Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 000-25879
Metabolic Research, Inc.
(Exact name of registrant as specified in its charter)
|
Nevada
|
20-8050263
|
|
(State or other jurisdiction of
incorporation or organization
|
(I.R.S. Employer
Identification Number)
|
2602 E 7th Ave Tampa, Florida 33605
(Address of principal executive offices)
Registrant's telephone number, including area code: (813) 990-8202
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o (Not Required)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of "large accelerated filer," "accelerated filer," "smaller reporting company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
|
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
x
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
As of June 30, 2010, the Registrant has outstanding 60,408,009 shares of Common Stock.
1
|
INDEX
|
||
|
Page No.
|
||
|
PART I.
|
FINANCIAL INFORMATION
|
3
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
3
|
|
Condensed Consolidated Balance Sheet as of June 30, 2010 and March 31, 2010 (unaudited)
|
3
|
|
|
Condensed Consolidated Statements of Operations for the three months ended June 30, 2010 and 2009
|
4
|
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2010 and 2009
|
5
|
|
|
Notes to Unaudited Financial Statements
|
6
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
7
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
8
|
|
ITEM 4(T).
|
CONTROLS AND PROCEDURES
|
8
|
|
PART II.
|
OTHER INFORMATION
|
8
|
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
8
|
|
ITEM 1A.
|
RISK FACTORS
|
8
|
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
9
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
9
|
|
ITEM 4.
|
SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
|
9
|
|
ITEM 5.
|
OTHER INFORMATION
|
9
|
|
ITEM 6.
|
EXHIBITS
|
9
|
|
SIGNATURES
|
9
|
|
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
|
METABOLIC RESEARCH, INC
|
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
||||||||
|
As of June 30, 2010 and March 31, 2010
|
||||||||
|
June 30,
|
March 31,
|
|||||||
|
ASSETS:
|
2010
|
2010
|
||||||
|
Current Assets
|
||||||||
|
Cash and Cash Equivalent
|
93,521
|
82,436
|
||||||
|
Accounts Receivable
|
-31,841
|
95,948
|
||||||
|
Inventory
|
176,728
|
176,728
|
||||||
|
Deposits
|
4,807
|
4,807
|
||||||
|
Prepaid Consulting
|
||||||||
|
Prepaid Financing
|
0
|
|||||||
|
Total Current Assets
|
1,532,703
|
359,919
|
||||||
|
Other Assets
|
||||||||
|
Investments in IDZIN, Inc.
|
10,690
|
10,690
|
||||||
|
Furniture & Equipment
|
1,950
|
1,950
|
||||||
|
Communication Equipment
|
4,824
|
4,824
|
||||||
|
Patents and Trademarks
|
6,546,950
|
6,546,950
|
||||||
|
License
|
1,560,000
|
1,560,000
|
||||||
|
Total Other Assets
|
8,122,447
|
8,124,414
|
||||||
|
Total Assets
|
8,367,629
|
$
|
8,484,333
|
|||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts Payable
|
$
|
551,930
|
$
|
501,943
|
||||
|
Credit Cards
|
5,699
|
8,336
|
||||||
|
Royalties Payable
|
23,264
|
195,179
|
||||||
|
Advances from Related Parties
|
-
|
|||||||
|
Note - Debenture
|
-
|
-
|
||||||
|
Payroll Tax Liability
|
60,168
|
61,201
|
||||||
|
Due Directors
|
-
|
-
|
||||||
|
Notes Payable
|
78,500
|
115,000
|
||||||
|
Other Current Liabilities
|
89,132
|
-
|
||||||
|
Total Current Liabilities
|
719,562
|
881,659
|
||||||
|
Stockholders' Equity
|
||||||||
|
Preferred Stock - $0.001 par value, 50,000,000 shares
|
||||||||
|
authorized: 9,432,500 issued and outstanding
|
9,432
|
9,815
|
||||||
|
Common Stock - $0.001 par value, 200,000,000 shares
|
||||||||
|
authorized: 60,480,009 shares issued and outstanding
|
60,480
|
59,495
|
||||||
|
Additional paid in capital
|
14,223,650
|
14,223,650
|
||||||
|
Accumulated (deficit) during the development stage)
|
(6,585,124
|
)
|
(6,585,124
|
)
|
||||
|
Total Stockholders' Equity
|
7,648,067
|
7,589,369
|
||||||
|
Total Liabilities and Stockholders' Equity
|
16,735,259
|
$
|
8,484,333
|
|||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
|
METABOLIC RESEARCH, INC.
|
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
|
For the three months ended as of June 30, 2010 and 2009
|
||||||||
|
For the three months ended
|
||||||||
|
June 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
REVENUES:
|
||||||||
|
Net Sales
|
$
|
437,894
|
$
|
960,958
|
||||
|
Cost of Sales
|
$
|
228,514
|
$
|
212,019
|
||||
|
Gross Profit
|
$
|
209,380
|
$
|
748,939
|
||||
|
COSTS AND EXPENSES:
|
||||||||
|
General and Administrative
|
$
|
237,981
|
$
|
642,374
|
||||
|
Advertising Expense
|
$
|
53,116
|
$
|
68,059
|
||||
|
Derivative Adjustment Expense
|
||||||||
|
Board of Directors Expense
|
$
|
0
|
$
|
-
|
||||
|
Consulting Expense
|
$
|
50,000
|
$
|
65,268
|
||||
|
Depreciation and Amortization
|
$
|
3,036
|
$
|
1,558
|
||||
|
Total Costs and Expenses
|
$
|
344,133
|
$
|
777,259
|
||||
|
Operating Income (Loss)
|
$
|
(134,753)
|
$
|
-28,320
|
||||
|
OTHER INCOME (EXPENSE):
|
||||||||
|
Interest Expense
|
$
|
0
|
$
|
-
|
||||
|
Income (Loss) before income taxes
|
$
|
-134,753
|
$
|
28,320
|
||||
|
Provision for income taxes
|
-
|
|||||||
|
Net Income(Loss)
|
$
|
-174,753
|
$
|
-28,320
|
||||
|
Other comprehensive income:
|
||||||||
|
Derivative Items
|
$
|
$
|
22,207
|
|||||
|
Debt Forgiveness
|
$
|
184,310
|
$
|
|||||
|
Net comprehensive Income (loss)
|
$
|
55,697
|
$
|
(6,113)
|
||||
|
Net Income (loss) per common share
|
||||||||
|
Basic and Diluted
|
$
|
0.000
|
$
|
0.000
|
||||
|
Weighted average shares outstanding
|
||||||||
|
Basic and Diluted
|
56,165509
|
52,171,342
|
||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
|
METABOLIC RESEARCH, INC
|
||||||||
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||
|
for the three months ended as of June 30, 2010 and 2009
|
||||||||
|
For the three months ended
|
||||||||
|
June 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net Income or (Loss)
|
$ | 55,697 | $ | (6,113 | ) | |||
|
Increase/(Decrease) in Accounts Receivable
|
$ | 20,561 | $ | (11,272 | ) | |||
|
Increase/(Decrease) in Prepaid Services
|
$ | (87,796 | ) | $ | (410,447 | ) | ||
|
Increase/(Decrease) in Other Assets
|
$ | (2,465,974 | ) | $ | 492 | |||
|
Depreciation Expense
|
$ | 3,036 | $ | 1,558 | ||||
|
Increase/(Decrease) in Inventory
|
$ | (35,291 | ) | $ | 212,019 | |||
|
(Increase)/Decrease in Accounts Payable
|
$ | (21,145 | ) | $ | (21,145 | ) | ||
|
Increase/(Decrease) in Royalties Payable
|
$ | (9,596 | ) | $ | 32,860 | |||
|
Transactions not requiring cash:
|
||||||||
|
Amortization of prepaid consulting fees
|
$ | 87,796 | $ | (65,268 | ) | |||
|
Accrued Interest
|
$ | - | $ | - | ||||
|
Prepaid Consulting
|
$ | - | $ | 63,710 | ||||
|
Increase/(Decrease) in Other Liabilities
|
$ | (119,923 | ) | $ | - | |||
|
Net cash (used in) operating activities
|
$ | (59,768 | ) | $ | (203,606 | ) | ||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Acquisition of property and equipment
|
$ | - | $ | - | ||||
|
Net cash(used in)Investing Activities
|
$ | - | $ | - | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds from loans payable
|
||||||||
|
Bank overdraft
|
||||||||
|
Proceeds from loans payable-officers
|
||||||||
|
Repayment of loans payable-officers
|
||||||||
|
Common stock issued for services
|
$ | 4,222 | $ | 6,124 | ||||
|
Additional paid in capital issued for services
|
$ | 139,432 | $ | 208,225 | ||||
|
Common stock issued for cash
|
||||||||
|
Net cash provided by financing activities
|
$ | - | $ | 214,349 | ||||
|
Net increase in cash and equivalents
|
$ | 11,085 | $ | 10,743 | ||||
|
Cash and equivalents at beginning of period
|
82,436 | 46,351 | ||||||
|
Cash and equivalents at end of period
|
$ | 93,521 | $ | 57,094 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
METABOLIC RESEARCH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
GENERAL
Metabolic Research, Inc. (the Company) has elected to omit substantially all footnotes to the financial statements for the three months ended June 30, 2010. Since there have been no material changes (other than indicated in other footnotes) to the information previously reported by the Company in their Annual Report filed on the form 10-K for the twelve months ended December 31, 2009.
DEVELOPMENTAL STAGE COMPANY
Metabolic Research, Inc. (the Company) is no longer considered a developmental stage company under SFAS 7. The Company is receiving revenues from its planned principal operations.
EQUITY
On April 30, 2010 the company issued 300,000 shares of common restricted stock to Steven J. Levy per terms of a contract.
On June 2, 2010 the company issued 200,000 shares of common restricted stock to Hrkach Marketing LLC per terms of a contract.
On June 2, 2010 the company issued 430,000 shares of common restricted stock to Marvel Performance Concepts LLC per terms of a contract.
On June 2, 2010 the company issued 350,000 shares of common restricted stock to Kevin Boss LLC per terms of a contract.
On June 2, 2010 the company issued 200,000 shares of common restricted stock to Roger Craig per terms of a contract.
On June 2, 2010 the company issued 200,000 shares of common restricted stock to Gary Brackett per terms of a contract.
On June 2, 2010 the company issued 100,000 shares of common restricted stock to June Enterprises per terms of a contract.
On June 2, 2010 the company issued 1,200,000 shares of common restricted stock to Robert Bakker per terms of a contract.
On June 2, 2010 the company issued 175,000 shares of common restricted stock to Michael L. George per terms of a contract.
On June 2, 2010 the company issued 100,000 shares of common restricted stock to Patrick Johnson per terms of a contract.
On June 2, 2010 the company issued 166,000 shares of common restricted stock to Rob Shorr per terms of a contract.
On June 2, 2010 the company issued 125,000 shares of common restricted stock to Cheryl M. Curtis per terms of a contract.
On June 2, 2010 the company issued 85,000 shares of common restricted stock to Corey Simpson per terms of a contract.
On June 2, 2010 the company issued 291,000 shares of common restricted stock to Simeon Rice per terms of a contract.
On June 2, 2010 the company issued 100,000 shares of common restricted stock to Profound Fitness, Inc. per terms of a contract.
On June 10, 2010 the company issued 392,500 shares of common restricted stock to Donald E. Ehrlich relevant to a conversion of the Company’s Preferred Stock.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments that are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.
6
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
When used in this discussion, the words "expect(s)," "feel(s)," "believe(s)," "will," "may," "anticipate(s)" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, and are urged to carefully review and consider the various disclosures elsewhere in this Form 10-Q. The provision of Section 27A of the Securities Act of 1933 and Section 21 of the Securities and Exchange Act of 1934 shall apply to any forward looking information in this Form 10-Q.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2010 and June 30, 2009. Revenues for the three months ended June 30, 2010 were $437,894 compared to $960,958 for the same period of 2009.
Net income for the three months ended June 30, 2010 was $58,697 compared to a net income of ($6,113) for the same period of 2009.
The Company's operating expenses were mainly attributable to marketing expenses, legal expenses, office lease, cost of goods sold, operating expenses, telephone and internet server and commencing operations prior to this quarter. Compared to the previous quarter results, the Company has increased operating expenses. In an effort to reduce operating expenses, the Company is preparing to close the Las Vegas, Nevada office and consolidate administration and operations in a less expensive office/warehouse facility in Tampa Florida.
FUTURE OUTLOOK
The Company must develop or otherwise acquire additional products in order to achieve profitable levels of sales by maximizing marketing and advertising expenditure return. Despite having loyal users of “Stemulite™ Fitness Formula for Men” and “Stemulite™ Fitness Formula for Women” the company needs additional products to be competitive. The Company expects to introduce its “Tsunami Strike” product into the market. The Company must introduce one or more additional products in the next two quarters. However, it can be expected that future operating expenses will increase with the need to expand the product line and to revitalize sales. The Company intends to investigate and consider any business alliance or opportunity that would reasonably provide products or services of a complementary nature to the Company's current products. In the event of any possibility of future merger or acquisition there may be probable change in control of the Company and share reorganization and may involve significant changes made to the capitalization or stock ownership in the Company.
LIQUIDITY AND CAPITAL RESOURCES
Management believes that cash expected to be generated from operations and current cash reserves will not be sufficient for the Company to meet its capital expenditures and working capital needs for its operations as presently conducted. The Company's future liquidity and cash requirements will depend on a wide range of factors, including the level of business in existing operations and consolidation of facilities. In particular, if cash flows from operations are not sufficient, it will be necessary for the Company to raise capital or seek additional financing. There can be no assurance that such raising of capital or seeking of additional financing would be available in amounts and on terms acceptable to the Company.
We are pursuing equity financing for our operations. Failure to secure such financing or to raise additional capital or borrow additional funds may result in our depleting available funds and not being able pay our obligations.
For further information, refer to our Management's Discussion and Analysis included in our Annual Report on Form 10-K for the year ended December 31, 2009.
7
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Not Required.
|
ITEM 4(T).
|
CONTROLS AND PROCEDURES
|
We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report as well as to the safeguard assets from unauthorized use or disposition. However, no cost effective internal control system will preclude all errors and irregularities, and management as necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective and adequately designed to insure that the information required to be disclosed by the company in the reports submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to the company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), in a manner that allowed for timely decisions regarding required disclosure in our periodic reports filed with the SEC.
During our most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
On November 19, 2009, the Company filed a lawsuit in the District Court of Clark County, State of Nevada against Scott J. Ferrell, Michael Campos, Thomas Hess, and Sara Jordan, all of California, for extortion and racketeering.
In late October 2009 defendant Ferrell acting in behalf of Campos, Hess, and Jordan demanded in writing and without warning that the Company agree to an un-provided /unseen stipulation indicating that its Stemulite Fitness Formula product was fraudulent and demanding that the Company make a 100% refund / disgorgement within 30 days or defendant Ferrell would file a complaint under the California Consumers Legal Remedies Act alleging fraud in the advertising and sale of the Company’s Stemulite Fitness Formula. Defendant Ferrell made the same demands of GNC, the Company’s national distributor.
Both cases continued as of June 30, 2010.
In a subsequent event, on August 4, 2010, the suit against the company under the California Consumers Legal Remedies Act was dismissed.
|
ITEM 1A.
|
RISK FACTORS
|
Not Applicable.
8
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
The company sold no stock during the three months ended March 31, 2010.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
None
|
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
None
|
ITEM 5.
|
OTHER INFORMATION
|
None
|
ITEM 6.
|
EXHIBITS
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Metabolic Research, Inc.
|
|||
|
By:
|
/s/ Robert Bakker
|
||
|
Robert Bakker
|
|||
|
Chief Executive Officer
|
|||
|
By:
|
/s/ Robert Bakker
|
||
|
Robert Bakker
|
|||
|
Chief Financial Officer
|
|||
|
Dated:
|
December 14, 2010 |
9