UNITED STATES
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 period ended September 30, 2004
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File No. 000-49900
RIVAL TECHNOLOGIES INC.
(Exact name of small business issuer as specified in its charter)
British Columbia, Canada N/A
(State or other jurisdiction of incorporation or organization) (IRS Employer ID)
#200, 100 Park Royal, West Vancouver, British Columbia, Canada V7T 1A2
(Address of principal executive offices)
(604) 689-0584
(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 September 30, 2004, 42,659,834 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.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
(Unaudited)
SEPTEMBER 30, 2004
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Expressed in Canadian dollars)
(Unaudited)
| | | September 30, 2004 | |
| | | | |
| | | | |
ASSETS | | | |
| | | | |
Current | | | |
Cash | | $39,811 | |
Receivables | | 9,932 | |
Prepaid expenses | | 31,695 | |
| | | | |
Total current assets | | 81,438 | |
| | | | |
Equipment | | 5,313 | |
Intangible property
| | 35,000 | |
Deferred income taxesless valuation allowance of $1,111,800 | |
- | | | | | | |
Total assets | | $121,751 | |
| | | | |
| | | | |
| | | | |
LIABILITIES AND DEFICIENCY IN ASSETS | | | |
| | | | |
Current | | | |
Accounts payable and accrued liabilities | | $80,726 | |
Promissory note payable | | 5,575 | |
Convertible debentures | | 82,512 | |
| | | | |
Total current liabilities | | 168,813 | |
| | | | |
| | | | |
Deficiency in assets | | | |
Common stock | | | |
Authorized | | | |
100,000,000 common shares without par value | | | |
Issued and outstanding | | | |
42,659,834 common shares | | 11,899,315 | |
Additional paid-in capital | | 254,044
| |
Stock subscriptions received in advance | | 60,286 | |
Deficit accumulated during the development stage | | (5,028,219) | |
Deficit | | (7,232,488) | |
| | | | |
Total deficiency in assets | | (47,062) | |
| | | | |
Total liabilities and deficiency in assets | | $121,751 | |
The accompanying notes are an integral part of these consolidated financial statements.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in Canadian dollars)
(Unaudited)
| |
Cumulative Amounts From Beginning of Development Stage (April 1, 2003) to September 30, 2004 |
Three-Month Period Ended September 30, 2004 |
Three-Month Period Ended September 30, 2003 |
Nine-Month Period Ended September 30, 2004 |
Nine-Month Period Ended September 30, 2003 |
| | | | | | |
| | | | | | |
EXPENSES | | | | | |
Accounting and legal | $76,531 | $10,071 | $1,415 | $42,486 | $27,926 |
Amortization of beneficial conversion | | | | | |
feature | 27,497 | 27,497 | - | 27,497 | - |
Consulting | 214,215 | 1,000 | 43,558 | 33,625 | 56,859 |
Depreciation | 1,088 | 375 | - | 897 | - |
Interest expense | 6,164 | 3,645 | - | 6,164 | - |
Investor relations | 57,935 | 4,426 | 8,829 | 12,814 | 10,079 |
Office and miscellaneous | 10,263 | 3,792 | 4,933 | 6,498 | 7,626 |
Regulatory fees | 24,610 | 4,485 | 1,986 | 12,049 | 7,738 |
Rent | 11,362 | 2,147 | - | 6,084 | - |
Research and development | 70,292 | 30,140 | - | 70,292 | - |
Shareholder costs | 949 | 949 | - | 949 | 422 |
Telephone and utilities | 3,781 | 918 | 621 | 1,857 | 1,354 |
Travel and related | 6,857 | 1,194 | 3,017 | 1,194 | 4,017 |
Website design and maintenance | 1,675 | - | - | - | 1,175 |
| | | | | | |
Loss before other items | (513,219) | (90,639) | (64,359) | (222,406) | (117,196) |
| | | | | | |
OTHER ITEMS | | | | | |
Impairment of intangible property | (4,515,000) | - | - | - | (4,515,000) |
| | | | | | |
Loss before income taxes | (5,028,219) | (90,639) | (64,359) | (222,406) | (4,632,196) |
| | | | | | |
Provision for income taxes | - | - | - | - | - |
| | | | | | |
Net loss | (5,028,219) | (90,639) | (64,359) | (222,406) | (4,632,196) |
| | | | | | |
Basic and diluted net loss per common share | |
$(0.01) |
$ (0.01) |
$(0.01) |
$ (0.21) |
| | | | | | |
Weighted average number of common shares outstanding – basic and diluted | |
42,659,834 |
41,820,738 |
42,612,403 |
22,212,454 |
The accompanying notes are an integral part of these consolidated financial statements.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
| |
Cumulative Amounts From Beginning of Development Stage (April 1, 2003) to September 30, 2004 |
Nine-Month Period Ended September 30, 2004 |
Nine-Month Period Ended September 30, 2003 |
| | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net Loss | $(5,028,219) | $(222,406) | $(4,632,196) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Amortization of beneficial conversion feature | 27,497 | 27,497 | - |
Depreciation | 1,088 | 897 | - |
Shares issued for services | 192,420 | - | 43,938 |
Impairment of intangible property | 4,515,000 | - | 4,515,000 |
Changes in assets and liabilities: | | | |
Increase in receivables | (9,932) | (2,137) | (6,830) |
(Increase) decrease in prepaid expenses | 31,555 | 31,625 | (612) |
Increase (decrease) in accounts payable and accrued liabilities | 14,184 | (19,917) | 25,518 |
| | | | |
Net cash used in operating activities | (256,407) | (184,441) | (55,182) |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Convertible debentures | 162,604 | 149,315 | - |
Promissory note payable | 5,575 | - | 5,575 |
Proceeds from issuance of common stock | 71,667 | 13,661 | 25,500 |
Stock subscriptions received | 60,286 | 60,286 | 41,356 |
| | | | |
Net cash provided by financing activities | 300,132 | 223,262 | 72,431 |
| | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Purchase of equipment | (6,401) | (2,590) | (3,811) |
| | | | |
Net cash used in investing activities | (6,401) | (2,590) | (3,811) |
| | | | |
Change in cash and cash equivalents during period | 37,324 | 36,231 | 13,438 |
Cash and cash equivalents, beginning |
2,487 |
3,580 |
5,350 |
| | | | |
Cash and cash equivalents, ending | $39,811 | $39,811 | $18,788 |
| | | | |
Supplemental disclosure with respect to cash flows | | | |
Settlement of accounts payable to an officer of the Company | $54,744 | $ - | $ - |
Shares issued to acquire intangible property | 35,000 | - | - |
Shares issued for services | 192,420 | - | 43,938 |
Shares issued to settle convertible debenture and accrued interest | | | |
payable | 13,729 | 13,729 | - |
Beneficial conversion feature recorded as additional paid-in | | | |
capital | 94,300 | 94,300 | - |
The accompanying notes are an integral part of these consolidated financial statements.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
SEPTEMBER 30, 2004
(Unaudited)
1.
OPERATIONS AND GOING CONCERN
The Company is incorporated under the Company Act of British Columbia with its head office in 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 and has abandoned this business during the three-month period beginning April 1, 2003.
During the period beginning April 1, 2003, the Company acquired a new technology for reducing diesel emissions and will now focus on developing and marketing this technology. The Company is considered to be a development stage company beginning April 1, 2003 as the Company has changed its business and no longer generates revenues from operations.
These consolidated 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.
The operations of the Company have primarily been funded by the issuance of common stock. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms.
| | | September 30, 2004 |
| | | |
Working capital (deficiency) | | $ (87,375) |
Deficit accumulated during the development stage | | (5,028,219) |
Deficit | | (7,232,488)
|
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary (consisting of normal recurring accruals) to present fairly the financial information contained therein. The accompanying unaudited consolidated financial statements do not include all disclosures required by generally accepted accounting principles in the United States of America and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2003. The results of operations for the nine-month period ended September 30, 2004, are not necessarily indicative of the results to be expected for the year ending December 31, 2004.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
SEPTEMBER 30, 2004
(Unaudited)
2.
SIGNIFICANT ACCOUNTING POLICIES
Net loss per share
Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock. The dilutive effect of 214,900 warrants is not reflected in net loss per share as the effect would be anti-dilutive.
New accounting pronouncements
In January 2003, FASB issued Financial Interpretation No. 46 “Consolidation of Variable Interest Entities” ("FIN 46") (revised inDecember 17, 2003). The objective of FIN 46 is to improve financial reporting by companies involved with variable interest entities. A variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. FIN 46 also requires disclosures about vari able interest entities thatthe company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 are required in financial statements of public entities that have interests in variable interest entities for periods ending after December 15, 2003. The consolidation requirements for all other types of entities are required in financial statements for periods endingMarch 15, 2004.
The adoption of this new pronouncement is not expected to have a material effect on the Company's consolidated financial position or results of operations.
Comparative figures
Certain comparative figures have been reclassified to conform with the presentation adopted in the current period.
3.
EQUIPMENT
| | | September 30, 2004 |
| | | | |
Cost
| Accumulated Amortization | Net Book Value |
| | | | | | |
Furniture and equipment | | | |
$3,811 | $733 | $3,078 | | Computer equipment | | | | 2,590 | 355 | 2,235 |
| | | | |
| | | | | | | |
$6,401 | $1,088 | $5,313 |
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
SEPTEMBER 30, 2004
(Unaudited)
4.
INTANGIBLE PROPERTY
The Company acquired a diesel engine technology that reduces engine emissions (“CWI Technology”) from M.A. Turbo/Engine Ltd. (“M.A. Turbo”). It acquired a 100% interest in the CWI Technology for the automotive transportation industry and a 20% interest in the 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. The Company has determined the value of the shares based on the market price of the securities under the guidance in EITF No. 97-8 “Accounting for Contingent Consideration Issued in a Purchase Business Combination” and EITF No. 99-12 “Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination”. On the date of acquisition agreement, the market value of the stock was $0.15 per share; however, the market value of the stock was adjusted as follows:
i)
A discount of approximately 23%, based upon published materials, was applied against the market value of the
stock of $0.15 per share to reflect the thinly traded market in which the Company’s stock trades.
ii)
A premium of approximately 10%, based upon published materials, was applied against the market value of the stock of $0.15 per share to reflect the cost of issuing a significant number of shares that results in control of the Company passing to the vendors of the CWI Technology.
Accordingly, the Company determined the share price for this transaction to be approximately $0.13 per share. As a result, the cost recorded by the Company upon acquisition of the CWI Technology was $4,550,000.
Subsequent to the acquisition of CWI Technology and under the guidance in Statements of Financial Accounting Standards No.142, “Goodwill and Other Intangible Assets”, the Company determined that carrying value of the CWI Technology exceeded the fair value which was estimated to be approximately $35,000 based upon expected future cash flows. Consequently, the Company recorded a charge in the consolidated statements of operations of $4,515,000 as the carrying value of CWI Technology was written-down to fair value in the year the impairment was recognized.
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 the CWI Technology for the marine industry.
In connection with the purchase of the CWI Technology, the Company entered into a contractor agreement for a one year term. Under the agreement, the Company agreed to provide compensation of 150,000 common shares for services related to the acquisition. The obligation to issue these shares is included in accounts payable.
5.
PROMISSORY NOTE PAYABLE
On April 17, 2003, the Company issued a promissory note of $5,575 (US$3,960) to an individual related to a director of the Company. The note is unsecured, bears no interest and is payable on demand.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
SEPTEMBER 30, 2004
(Unaudited)
6.
CONVERTIBLE DEBENTURES
On December 1, 2003, the Company borrowed $13,289 (US$10,000) from a lender and issued a convertible debenture for
a period of one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to
the date of payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains
unpaid at the end of the term, the lender and/or the Company shall have the right to convert the principal and interest
earned into common stock of the Company at a value of US$0.35 per share. On June 17, 2004, the lender exercised its
right to convert the principal and interest into common stock resulting in the Company issuing 30,000 common shares
to settle the convertible debt of $13,729 (principal and accrued interest).
On January 16, 2004, the Company borrowed $15,000 from a lender and issued a convertible debenture for a period of
one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to the date of
payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains unpaid at the end
of the term, the lender and/or the Company shall have the right to convert the principal and interest earned into
common stock of the Company at a value of US$0.35 per share.
On March 8, 2004, the Company borrowed $13,015 (US$10,000) from a lender and issued a convertible debenture for a
period of one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to
the date of payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains
unpaid at the end of the term, the lender and/or the Company shall have the right to convert the principal and interest
earned into common stock of the Company at a value of US$0.35 per share.
On April 13, 2004, the Company borrowed $27,000 (US$20,000) from a lender and issued a convertible debenture for a
period of one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to
the date of payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains
unpaid at the end of the term, the lender and/or the Company shall have the right to convert the principal and interest
earned into common stock of the Company at a value of US$0.35 per share.
On June 9, 2004, the Company borrowed $67,300 (US$50,000) from a lender and issued a convertible debenture for a
period of one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to
the date of payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains
unpaid at the end of the term, the lender and/or the Company shall have the right to convert the principal and interest
earned into common stock of the Company at a value of US$0.35 per share. As the market price of the Company’s
common stock exceeded the exercise price on the commitment date, the intrinsic value of the beneficial conversion
features recorded as additional paid-in capital was $67,300. During the nine-month period ended September 30, 2004, the
Company recognized $20,747 of intrinsic value of the beneficial conversion feature in the consolidated statements of
operations.
On June 30, 2004, the Company borrowed $27,000 (US$20,000) from a lender and issued a convertible debenture for a
period of one year, bearing interest of 10% per annum. The Company may prepay the principal and interest accrued to
the date of payment, in whole or in part, without penalty. If all or any portion of the principal and interest remains
unpaid at the end of the term, the lender and/or the Company shall have the right to convert the principal and interest
earned into common stock of the Company at a value of US$0.35 per share. As the market price of the Company’s
common stock exceeded the exercise price on the commitment date, the intrinsic value of the beneficial conversion
features recorded as additional paid-in capital was $27,000. During the nine-month period ended September 30, 2004, the
Company recognized $6,750 of intrinsic value of the beneficial conversion feature in the consolidated statements of
operations.
The related accrued interest for the convertible debentures has been recorded as accounts payable and accrued liabilities.
RIVAL TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
SEPTEMBER 30, 2004
(Unaudited)
7.
COMMON STOCK
During the period, the Company issued and transferred 4,000,000 shares of common stock to a trustee for the sole purpose of selling the shares of common stock. The trustee will receive a trustee fee equal to 3% of the selling value of the shares of common stock. Any shares of common stock not sold by the trustee will be returned to the Company at their request. Accordingly, those shares of common stock have not been recorded as issued and outstanding on the consolidated balance sheet.
As at September 30, 2004, there were no stock options outstanding.
As at September 30, 2004, the following warrants were outstanding:
| | Number of Shares | | Exercise Price | |
Expiry Date |
| | | | | | |
| | 168,000 | | US$ 0.30 | | November 28, 2004 |
| | 46,900 | | US$ 0.35 | | June 17, 2005 |
8.
SEGMENT INFORMATION
The Company operates in one reportable segment, being the diesel technology industry, in Canada and the United
States of America.
9.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents, receivables, accounts payable and accrued liabilities, promissory note payable and convertible debentures. Unless otherwise noted, 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 approximate their carrying values, unless otherwise noted.
Item 2.
Management's Discussion and Analysis or Plan of Operation.
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 June 30, 2004.
The financial statements of the Company are expressed in Canadian dollars. All figures herein are also expressed in Canadian dollars, except where specifically indicated in United States dollars.
General Overview
In the period beginning April 1, 2003, we acquired diesel engine technology for reducing engine emissions (“CWI Technology”) from M.A. Turbo/Engine Ltd. (“M.A. Turbo”). Specifically, we 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, we issued 35,000,000 restricted common shares. On the date of the acquisition agreement, the market value of the stock was $0.15 per share; however, the market value of the stock was adjusted as follows:
i)
A discount of approximately 23%, based upon published materials, was applied against the market value of the stock of $0.15 per share to reflect the thinly traded market in which our stock trades.
ii)
A premium of approximately 10%, based upon published materials, was applied against the market value of the stock of $0.15 per share to reflect the cost of issuing a significant number of shares that results in control of us passing to the vendors of the CWI Technology.
Accordingly, we determined the share price for this transaction to be approximately $0.13 per share. As a result, the cost recorded by us upon acquisition of the CWI Technology was $4,550,000.
We have 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. On June 1, 2004 we amended the Schedules to the Purchase Agreement in order to bring them current with our anticipated financing and development schedule. To date we have maintained our funding commitment in accordance with these Schedules.
In connection with the purchase of the CWI Technology, we entered into a contractor agreement for a one-year term. Under the contractor agreement, we agreed to provide compensation of 150,000 common shares for services related to the acquisition. The shares have been issued and delivered.
The principle followed in determining the number of shares issued by us was the estimated value of CWI Technology, and our lack of assets or revenue. At the time of the transaction, there was no relationship between ourselves and the owners of CWI Technology, our officers, directors or persons owning 10% or more of the our common stock.
We have entered into Marketing Agreement with MA Turbo allowing it to market the marine application of CWI Technology and providing us with a 15% commission on any sales. In this regard we have also entered into a Memorandum of Understanding with Advanced Engineering Services of Milan Italy to assist in marketing the marine application of CWI Technology in Europe. This marketing effort is in process and firm contracts are being sought from a number of European shipbuilders.
We are actively working on raising funds needed to proceed with our plans for CWI Technology. In April, 2004 the Company executed a Trust Declaration with a German lawyer. The Trust Declaration relates to Reg S common shares that they will be sold to European investors under a separate Berlin Stock Exchange Reg S listing, with the Company receiving the net proceeds from the sale of these shares.
The Company has transferred 4,000,000 shares of common stock to a trustee for the sole purpose of selling the shares of common stock. The trustee will receive a trustee fee equal to 3% of the selling value of the Reg S shares of common stock. Any shares of common stock not sold by the trustee will be returned to the Company at their request. As of the date hereof no shares have been sold.
We have been and will continue to engage in the business of developing, marketing and distributing environmental products. We have no employees at this time.
Results of Operations
Three-Month and Nine-Month Periods Ended September 30, 2004. Compared to September 30, 2003.
We have had no revenues from the beginning of the development stage on April 1, 2003.
General and Administrative expenses for the three-month period ended September 30, 2004 were $90,639 as compared to $64,359 for the three-month period ended September 30, 2003, representing an increase of 41%. This increase was primarily attributed to Research and Development costs relating to the development of CWI Technology plus increased interest and rent expenses. General and Administrative expenses for the nine-month period ended September 30, 2004 were $222,406 as compared to $117,196 for the nine-month period ended September 30, 2003, representing an increase of 90%. This increase was primarily attributed to Research and Development costs relating to the development of CWI Technology plus increased interest and rent expenses.
The Company incurred $30,140 in Research and Development costs during the three-month period ended September 30, 2004 and $70,292 in Research and Development costs during the nine-month period ended September 30, 2004.
Liquidity and Capital Resources
We completed the exercise of 138,000 warrants at US$0.30 per warrant during the 3 month period ending September 30, 2004 for total proceeds US$28,500 plus Cdn$13,098. We will issue 138,000 shares of common stock in this regard subsequent to the end of this quarterly period.
Rival's cash position at September 30, 2004 was $39,811 as compared to $3,580 at December 31, 2003, representing an increase of 1,012%.
Rival's net working capital position (current assets less current liabilities) increased to negative ($87,375) at June 30, 2004 from negative ($45,252) at December 31, 2003, due primarily to funds borrowed by way of convertible debentures.
During the three-month period ending September 30, 2004, the Company met all cash flow needs from the receipt of subscriptions in advance of shares issued, plus funds borrowed by way of convertible debentures.
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.
Item 3.
Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to our management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including the Chief Executive Officer and the Chief Financial Officer, recognize that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 45 days prior to the filing date of this quarterly report on Form 10-QSB, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. No changes were made to internal disclosure controls from the prior fiscal quarter.
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. Unregistered Sales of Equity Securities and Use of Proceeds
During the three-month period ended September 30, 2004, warrant holders and the Company completed the exercise of 138,000 warrants and will issue 138,000 shares of common stock in this regard subsequent to the end of this quarterly period.
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
(a) Exhibits.
None.
(b) Reports on Form 8-K during the quarter ended June 30, 2004.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Rival Technologies Inc.
Date: November 12, 2004
/s/ Robin J. Harvey
By: Robin J. Harvey
President, Chief Financial Officer and Director
Date: November 12, 2004
/s/ Perry D. Guglielmi
By: Perry Guglielmi
Director
CERTIFICATIONS
I, Robin J. Harvey, President and Chief Financial Officer of the Company certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Rival Technologies Inc.;
2. Based on my knowledge, this quarterly 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 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 Small Business Issuer as of, and for, the periods presented in this report.
4. The Small Business Issuer’s other certifying offering officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Small Business Issuer 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 Small Business Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the Small Business Issuer'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
d)
Disclosed in this report any change in the Small Business Issuer’s internal control over financial reporting that occurred during the Small Business Issuer’s first fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Small Business Issuer’s internal control over financial reporting; and
5. The Small Business Issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Small Business Issuer’s auditors and the audit committee of Small Business Issuer’s board of directors (or persons performing the equivalent function):
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 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 internal control over financial reporting; and
Date:
November 12, 2004.
/s/ Robin J. Harvey
By: Robin J. Harvey
President and Chief Financial Officer
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of Rival Technologies, Inc., a British Columbia corporation (the “Company”), on Form 10-QSB for the period ending September 30, 2004, as filed with the Securities and Exchange Commission (the “Report”), I, , President and Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to the best of my knowledge:
(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 result of operations of the Company.
/s/ Robin J. Harvey
By: Robin J. Harvey
President and Chief Financial Officer
