~~873 16,~~108 ------------------~~------~~ ------------------~~------~~ TOTAL CURRENT ASSETS 3,~~588~~509,~~329~~654 3,994,251 PROPERTY AND EQUIPMENT net of accumulated depreciation (Notes 1 & 2) ~~109~~111,~~456~~297 88,658 ------------------~~------~~ ------------------~~------~~ OTHER ASSETS ~~Other~~Mortgage ~~Receivables~~loans ~~44,657~~& ~~Mortgage~~debentures ~~Debentures~~receivable ~~Receivable 6~~7,~~541~~032,~~414~~358 6,270,695 ------------------~~------~~ ------------------~~------~~ TOTAL ASSETS $ 10,~~283~~653,~~856~~309 $ 10,353,604 ==================~~======~~ ==================~~======~~ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 4014,~~423~~605 $ 222,155 ------------------ ------------------ Notes and ~~Loans~~loans ~~Payable~~payable 3,~~387~~072,~~080~~159 3,196,290 Accrued ~~Expenses~~expenses ~~1,633~~ 8,450 ------------------~~------~~ ------------------~~------~~ TOTAL LIABILITIES 3,~~429~~086,~~136~~764 3,426,895 SHAREHOLDERS' EQUITY (DEFICIT) Preferred stock, $.005 par value, authorized 50,000,000 shares; no shares issued and outstanding at ~~September~~December 3031, 2001 and June 30, 2001 Common stock, $.05 par value, authorized 50,000,000 shares; 40,793,650 shares issued and outstanding at ~~September~~December 3031, 2001, and 40,793,650 shares issued and outstanding at June 30, 2001. 2,039,682 2,039,682 Additional paid-in capital 7,321,929 7,321,929 Accumulated deficit (2,~~741~~017,~~740~~316) (2,434,902) Accumulated other comprehensive income: Cumulative foreign currency translation adjustments ~~234~~222,~~849~~250 ------------------~~------~~ ------------------~~------~~ Total shareholders' Equity 6(Deficit) 7,~~854~~566,~~720~~545 6,926,709 ------------------~~------~~ ------------------~~------~~ TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT) $ 10,~~283~~653,~~856~~309 $ 10,353,604 ==================~~======~~ ==================~~======~~ See accompanying notes to financials statements

GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES STATEMENTS OF OPERATIONS (UNAUDITED) For the three months ended ~~September~~For ~~30,~~the ~~2001~~six ~~2000~~months ~~------------------~~ended ~~------------------~~December ~~Gross receipts $ 464~~31,~~455~~ $December 3631,~~720~~ ~~Less:~~2001 ~~Returns~~2000 ~~and~~2001 ~~allowances~~2000 - - -------- ---------- ---------- --------- ~~Net~~Revenues ~~sales~~$ ~~464~~531,~~455~~382 $ - $ 995,837 $ 36,720 Cost of ~~sales~~revenues 124,837 - 235,542 - ---------- --------- ---------- --------- Gross profit ~~464~~406,~~455~~545 - 760,295 36,720 Selling, general and administrative expenses ~~641~~227,~~504~~173 27314,~~442~~384 477,489 341,826 ---------- --------- ---------- --------- Income (loss) from operations 179,372 (~~177~~314,~~049~~384) 9282,~~278~~806 (305,106) Other income and (expenses) - - Interest income 68166,~~400~~775 235,175 Interest expense (82) (1,829) (42,~~310~~392) (151,844) Foreign currency ~~transaction~~gain (loss) 97,876 (~~155~~58,~~879~~003) ---------- --------- ---------- --------- Income (loss) before income taxes 443,941 (~~306~~316,~~838~~213) 9417,~~293~~586 (306,950) Provision for income taxes - (Note 6) - - - - ---------- --------- ---------- --------- Net income (loss) ~~from~~$ ~~continuing~~443,941 ~~operations~~ $(~~306~~316,~~838~~213) 9$ 417,~~293~~586 ~~Net income (loss)~~ $ (306,~~838~~950) ~~$ 9,293~~ ========== ========= ========== ========= Income (loss) per share amounts: Basic: Net income (loss) ~~from~~$ ~~continuing~~0.01 ~~operations~~ $ (0.0110) $ 0.0301 $ (0.09) Diluted: Net income (loss) ~~from continuing operations~~ $ (0.01) N/A $ 0.0301 N/A Weighted average common and common equivalent shares: Basic 40,793,650 ~~330~~3,~~688~~306,878 40,793,650 3,306,878 ========== ========= ========== ========= Diluted 40,793,650 ~~330~~3,~~688~~306,878 40,793,650 3,306,878 ========== ========= ========== ========= STATEMENT OF COMPREHENSIVE INCOME For the three months ended ~~June~~For 30the six months ended December 31, December 31, 2001 2000 2001 2000 ---------- --------- ---------- --------- Net income(loss) $ 443,941 $ (~~306~~316,~~838~~213) $ 9417,~~293~~586 $ (306,950) Other comprehensive income: Currency translation adjustment ~~234~~(12,~~849~~599) - 222,250 - --------- ---------- --------- ---------- Comprehensive income(loss) $ 431,342 $ (71316,~~989~~213) $ 9639,~~293~~836 $ (306,950) ========= ========== ========= ========== See accompanying notes to financials statements

GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES STATEMENTS OF ~~CASH~~SHAREHOLDERS' ~~FLOWS~~EQUITY ~~For the three months ended September 30, 2001 2000 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME~~ (~~LOSS~~UNAUDITED) $Additional ~~(306,838)~~Accumu- $Cumulative ~~9,263~~Net ~~Adjustments~~Common toStock ~~reconcile~~paid ~~net income to net cash provided by operating activities: Depreciation & amortization 572 (Increase)~~ in ~~mortgage~~lated ~~debentures~~Translation ~~receivable~~Shareholders' ~~(270,719)~~Shares ~~(Increase)~~Amount ~~Decrease~~Capital inDeficit ~~accounts~~Adjustment ~~receivable~~Deficit (446,343) (Increase) Decrease in interest receivable (765) (Increase) Decrease in other receivables (44,657) Increase (Decrease) in accounts payable (181,732) (9,263) Increase (Decrease) in accrued expenses (6,817) ---------------- --- ----------- --------- - ~~NET CASH USED IN OPERATING ACTIVITIES (1,257,299)~~ ---- --------------- ---------------- -------------- ~~CASH~~Balance ~~FLOW~~at ~~FROM~~June ~~INVESTING~~30, ~~ACTIVITIES~~2001 -40,793,650 ~~Purchases~~$ ~~of furniture~~2,039,682 ~~fixtures~~$ &7,321,929 ~~equipment~~$ (212,~~370~~434,902) $ - $ 6,926,709 ---------- -------- --- -----------~~------~~ ~~CASH USED FOR INVESTING ACTIVITIES (21,370) CASH FLOW FROM FINANCING ACTIVITIES Increase in loans payable 190,790~~ - -----------~~--------~~ --------- ----------- ~~NET~~Net ~~CASH~~Income ~~PROVIDED~~for BYPeriod ~~(USED~~417,586 ~~FOR)~~417,586 ~~FINANCING~~Foreign ~~ACTIVITIES~~Currency ~~190~~Translation 222,~~790~~250 -222,250 ---------- --------- -- -----------~~-------~~ ~~EFFECT OF EXCHANGE RATE CHANGES ON CASH 234,849 NET CHANGE IN CASH (853,030) CASH AT BEGINNING OF YEAR 3,960,031 165~~ ------------~~-------~~ --------- ----------- ~~CASH~~Balance ATat ~~END~~December OF31, ~~YEAR~~2001 40,793,650 $ 32,~~107~~039,~~001~~682 $ ~~165~~7,321,929 $ (2,017,316) $ 222,250 $ 7,566,545 ========== =========== =========== ============ ~~Supplemental~~========= ~~Cash~~=========== ~~Flow~~See ~~Information:~~accompanying ~~Interest~~notes ~~expense~~to ~~paid~~financials ~~during the period was: $ 42,310 $ 15~~statements

GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES STATEMENTS OF ~~SHAREHOLDERS'~~CASH ~~DEFICIT~~FLOWS ~~Additional~~(UNAUDITED) ~~Accumu-~~For ~~Cumulative~~the ~~Net~~six ~~Common~~months ~~Stock~~ended ~~paid~~December in31, ~~lated~~2001 ~~Translation~~2000 ~~Shareholders' Shares Amount Capital Deficit Adjustment Deficit~~ ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ 417,586 $ (306,950) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation & amortization 12,435 (Increase) in mortgage debentures receivable (481,180) (Increase) Decrease in accounts receivable 17,922 (Increase) Decrease in interest receivable 16,108 (Increase) Decrease in other receivable (10,000) Increase (Decrease) in accounts payable (207,550) 316,950 Increase (Decrease) in accrued expenses (8,450) ---------------- --------------- NET CASH USED IN OPERATING ACTIVITIES (233,129) - ---------------- --------------- ~~Balance~~CASH atFLOWS ~~June~~FROM ~~30,~~INVESTING ~~2001~~ACTIVITIES ~~40,793,650~~Purchases $of 2furniture,~~039,682~~ $fixtures ~~7,321,929~~& $equipment (235,~~434,902~~073) $Purchase -of $mortgage 6note receivable (280,~~926,709~~483) ~~Net~~---------------- ~~Income~~--------------- ~~for~~NET ~~Period~~CASH ~~(306,838)~~PROVIDED BY (~~306,838~~USED FOR) ~~Foreign~~INVESTING ~~Currency~~ACTIVITIES ~~Translation 234~~(315,~~849~~556) ~~234,849~~- ---------------- --------------- CASH FLOW FROM FINANCING ACTIVITIES Increase (Decrease) in loans payable (124,131) - ---------------- --------------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (124,131) - ---------------- --------------- ~~Balance~~EFFECT atOF ~~September~~EXCHANGE ~~30,~~RATE ~~2001~~CHANGES ~~40,793,650~~ON $CASH 2222,~~039,682~~250 $NET ~~7,321,929~~CHANGE $IN CASH (2450,~~741,740~~566) $CASH ~~234~~AT BEGINNING OF YEAR 3,~~849~~960,031 165 ---------------- --------------- CASH AT END OF YEAR $ 63,~~854~~509,~~720~~465 ~~================~~$ ~~==============~~165 ============== ==~~=============~~ ================ ~~==============~~Supplemental Cash Flow Information: Interest expense paid during the period was: $ 42,392 $ 1,844 See accompanying notes to financials statements

5 GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 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 and this Company was subsequently sold in June 2001. Glengarry Holdings Ltd. and its subsidiaries (The Company) is engaged in selling computer software systems, system financing and advisory services. 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 commissions on software sales and financing is recognized when received. Revenue from advisory services is recognized on signing of contract and receipt of deposit. 6 GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 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: December 31, June 30, 2001 2001 ---- ---- Furniture and Fixtures $ 70,683 $ 35,609 Computer Equipment $ 55,138 $ 55,138 less: Accumulated Depreciation $ (14,524) $ (2,089) ---------------- ---------------- $ 111,297 $ 88,658 ================ ================ Depreciation expense charged to operations was $12,435, for the six months ended December 31, 2001 and $2,089 for the year ended June 30, 2001. NOTE 3 - NOTES AND LOANS PAYABLE At December 31, 2001 the Company had a loan payable in the amount of JPY 402,882,878 Japanese Yen which translates to $3,072,159 U.S. dollars. This loan accrues interest at 1.5% per annum and is due in June 2002. 7 GLENGARRY HOLDINGS, LTD. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 2001 AND JUNE 30, 2001 NOTE 4 - INCOME TAXES There is no current or deferred income tax expense for the six months ended December 31, 2001 and December 31, 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. December 31, 2001 December 31, 2000 ----------------- ----------------- Federal Statuatory rate 34 % 34 % Adjustment for business conducted in nontaxable foreign jurisdiction (34) % Valuation allowance adjustment 0 % (34) % -------------- -------------- Effective rate 0 % 0 % ============== =============== 8 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 statement 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 commercial finance and computer hardware and software systems, for which it receives an agency commission. The Company also provides IT and advisory services. The following discussion is based on the financial statements for the six months ending December 31, 2001 and 2000. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States. Results of Operations Revenues. Revenues for the six months ended December 31, 2001 increased by $959,117 or 2612% compared to the six months ended December 31, 2000. Revenues for the three months ended December 31, 2001 were $531,382. There were no revenues for the three months ended December 31, 2000. Revenues for the six months ended December 2001 primarily consisted of commissions generated from software sales and related financing and system consulting services. The increase in sales is the result of the Company's continued development since 29 June 2001. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $135,663 during the six months ended December 31, 2001 compared to the six months ended December 31, 2000. Selling, general and administrative expenses decreased by $87,211 for the three months ended December 31, 2001 compared to December 31, 2000. This overall increase was due to increased sales and marketing activity, and miscellaneous non-recurring expenses related to the Company's expansion into new facilities. The decrease for the three-month period was a result of a decrease in non-recurring expense relating to the implementation of the Company's current business strategy. The Company's management continues to pursue cost reduction measures consistent with the level of business wherever opportunities can be identified. 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. As the Company continues to shape its strategy there is a focus on liquidity to ensure business aims can be swiftly implemented. 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 9 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. 10 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 11 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: February 6, 2002 GLENGARRY HOLDINGS LIMITED By: /s/ Jacqueline Antin ------------------------- Jacqueline Antin, CFO 12

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