Financial Statements (unaudited)
1
Auditor's Report
1
Condensed Consolidated Balance Sheet (unaudited) as of June 30, 2006
2
Condensed Consolidated Statement of Income (unaudited) for the three
months ended June 30, 2006 and June 30, 2005
3
Condensed Consolidated Statements of Cash Flows (unaudited) for the
three months ended June 30, 2006 and June 30, 2005
4
Notes to Condensed Consolidated Financial Statements
5
Item 2.
Management’s Discussion and Analysis or Plan of Operation
15
Item 3.
Controls and Procedures
30
PART II
OTHER INFORMATION
30
Item 1.
Legal Proceedings
30
Item 2.
Unregistered Sales of Securities and Use of Proceeds
31
Item 6.
Exhibits
32
ii
SEALIFE CORPORATION QUARTERLY REPORT FOR QUARTER ENDED JUNE 30, 2006
PART I
FINANCIAL INFORMATION
Item 1.
Financial Statements
Pollard-Kelley Auditing Services, Inc.
Auditing Services
3250 West Market St, Suite 307, Fairlawn, OH 44333 330-836-2558
Report of Independent Certified Public Accountants
Board of Directors
Sealife Corporation and Subsidiaries
We have reviewed the accompanying consolidated balance sheets of Sealife Corporation and Subsidiaries as of June 30, 2006, and the related consolidated statements of income, stockholders’ equity, and cash flows for the three-month periods then ended. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with the standards of the Public Company Accounting Oversight Board, the object of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
The Company has not generated significant revenues or profits to date. This factor among others may indicate the Company will be unable to continue as a going concern. The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles accepted in the United States of America.
Pollard-Kelley Auditing Services, Inc.
/s/ Terance Kelly
Terance L Kelley
Certified Public Accountant
June 30, 2006
Fairlawn, Ohio
1
SEALIFE CORPORATION AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEET | ||||
June 30, 2006 and 2005 | ||||
June 30, | June 30, | |||
2006 | 2005 | |||
ASSETS | ||||
Current Assets | ||||
Cash | $ (2,643) | $ 17,255 | ||
Cash in escrow | 25,000 | 25,000 | ||
Inventory | 32,620 | 96,885 | ||
Accounts Receivable | 116,375 | 3,248 | ||
Prepaid expenses | 45,647 | 67,928 | ||
Total Current Assets | 216,999 | 210,316 | ||
Other Assets | ||||
Technology | 1,735,309 | 1,735,309 | ||
Less: accumulated amortization | (1,735,309) | (314,845) | ||
- | 1,420,464 | |||
Total Assets | $ 216,999 | $ 1,630,780 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities | ||||
Notes payable | $ 197,500 | $ 202,595 | ||
Accounts payable | 52,701 | 99,099 | ||
Accounts payable - shareholders | 501 | 127,944 | ||
Accrued expenses | 110,612 | 202,483 | ||
Accrued wages | 433,751 | 542,297 | ||
Accrued interest | 92,255 | 25,340 | ||
Accrued payroll taxes | 8,382 | 8,382 | ||
Accrued royalties | 18,490 | - | ||
Sales deposits | - | 6,000 | ||
Current portion of long-term debt | 12,258 | 7,313 | ||
Total Current Liabilities | 926,450 | 1,221,453 | ||
Long-Term Debt | ||||
Notes payable | 222,551 | 311,003 | ||
Stockholders' Equity | ||||
Common stock | 3,048 | 1,939 | ||
Additional paid in capital | 7,463,032 | 5,773,491 | ||
Deficit accumulated during the development stage | (8,398,082) | (5,677,105) | ||
Total Stockholders' Equity | (932,002) | 98,324 | ||
Total Liabilities and Stockholders' Equity | $ 216,999 | $ 1,630,780 | ||
(See accompanying notes to condensed consolidated financial statements)
2
SEALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENT OF INCOME |
For the Three Months Ended June 30, 2006 and 2005 |
Three Months Ended | June 30, 2006 | Three Months Ended | June 30, 2004 | |||
June 30, 2006 | Year to date | June 30, 2005 | Year to date | |||
Sales | $ 43,456 | $ 69,231 | $ 41,279 | $ 77,331 | ||
Cost of sales | 28,518 | 42,983 | 25,564 | 45,613 | ||
Gross Profit | 14,938 | 26,248 | 15,715 | 31,718 | ||
Sales and marketing | 12,258 | 70,822 | 103,178 | 230,630 | ||
General and administrative | 170,246 | 521,771 | 327,270 | 1,005,908 | ||
182,504 | 592,593 | 430,448 | 1,236,538 | |||
Net Loss | $ (167,566) | $ (566,345) | $ (414,733) | $ (1,204,820) | ||
Loss per share | ||||||
Weighted average shares outstanding | 30,241,579 |
28,386,789 | ||||
Loss per share | (0.01) | (0.02) | ||||
| ||||||
(See accompanying notes to condensed consolidated financial statements)
3
SEALIFE CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
For the Three Months Ended June 30, 2006 and 2005 | ||||||
Three Months Ended | June 30, 2006 | Three Months Ended | June 30, 2005 | |||
June 30, 2006 | Year to date | June 30, 2005 | Year to date | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net Loss | $ (167,566) | $ (566,345) | $ (414,732) | $ (1,204,820) | ||
Adjustments to reconcile net loss to net | ||||||
cash provided used in operating activities | ||||||
Amortization | - | - | 28,923 | 57,846 | ||
Stock issued for services | 19,921 | 319,187 | 154,229 | 613,246 | ||
Changes in Current Assets and liabilities: | - | |||||
(Increase) Decrease in Accounts receivable | (38,716) | (36,303) | 13,149 | (3,247) | ||
(Increase) in Inventories | (6,861) | (6,870) | (57,247) | (72,580) | ||
Decrease in Prepaid expenses | - | (17,054) | 87,443 | 34,737 | ||
Increase in Accounts payable | 17,875 | (4,517) | 26,295 | 76,867 | ||
Increase in Accrued expenses | 67,500 | 50,769 | 8,273 | 202,483 | ||
Increase in Accrued wages | 77,251 | 189,751 | 105,000 | 195,237 | ||
Increase in Accrued interest | 6,986 | 20,775 | 7,496 | 12,892 | ||
Increase in Accrued royalties | 1,537 | 18,490 | ||||
Increase in Sales deposits | &n | |||||
