10QSB/A 1 qsba.htm QSBA qsba
 
U. S. SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 10-QSB/A-2
 
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2006
 
Commission File Number 0 - 30215
 
SAFARI ASSOCIATES, INC.
(Exact name of small business issuer as specified in its charter)
 
Utah                 87-9369569
 (State or other jurisdiction of     (IRS Employer
incorporation or organization)     Identification Number)

 

12753 Mulholland Dr. Beverly Hills, Ca 90210
 (Address of principal executive offices)

(310) 733-0879
 (Issuer's Telephone Number)
 

 
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 |_|
 
As of June 30, 2006 1,665,034 shares of common stock were outstanding.
 

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SAFARI ASSOCIATES, INC.
FORM 10-QSB
QUARTER ENDED JUNE 30, 2006
 
TABLE OF CONTENTS
 
Part I - Financial Information

Item 1- Financial Statements

Consolidated Balance Sheet as of June 30, 2006

Consolidated Statement of Operations for the three and six
months ended June 30, 2006 and 2005

Consolidated Statement of Cash Flows for the six months
ended June 30, 2006 and 2005

Notes to Consolidated Financial Statements

Item 2 - Management’s Discussion and Analysis or Plan of Operations

Part II - Other Information

Item 1 - Legal Proceedings

Item 2 - Changes in Securities and Use of Proceeds

Item 3 - Default upon Senior Securities

Item 4 - Submission of Matters to a Vote of Security Holders

Item 5 - Other Information

Item 6 - Exhibits and Reports on Form 8-K

Signatures

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PART I - FINANCIAL INFORMATION

SAFARI ASSOCIATES INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2006


     
2006
  
 
 
 
(Unaudited) 
  
 ASSETS
        
         
 Current Assets:        
         
 Cash   $ 7,240  
         
 Total Assets
   $ 7,240  
         
 LIABILITIES AND STOCKHOLDERS’ DEFICIT
        
         
 Current Liabilities:        
         
 Notes payable   $ 15,000  
 Accounts payable     318,282  
 Payroll and other taxes payable     27,772  
 Accrued expenses     231,754  
 Loans from stockholder     232,730  
 Convertible notes payable     505,500  
         
 Total Current Liabilities
     1,331,038  
         
 Commitments and Contingencies        
         
 Stockholders’ Deficit:        
         
 Common Stock, par value $.001, authorized 100,000,000        
 shares, issued and outstanding 1,665,034 shares     1,665  
 Additional Paid-in Capital     2,401,031  
 Retained (Deficit)     (3,726,494 )
         
 Total Stockholders’ Deficit
     (1,323,798 )
         
 Total Liabilities and Stockholders’ (Deficit)
   $ 7,240  
         

The accompanying notes are an integral part of these Financial Statements.

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SAFARI ASSOCIATES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
 
The accompanying notes are an integral part of these Financial Statements.
 
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CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
 
   
2006
    
2005
  
 
    
(Unaudited) 
    
(Unaudited)
  
               
 Operating Expenses:              
 General and Administrative Expenses   $ 59,937   $ 22,120  
 Research and Development Costs     -     23,950  
               
 Total Operating Expenses     59,937     46,070  
               
 Loss from Operations     (59,937 )   (46,070 )
               
 Interest Expense     (10,435 )   (10,435 )
               
 Net (Loss)   $ (70,372 ) $ (56,505 )
               
 Earnings Per Share              
 Basic   $ (.04 )  $ (.04 )
               
 Weighted Average Shares Outstanding     1,665,034     1,505,034  
               

The accompanying notes are an integral part of these Financial Statements.

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SAFARI ASSOCIATES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
 
 
   
2006
    
2005
  
 
  
(Unaudited) 
    
(Unaudited)
  
             
 CASH FLOWS FROM OPERATING ACTIVITIES:            
 Net (loss) $ 100,984   $ (108,636 )
 Adjustment to Reconcile Net (Loss) to            
 net cash used in operating activities            
 Depreciation   -     1,148  
 Loss on disposition of property and equipment   -     2,217  
             
 Changes in Operating Assets and Liabilities            
 Prepaid Expenses and Other Assets   -     7,910  
 Accounts Payable   5,986     21,410  
 Accrued Expenses   14,870     50,017  
             
 Net Cash Used in Operating Activities   (80,128 )   (25,944 )
             
 CASH FLOWS FROM FINANCING ACTIVITIES:            
 Loans From Stockholders   79,854     26,000  
             
 Net Cash Provided by Financing Activities   79,854     26,000  
             
 Net Increase (Decrease) in Cash   (274 )   56  
             
 Cash - Beginning of Period   7,514     2,668  
             
 Cash - End of Period $ 7,240   $ 2,724  


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SAFARI ASSOCIATES, INC.
 
The following financial information is submitted in response to the requirements of Form 10-QSB and does not purport to be financial statements prepared in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although Safari Associates, Inc. and subsidiaries (the “Company") believes the disclosures that are made are adequate to make the information presented not misleading. Further, in the opinion of the management, the interim financial statements reflect fairly the financial position and results of operations for the periods indicated.
 
It is suggested that these interim consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10KSB containing the Company's audited financial statements as of and for the year ended December 31, 2005 filed with the Securities and Exchange Commission. The results of operations for the six months ended June, 2006 are not necessarily indicative of results to be expected for the entire fiscal year ending December 31, 2006.

NOTE 1 - DESCRIPTION OF BUSINESS

Safari Associates, Inc. (the “Company”), a Utah Corporation was incorporated on July 30, 1980. The Company has eight wholly owned subsidiaries; Safari Group Safety Products, Inc., Safari Camera Corporation, Photography For Evidence, Inc., Impact Dampening Technology, Inc., Safari Target Corporation, Shoothru, Inc., Safari Boat Company, and Safari Lure Company. All of the subsidiaries are inactive.

New management of the Company changed its business strategy and is currently seeking a merger candidiate.

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the Company and all its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. The cost of maintenance and repairs is charged to operations as incurred.

INCOME TAXES
The Company records deferred income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and income tax basis of the Company's assets and liabilities. An allowance is recorded, based on currently available information, when it is more likely than not that any or all of a deferred tax asset will not be realized. The provision for income taxes include taxes currently payable, if any, plus the net change during the period presented in deferred tax assets and liabilities recorded by the Company

PER SHARE DATA
The Company has adopted the standards set by the Financial Accounting Standards Board and computes earnings per share data in accordance with SFAS No. 128 "Earning per Share." The basic per share data has been computed on the loss for the period divided by the weighted average number of shares of common stock outstanding.. All potentially dilutive securities have been included in the calculation of earnings per share-diluted.

ESTIMATES AND ASSUMPTIONS
Preparing financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses at the balance sheet date and for the periods then ended. Actual results could differ from these estimates

NOTE 3 - SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES
Non Cash Transactions                                         2006
Stock issued for payment of obligation        $ 98,500
Shareholder loan contributed and transferred to Additional Paid-In Capital                                $103,237
Accrued Compensation Contributed to Additional Paid-In Capital                                               $217,000
 
 
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SAFARI ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 -FORMER DEVELOPMENT STAGE COMPANY

The Company was previously a development stage company. As of April 1, 2006, with new management, the Company decided to cease all future research and development activities and, therefore no longer considers itself to be a development stage Company.

NOTE 5 - INCOME TAXES

There is no provision for federal or state income taxes for the periods ended June 30, 2006 and 2005 since the Company has incurred operating losses. Additionally, the Company has reserved fully for any potential future tax benefits resulting from its carry forward operating losses. Deferred tax assets at June 30, 2006 and 2005 consist of the following:
                                                                                                              2006                        2005
Net Operating Loss Carry forward   $1,210,000  $1,200,000
Valuation Allowance                                                    (1,210,000)             (1,200,000)
                                                                                                        $            -0-              $            - 0 - .

As of December 31, 2005, the Company had a net unused operating loss carry forward of approximately $3,300,000 which expires in various years 2008 through 2024.

Note 6 - NOTES PAYABLE

Convertible Notes Payable

On December 20, 2000, one of the creditors of the Company agreed to receive a note from the Company in the amount of $45,000 payable on December 19, 2002, together with interest thereon at the rate of 8% per annum. Commencing one year from the date of the note, the creditor may convert any portion of the note into restricted share of common stock in the Company at a conversion rate of $.15 per share. The note has been extended on a month-to-month basis by mutual consent of the parties.
On August 9, 2001, the Company and three shareholders agreed to convert a total of $460,500 of accrued expenses, deferred compensation, and loan payable stockholder into convertible notes. The convertible notes were for a two year period with interest at the rate of 8% per annum, payable quarterly commencing December 1, 2001 until they mature on August 9, 2003. The notes are convertible into restricted shares of common stock at a conversion rate of $.25 per share. The notes have been extended on a month to month basis by mutual consent of the parties.

All of the above convertible notes plus accrued interest on those notes have been acquired by a group of non affiliated investors.

Notes Payable

The Company borrowed a total of $15,000 from two individual investors. The notes were for a term of four months with interest to be accrued at the rate of 8% and 9% per annum. The notes have been extended on a month-to-month basis by mutual consent of the parties.

NOTE 7- LOANS STOCKHOLDERS

During the six months ended June 30, 2006, Mrs. Berger, a major stockholder of the Company, was repaid $7,475 which reduced the Company obligation to $103,237. During the period ended June 30, 2006, Mrs. Berger forgave the debts owed to her and the obligation was reclassified to additional paid- in capital.


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SAFARI ASSOCIATES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


During the six months ended June 30, 2006, Mr. Henry Steeneck, a stockholder of the Company, loaned the Company $1,192 for a total of $146,592.

During the six months June 30, 2006 Mr. Zirk Engelbrecht, President of the Company, loaned the Company $86,137.
 
The loans from the stockholders and officer have been used to provide the Company with working capital and are non interest bearing and payable on demand.

NOTE 8-COMMON STOCK

During the period ended June 30, 2006, the Company issued 160,000 shares of the Company’s restricted common stock in exchange for the release of $98,500 of accrued expenses. In addition the Company recorded as additional paid in capital $103,237, which included forgiveness of $103,237 in loans from Mrs. Berger, and additional paid in capital of $217,000 for the forgiveness of accrued compensation owed to the Former President of the Company, Morton Berger.

NOTE 9-COMMITMENTS & CONTINGENCIES

Product Liability

Certain of the Company's proposed products will be in the safety field where the Company could be subject to claims from injuries resulting from use of the Company's products. Recent developments in the insurance industry have reduced the availability and increased the cost of liability insurance coverage. At present, the Company does not have any liability insurance.

NOTE 10 - GOING CONCERN

As of June 30, 2006, the Company had a working capital deficit and a stockholder's deficit of $1,323,798.. In addition, the Company has no significant operations to sustain themselves. In 2003, the Company changed its strategy from a manufacturing and sales operation to perform research and development on products that have a patent and other products which may be patentable. Prior to March 31, 2006 the Company ceased all future research and development and decided to go in a new direction and is currently seeking a merger candidate. For the past few years such individuals have provided most of the working capital for the Company. The above facts and circumstances raise substantial doubt about the Company's ability to continue as a going concern.

The Company is currently exploring different methods of raising additional equity capital through private placements or by other means. There is no assurance that the Company will be successful in its efforts to raise additional capital. Even if the Company is successful in raising additional capital, there is no assurance that it will be sufficient for the Company to be able to continue as a going concern..

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Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

During late fiscal 2003 and into fiscal 2004, the Company decided to change its strategy from the manufacture of disposable cameras, recoil pads and targets to concentrate on research and development of other products to be used to increase safety in the event of hostile fires.

The Company was developing and testing two new safety devices intended to save lives in the event of hostile fire. On March 7, 2006, Mr. Morton Berger, President and Chairman of the Board of the Company, passed away after a long illness and Mr. Zirk Engelbrecht was appointed as President of the Company. The Company ceased all future research and development activities and decided to go in a new direction and is currently seeking a merger candidate. In addition, for the period ended March 31, 2006, there was been a change in the Chairman of the Board of Directors and President of the Company. For the past few years, former management and shareholders have provided most of the working capital for the Company.
 
Operating expenses for the six months ended June 30, 2006 were $72,936 compared to $47,535 for the six months ended June 30, 2005. General and administrative expenses include $60,000 in legal expenses and $7,000 in accounting expense and the balance of $5,936 in other administrative expenses.. In the prior year general and administrative expenses included $26,000 in officers’ compensation, $14,000 in accounting and $7,535 of other administrative expenses. The decrease in officers’ compensation was due to the death of the former chairman of the Company. Legal expenses of $60,000 incurred during the six months ended June 30, 2006 included an initial retainer agreement, review of prior filings and negotiations related to prior debts incurred by the Company. Research and development costs during the period were $7,178, a decrease of $30,722 from the six months ended June 30, 2005, as the Company has ceased all future research and development activities. The Company has eliminated all but necessary expenses which include legal and accounting for the filing of quarterly reports.

Interest expense for the six months ended June 30, 2006 and 2005 was $20,870.

 
LIQUIDITY AND CAPITAL RESOURCES
 
As of June 30, 2006, the current liabilities exceeded the current assets by $1,323,798.. The Company has primarily relied on the proceeds of stockholder and officer loans to fund operations.
 
The Company is currently exploring different methods of raising additional equity capital through a private placement or other means. There is no assurance that the Company will be successful in its efforts to raise additional equity capital. Even if the Company is successful in raising additional capital, there is no assurance that it will be sufficient for the Company to be able to continue as a going concern.

Off Balance Sheet Arrangements
The Company does not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on its financial condition, revenues, and results of operations, liquidity or capital expenditures.

ITEM 3. CONTROLS AND PROCEDURES.
The Company's Chief Executive Officer and Chief Financial Officer (or those persons performing similar functions), after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a date within 90 days before the filing date of this quarterly report (the "Evaluation Date"), have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated there under. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the Evaluation Date.

ITEM 1 Legal Proceeding

ITEM 2 Changes in Securities and Use of Proceeds

ITEM 3 Defaults upon Senior Securities

ITEM 4 Submissions of Matters to a Vote of Security Holders

ITEM 5 Other Information

ITEM 6 Exhibits and Reports on Form 8-K

31.1 Certification by Zirk Engelbrecht President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1 Certification by Zirk Engelbrecht President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
(b) Reports on Form 8-K dated, April 7, 2006, and May 10, 2006.



SIGNATURES
 
In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
SAFARI ASSOCIATES, INC.
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: August 10, 2006 By: /s/ Zirk Engelbrecht
                Zirk Engelbrecht
                Chief Executive Officer & Chairman
 


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EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Zirk Engelbrecht, Chief Executive Officer of Safari Associates, certify that:
I have reviewed this quarterly report on Form 10 QSB of Safari Associates, Inc.;

1.  
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

2.  
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of, and for, the periods presented in this Report;
 
4. I and the other certifying officers of the Company are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

 
(c) Disclosed in this Report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

 
5. I and the other certifying officers have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and to the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.


Dated: May 22, 2006          By:  /s/ Zirk Engelbrecht
Zirk Engelbrecht
Chief Executive Officer & Chief Financial Officer
 
 
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EXHIBIT 32.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of Safari Associates, Inc. (the “Company”) on Form 10QSB for the quarter ended in June 30, 2006 as filed with the Securities & Exchange Commission (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 

 
1.  
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
2.  
The information contained in the Report Fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 
Dated: August 10, 2006                      By:  /s/ Zirk Engelbrecht
Zirk Engelbrecht
Chief Financial Officer & Chief Executive Officer



            
 
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