SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No.
RIVAL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
British Columbia
n/a
(State of organization)
(I.R.S. Employer Identification No.)
#200, 100 Park Royal, West Vancouver, British Columbia, Canada V7T 1A2
(Address of principal executive offices)
Registrant's telephone number, including area code: (604) 689-0584
Securities registered under Section 12(g) of the Exchange Act: Common stock, no par value.
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 Sepember 30, 2003, 42,414,934 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
RIVAL TECHNOLOGIES INC.
CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited - - Prepared by Management)
SEPTEMBER 30, 2003
RIVAL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited - Prepared by Management)
| | September 30, | | December 31, | |
| | 2003 | | 2002 | |
| | | | | | (Audited) | |
| | | | | | | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Current | | | | | | |
| Cash and cash equivalents | $ | 18,788 | | $ | 5,350 | |
| Accounts receivable | | 6,830 | | | - | |
| Prepaids | | 612 | | | - | |
| | |
| | |
| |
| | | | | | | |
| | | 26,230 | | | 5,350 | |
| | | | | | | |
| Capital assets | | 3,811 | | | | |
| Intangible property(Note 3) | | 35,000 | | | - | |
| | |
| | |
| |
| | | | | | | |
| | $ | 65,041 | | $ | 5,350 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| LIABILITIES AND SHAREHOLDERS' DEFICIENCY | | | | | | |
| | | | | | | |
| Current | | | | | | |
| Accounts payable | $ | 147,637 | | $ | 110,470 | |
| Accrued liabilities | | - | | | 12,500 | |
| Promissory note payable (Note 4) | | 5,575 | | | - | |
| | |
| | |
| |
| | | | | | | |
| | | 153,212 | | | 122,970 | |
| | |
| | |
| |
| | | | | | | |
| | | | | | | |
| Shareholders' deficiency | | | | | | |
| Capital stock (Note 5) | | | | | | |
| Authorized | | | | | | |
| 100,000,000 common shares without par value | | | | | | |
| Issued | | | | | | |
| 42,414,934 common shares | | 7,456,929 | | | 6,993,249 | |
| Share subscriptions | | 41,356 | | | - | |
| Additional paid in capital | | 105,000 | | | 105,000 | |
| Deficit | | (7,691,456) | | | (7,215,869) | |
| | |
| | |
| |
| | | | | | | |
| | | (88,171) | | | (117,620) | |
| | |
| | |
| |
| | | | | | | |
| | $ | 65,041 | | $ | 5,350 | |
The accompanying notes are an integral part of these financial statements.
RIVAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited - Prepared by Management)
| |
Three Month Period Ended September 30, 2003 |
Three Month Period Ended September 30, 2002 |
Nine Month Period Ended September 30, 2003 |
Nine Month Period Ended September 30, 2002 |
| | | | | |
| | | | | |
SALES | $ - | $ - | $ - | $ 74,447 |
| | | | | |
COST OF SALES | - | 3,121 | - | 40,468 |
| | | | | |
GROSS PROFIT (LOSS) | - | (3,121) | - | 33,979 |
| | | | | |
| | | | | |
EXPENSES | | | | |
Accounting and legal | $ 2,166 | $ 8,625 | $ 28,677 | $ 14,113 |
Administration | 4,414 | - | 5,039 | - |
Consulting | 347,035 | - | 357,500 | - |
Finders' fees (Note 3) | 57,000 | - | 57,000 | - |
Interest and bank charges | 148 | 497 | 483 | 1,439 |
Investor relations | 4,415 | - | 5,040 | - |
Management fees | - | 7,500 | - | 22,500 |
Office and miscellaneous | 1,742 | 1,096 | 4,100 | 6,530 |
Regulatory fees | 1,986 | 4,231 | 7,738 | 7,472 |
Rent | 3,042 | 9,340 | 3,042 | 28,229 |
Shareholder costs | - | - | 422 | - |
Telephone and utilities | 621 | 1,465 | 1,354 | 4,194 |
Travel and related | 3,017 | 849 | 4,017 | 2,095 |
Website design and maintenance | - | - | 1,175 | - |
| | | | | |
| | 425,586 | 33,513 | 475,587 | 86,572 |
| | | | | |
| | | | | |
Net loss for the period | (425,586) | (36,634) | (475,587) | (52,593) |
| | | | | |
| | | | | |
Deficit, beginning of period | (7,265,870) | (6,381,541) | (7,215,869) | (6,365,582) |
| | | | | |
| | | | | |
Deficit, end of period | $ (7,691,456) | $ (6,418,175) | $ (7,691,456) | $ (6,418,175) |
| | | | | |
| | | | | |
Basic and diluted loss per common share | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.01) |
| | | | | |
| | | | | |
Weighted average number of common shares outstanding |
41,820,738 |
5,953,954 |
22,212,454 |
5,953,954 |
The accompanying notes are an integral part of these financial statements.
RIVAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Prepared by Management)
| |
Three Month Period Ended September 30, 2003 |
Three Month Period Ended September 30, 2002 |
Nine Month Period Ended September 30, 2003 |
Nine Month Period Ended September 30, 2002 |
| | | | | |
| | | | | |
| | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | |
Loss for the period | $ (425,586) | $ (36,634) | $ (475,587) | $ (52,593) |
Items not affecting cash: | | | | |
Finders' shares issued | 57,000 | - | 57,000 | - |
Shares issued for services | 346,180 | - | 346,180 | - |
| | | | | |
Changes in non-cash working capital items: | | | | |
(Increase) decrease in receivables | (731) | 36,365 | (6,830) | 53,228 |
(Increase) decrease in prepaid expenses | (612) | 1,557 | (612) | 1,416 |
Increase (decrease) in accounts payable and accrued liabilities |
(2,606) |
6,742 |
24,667 |
(6,141) |
| | | | | |
Net cash used in operating activities | (26,355) | 8,030 | (55,182) | (4,090) |
| | | | | |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | |
Promissory note payable | - | - | 5,575 | - |
Proceeds from issuance of capital stock | 10,500 | - | 25,500 | - |
Share subscriptions received | 28,206 | - | 41,356 | - |
| | | | | |
Net cash provided by financing activities | 38,706 | - | 72,431 | - |
| | | | | |
| | | | | |
CASH FLOWS FROM INVESTING | | | | |
Purchase of capital assets | (3,811) | - | (3,811) | - |
| | | | | |
Net cash used in investing activities | (3,811) | - | (3,811) | - |
| | | | | |
| | | | | |
Change in cash position during the period | 8,540 | 8,030 | 13,438 | (4,090) |
| | | | | |
Cash position, beginning of period | 10,248 | 10,287 | 5,350 | 22,407 |
| | | | | |
Cash position, end of period | $ 18,788 | $ 18,317 | $ 18,788 | $ 18,317 |
| | Supplemental disclosure for non-cash operating, financing and investing activities | | | | |
| |
Shares issued to acquire intangible property Finders' shares issued Shares issued for services |
$ - 57,000 346,180 |
$ - - - |
$ 35,000 57,000 346,180 |
$ - - - |
| | | | | |
| | | | | |
The accompanying notes are an integral part of these financial statements.
RIVAL TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Prepared by Management)
SEPTEMBER 30, 2003
1.
OPERATIONS AND GOING CONCERN
The Company is incorporated under the Company Act of British Columbia with its head office in the City of West Vancouver, British Columbia, Canada.
The Company was the exclusive licensed manufacturer and distributor worldwide of a brand of fire extinguishants and fire retardant products. The license agreement was terminated December 1999. During the three years ended December 2002, all sales were made to customers in North America. The Company does not expect any further sales of these products. In June 2003 the Company acquired a new technology for reducing diesel emissions and will now focus on developing and marketing this technology.
These financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
The Company's continued existence is dependent upon its ability to raise substantial capital, maintain adequate financing arrangements and to generate profitable operations in the future. During 2001, control of the company passed to a new group that is actively seeking to raise capital and to identify possible business acquisitions.
These financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used
The Company is a foreign issuer within the meaning of United States securities law and regulations. As such it is not required and has not had its auditor review this Form 10Q filing and the quarterly financial statements contained herein.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These consolidated financial statements are presented in Canadian dollars. They are in accordance with accounting principles generally accepted in the United States of America and with those used in the preparation of the Company's annual financial statements. They include the accounts of the company and its wholly owned subsidiary, Rival Technologies (Delaware) Inc. and its former subsidiary Tracker Capital Corp. which merged with Rival Technologies (Delaware) Inc. during 2002.
Use of estimates
In conformity with accounting principles generally accepted in the United States of America management is required to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those reported.
RIVAL TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Prepared by Management)
SEPTEMBER 30, 2003
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd…)
Financial instruments
The Company's financial instruments consist of cash, receivables, payables and accruals. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values.
Revenue recognition
The Company sells environmental products. The Company recognizes revenues when goods have been shipped, invoices are rendered and collection is reasonably assured. Allowances for non-collection of revenues are made when collectibility becomes uncertain. Shipping and handling costs are included in costs of sales.
3.
INTANGIBLE PROPERTY
The Company acquired a diesel engine technology ("CWI") from M.A. Turbo/Engine Ltd. ("M.A. Turbo"). It acquired a 100% interest in CWI technology for the automotive transportation industry, and a 20% interest in CWI technology for the marine industry. The Purchase Agreement includes an option clause to acquire the balance of the marine application. Under the terms of the Purchase Agreement, the Company has issued 35,000,000 restricted common shares at a deemed value of $0.001 per share for a deemed purchase price of $35,000. The Company has also committed to provide M.A. Turbo with $230,000 in development and marketing funds to complete the CWI technology for the automotive transportation industry, plus $100,000 for its 20% interest in CWI technology for the marine industry. In Connection with this transaction, a total of 150,000 common shares were issued at $0.38 for a deemed cost of $57,000 as finders' shares.
4.
PROMISSORY NOTE PAYABLE
On April 17, 2003, the Company issued a promissory note of $5,575 ($3,960 US) to an individual related to a director of the Company. There are no specific terms of repayment. The note bears no interest and is payable on demand.
RIVAL TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Prepared by Management)
SEPTEMBER 30, 2003
5.
CAPITAL STOCK
| |
Number of Shares |
Capital Stock |
Paid in Capital |
Total |
| | | | | |
Authorized | | | | |
100,000,000 common shares without par value | | | | |
| | | | | |
Issued | | | | |
Balance as at December 31, 2002 | 6,183,934 | $ 6,993,249 | $ 105,000 | $ 7,098,249 |
Exercise of warrants | 170,000 | 25,500 | - | 25,500 |
Acquisition of intangible property | 35,000,000 | 35,000 | - | 35,000 |
Shares issued for services | 911,000 | 346,180 | - | 346,180 |
Finders' shares | 150,000 | 57,000 | - | 57,000 |
| | | | | |
Balance as at September 30, 2003 | 42,414,934 | $ 7,456,929 | $ 105,000 | $ 7,561,929 |
The Company received funds of $41,356 in advance of shares being issued from a private placement. During the period, the Company completed a private placement of 158,000 common shares at $0.20US per unit. Each unit consists of one common share and one non-transferable share purchase warrant entitling the holder to purchase one additional common share at $0.30US for one year. The shares have not yet been issued.
6.
SEGMENTED INFORMATION
The Company operates in one industry, the environmental products industry in North America.
PART I - FINANCIAL INFORMATION
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is management's discussion and analysis of significant factors that have affected the Company's financial position and operations during the three-month period ended September 30, 2003.
General Overview
The Company was incorporated in 1987 for the purpose of developing a line of fire extinguishing products that would be an alternative to Halon. These products consist of vapor gas that smothers a fire in confined areas. They are used in commercial applications where water or solid chemicals would cause damage to expensive equipment, such as computers. Due to lack of market demand for the product, the Company has ceased sales of the product.
In June, 2003 the Company acquired a diesel engine technology ("CWI") from M.A. Turbo/Engine Ltd. ("M.A. Turbo"). It acquired a 100% interest in CWI technology for the automotive transportation industry, and a 20% interest in CWI technology for the marine industry. The Purchase Agreement includes an option clause to acquire the balance of the marine application.
Under the terms of the Purchase Agreement, the Company has issued 35,000,000 restricted common shares at a deemed value of $0.001 per share. The Company has also committed to provide M.A. Turbo with $230,000 in development and marketing funds to complete the CWI technology for the automotive transportation industry, plus $100,000 for its 20% interest in CWI technology for the marine industry. The principle followed in determining the number of shares issued by the Company was the estimated value of the technology, and the lack of assets or revenue of the Company. At the time of the transaction, there was no relationship between the owners of the technology and the Company, its officers, directors or persons owning 10% or more of the Company's common stock.
The Company is actively working on raising funds needed to proceed with its plans for CWI technology. Later this year, the Company expects to commence design and development of CWI technology for the automotive transportation industry, as well as sales and marketing of CWI technology for the marine industry, subject to receiving adequate financing.
The Company was and will continue to engage in the business of developing, marketing and distributing environmental products.
Results of Operations
Three and Nine Months Ended September 30, 2003 compared to September 30, 2002.
Revenues for the three months ended September 30, 2003 remained $0 as compared to $0 for the three months ended September 30, 2002. Revenues for the nine months ended September 30, 2003 decreased to $0 as compared to $74,447 for the nine months ended September 30, 2002 due to a general decrease in demand for the Company's NAF S-111 fire extinguishant product.
General and Administrative expenses for the three months ended September 30, 2003 were $425,586 as compared to $33,513 for the three months ended September 30, 2002, representing an increase of 1,170%. This increase was primarily attributed to a finders fee and consulting services relating to the Company's acquisition of CWI Technology and listing on the Berlin Exchange in Germany. General and Administrative expenses for the nine months ended September 30, 2003 were $475,587 as compared to $86,572 for the nine months ended September 30, 2002, representing an increase of 449%. This increase was primarily attributed to a finders fee and consulting services relating to the Company's acquisition of CWI Technology and listing on the Berlin Exchange in Germany.
The Company did not incur any Research and Development costs during the three or nine month period ended September 30, 2003.
Liquidity and Capital Resources
During the nine month period ending September 30, 2003, the Company sold 170,000 common shares for consideration of $25,500 in order to fund operations. In addition, the Company completed a private placements totaling 158,000 common shares at $0.20US per Unit. Each Unit consists of one common share and one non-transferable share purchase warrant entitling the holder to purchase one additional common share at $0.30US for one year. The shares from the private placement will be issued subsequent to the quarter.
Rival's cash position at September 30, 2003 was $18,788 as compared to $5,350 at September 30, 2002, representing an increase of 251%.
Rival's net working capital position (current assets less current liabilities) decreased to negative ($126,982) at September 30, 2003 from negative ($117,620) at September 30, 2002, due primarily to decreasing sales.
During the three and nine month period ending September 30, 2003, the Company met all cash flow needs from the sale of shares.
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
Except for historical information contained herein, this Form 10-QSB contains express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. We intend that such forward-looking statements be subject to the safe harbors created thereby. We may make written or oral forward-looking statements from
time to time in filings with the SEC, in press releases, quarterly conference calls or otherwise. The words "believes," "expects," "anticipates," "intends," "forecasts," "project," "plans," "estimates" and similar expressions identify forward-looking statements. Such statements reflect our current views with respect to future events and financial performance or operations and speak only as of the date the statements are made.
Forward-looking statements involve risks and uncertainties and readers are cautioned not to place undue reliance on forward-looking statements. Our actual results may differ materially from such statements. Factors that cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-QSB.
Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate with the result that there can be no assurance the results contemplated in such forward-looking statements will be realized. The inclusion of such forward-looking information should not be regarded, as a representation that the
future events, plans, or expectations contemplated will be achieved. We undertake no obligation to publicly update, review, or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statements
based. Our filings with the SEC may be accessed at the SEC's Web site, www.sec.gov.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action has been threatened by or against the Company.
Item 2. Changes in Securities and Use of Proceeds
On June 25, 2003, the Company sold 70,000 common shares for consideration of $10,500. During the 3 months ending September 30, 2003 the Company accepted subscriptions for 148,000 common shares for consideration of US$29,600. The 148,000 common shares have not yet been issued.
On September 4, 2003 the Company issued 1,061,000 common shares for services in accordance with an S-8 Registration Statement.
Item 3. Default on Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Shareholders
None.
Item 5. Other Matters
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K during the quarter ended September 30, 2003.
None.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, hereunto duly authorized.
Rival Technologies Inc.
/s/William H. Morrison
By:
William H. Morrison
President
/s/Robin Harvey
By:
Robin Harvey
Director
