SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
| x | Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended September 30, 2004 |
-OR-
| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities And Exchange Act of 1934 for the transaction period from to |
Commission File Number 333-100431
| Colorado | ###-##-#### | |
| (State of Incorporation) | (I.R.S. employer identification number) |
Capital Tech, Inc.
(Exact name of registrant as specified in its charter)
8200 South Quebec Street, A-3 #125
Centennial, Colorado 80112
(Address of principal executive offices, Zip Code)
720-529-9293
(Registrant’s telephone number, including area code)
Check whether the issuer (1) 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 ¨
The number of outstanding shares of the registrant’s common stock, September 30, 2004: Common Stock - 2,110,000
PART I — FINANCIAL INFORMATION
(A Development Stage Company)
1
(A Development Stage Company)
CONDENSED BALANCE SHEET
September 30, 2004
| ASSETS | ||||
CURRENT ASSETS | ||||
Cash | $ | 254 | ||
TOTAL CURRENT ASSETS | 254 | |||
TOTAL ASSETS | $ | 254 | ||
LIABILITIES AND SHAREHOLDER’S DEFICIENCY | ||||
| LIABILITIES | ||||
CURRENT LIABILITIES | ||||
Accounts Payable | $ | 3,969 | ||
TOTAL CURRENT LIABILITIES | 3,969 | |||
Loan payable | 16,500 | |||
TOTAL LIABILITIES | 20,469 | |||
SHAREHOLDERS’ DEFICIENCY | ||||
Preferred stock, $.01 par value, 10,000,000 authorized no shares issued and outstanding | — | |||
Common Stock, $.001 par value, 100,000,000 shares authorized 2,110,000 issued and outstanding | 2,110 | |||
Additional paid-in capital | 180 | |||
Deficit accumulated during the development stage | (22,505 | ) | ||
TOTAL SHAREHOLDERS’ DEFICIENCY | (20,215 | ) | ||
TOTAL LIABILITIES AND SHAREHOLDER’S DEFICIENCY | $ | 254 | ||
The accompanying notes are an integral part of these financial statements.
2
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
| For the nine months ended September 30 | For the three months ended September 30 | Period from March 28, 2000 (Inception) to September 30, | ||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
OPERATING EXPENSES | ||||||||||||||||||
Professional fees | — | 2,300 | — | 350 | 17,601 | |||||||||||||
Consulting - related party | — | — | — | — | 3,616 | |||||||||||||
Other expenses | — | 98 | — | 24 | 1,374 | |||||||||||||
TOTAL OPERATING EXPENSES | — | 2,398 | — | 374 | 22,591 | |||||||||||||
Interest Income | — | 2 | — | — | 86 | |||||||||||||
LOSS FROM OPERATIONS | $ | — | $ | (2,396 | ) | $ | — | $ | (374 | ) | $ | (22,505 | ) | |||||
Loss per share - basic and diluted | $ | — | $ | (0.00 | ) | $ | — | $ | (0.00 | ) | $ | (0.01 | ) | |||||
Weighted average shares outstanding - basic and diluted | 2,110,000 | 2,110,000 | 2,110,000 | 2,110,000 | 2,110,000 | |||||||||||||
The accompanying notes are an integral part of these financial statements.
3
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
For the nine months ended September 30 | Period from to September 30, | ||||||||||
| 2004 | 2003 | 2004 | |||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | — | $ | (2,396 | ) | $ | (22,505 | ) | |||
Adjustments to reconcile net loss to net cash used by operating activities | |||||||||||
Expenses paid on behalf of company | — | 350 | 3,951 | ||||||||
Increase in accounts payable | — | — | 3,969 | ||||||||
Total adjustments | — | 350 | 7,920 | ||||||||
Net cash used by operating activities | — | (2,046 | ) | (14,585 | ) | ||||||
Cash flows from investing activities | — | — | — | ||||||||
Cash flows from financing activities | |||||||||||
Proceeds from issuance of common stock | — | — | 2,290 | ||||||||
Proceeds from loans payable | — | 2,000 | 32,209 | ||||||||
Repayment of loans payable | — | — | (19,660 | ) | |||||||
Net cash provided by (used in) financing activities | — | 2,000 | 14,839 | ||||||||
NET (DECREASE) IN CASH | — | (46 | ) | 254 | |||||||
CASH AT BEGINNING OF PERIOD | 254 | 178 | — | ||||||||
CASH AT END OF PERIOD | $ | 254 | $ | 132 | $ | 254 | |||||
The accompanying notes are an integral part of these financial statements.
4
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 – NATURE AND PURPOSE OF BUSINESS
Capital Tech, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on March 28, 2000 and began operations on May 11, 2000. The Company’s activities to date have been limited to organization and capital formation. The company is a “blank check company” and has not yet determined the nature of its business activities. The company has chosen December 31st as the end of its fiscal year.
NOTE 2 –SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2004 and the results of its operations and cash flows for the nine months ended June 30, 2004 and 2003, have been included. The results of operations of such interim period are not necessarily indicative of the results of the full year.
NOTE 3 – STOCKHOLDERS’ EQUITY
During May 2000, the Company issued 2,090,000 shares of its restricted common stock for cash to an entity controlled by an individual who also controls an entity that has made cash and other advances to the Company. The shares were valued at $0.01 per share for an aggregate of $2,090.
During May 2000, the Company issued 20,000 shares of common stock to an officer of the Company for cash aggregating $200.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
The officers and directors of the Company are involved in other business activities and may become involved in other business activities in the future. Such business activities may conflict with the activities of the Company. The Company has not formulated a policy for the resolution of any such conflicts that may arise.
NOTE 5 – LOAN PAYABLE
Bearing interest at 7%, principle and interest payable upon either the sale of the corporation or completion of a merger.
5
Item 2. Management’s Discussion and Analysis or Plan of Operations
Capital and Source of Liquidity. All of the initial working capital has been obtained from the sale of common shares to the current officers, directors and principal shareholder and loans of $3,659 from Advanced Funding, a prior shareholder no longer affiliated with Capital Tech. Advanced Funding locates and identifies various funding sources for its clients wishing to obtain loans against its receivables, obtain short term, interim capital or venture capital, etc. This balance to Advanced Funding was repaid in full during the year ended December 31, 2001.
For the nine months ended September 30, 2004 and 2003 and the years ended December 31, 2003 and 2002, Capital Tech did not have any net cash provided by investing activities.
For the nine months ended September 30, 2004, Capital Tech did not have any net cash provided by or used in financing activities.
For the nine months ended September 30, 2003, Capital Tech received a loan from Advanced Funding, a former related party of $2,000 resulting in net cash provided by financing activities of $2,000.
For the year ended December 31, 2003, Capital Tech received loan payable of $7,000 from an unrelated party. The loan bears interest at 7% per annum payable upon either the sale of the corporation or completion of a merger. As a result, Capital Tech had net cash provided by financing activities of $7,000 for the year ended December 31, 2003.
For the year ended December 31, 2002, Capital Tech repaid prior related party loans of $1,000 resulting in net cash used in financing activities of $1,000.
We currently have no working capital and will rely on loans from our officers and directors or non-affiliates to continue operations until completion of the offering. Capital Tech requires these additional loans and proceeds from its current public offering to expand our current and strategic business plans.
On a long-term basis, liquidity is dependent on commencement of operation and receipt of revenues, additional infusions of capital, and debt financing. Capital Tech believes that non-affiliate loans, related party loans and proceeds from the public offering in the short term will allow Capital Tech to increase its marketing and sales efforts and thereafter result in revenue and greater liquidity in the long term. However, there can be no assurance that Capital Tech will be able to obtain additional equity or debt financing in the future, if at all.
Results of Operations. For the nine months ended September 30, 2004 and 2003, Capital Tech did not receive any revenues from operations.
For the nine months ended September 30, 2004, Capital Tech did not pay any operating expenses.
6
For the nine months ended September 30, 2003, Capital Tech had expenses of $2,398 consisting of professional fees of $2,300 and other expenses of $98.
For the year ended December 31, 2003, Capital Tech did not receive any revenues from operations and incurred expenses of $6,923 during that period. The decrease in professional fees to $6,726 relates to decrease in legal and accounting fees for the preparation of the public offering. Other expenses were $197 for the year ended December 31, 2003.
For the year ended December 31, 2002, Capital Tech did not receive any revenues from operations and incurred expenses of $8,642 during that period. The increase in professional fees to $8,019 relates to legal and accounting fees for the preparation of the public offering. Consulting expense-related party decreased from $3,366 in 2001 to $250 in 2002 due to a shift in the focus of operations. Other expenses were $373 for the year ended December 31, 2002.
Plan of Operation. Capital Tech is in the development stage and has not conducted any operations to date or received any operating revenues. Capital Tech can satisfy our cash requirements in the next 24-36 months if we can successfully complete our current offering or through loans from our officers and directors or non-affiliates.
For the current fiscal year, Capital Tech anticipates incurring a loss as a result of expenses associated with registration under the Securities Exchange Act of 1934, and expenses associated with locating and evaluating acquisition candidates. Capital Techs anticipates that until a business combination is completed with an acquisition candidate, we will not generate revenues other than interest income, and may continue to operate at a loss after completing a business combination, depending upon the performance of the acquired business.
Need for Additional Financing
The proceeds of our offering not held in the escrow account after payment of the offering expenses will be used for the evaluation of acquisition candidates, expenses relating to SEC reporting and offering expenses in the following order of priority.
| • | to pay for business, legal and accounting due diligence expenses incurred in connection with evaluation of prospective business combinations. |
The expenses relating evaluation of acquisition candidates will consist of:
| • | telephone ($1,500) |
| • | travel and lodging ($5,000) |
| • | legal fees re: document review and preparation ($12,500) |
| • | accounting fees ($6,000) |
| • | other miscellaneous due diligence expenses ($1,822) |
7
General and administrative expenses incurred in connection with our reporting obligations with the SEC.
| • | legal ($7,500) |
| • | accounting fees ($5,000) |
| • | administrative support expenses ($2,500) |
| • | for expenses related to the offering to nonaffiliates ($8,178) |
If $100,000 is raised, the officers and directors have orally agreed to pay the $6,178 in offering expenses remaining after using the $2,000 available to Capital Tech.
If less than $50,000 is raised, our officers and directors have orally agreed to provide the funds necessary to pay the expenses of the offering of $8,178 and attempts to locate an acquisition candidate. Any amounts available for expenses immediately will be used to locate an acquisition candidate.
The officers and directors have verbally agreed to provide funds to cover the offering expenses, SEC reporting requirements and a minimal search for an acquisition candidate not covered by the available funds through a no interest loan to Capital Tech, repayable only if an acquisition is made.
No portion of the proceeds will be paid to officers, directors, their affiliates or associates for expenses of the offering.
Capital Tech believes that our existing capital will not be sufficient to meet Capital Tech’s cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934, as amended, for a period of approximately one year. Accordingly, in the event Capital Tech is able to complete a business combination during this period, it anticipates that our existing capital will not be sufficient to allow us to accomplish the goal of completing a business combination. Capital Tech will depend on additional advances from stockholders.
We cannot assure you that the available funds will ultimately prove to be adequate to allow it to complete a business combination, and once a business combination is completed, Capital Tech’s needs for additional financing are likely to increase substantially. Management and other stockholders have not made any commitments to provide additional. We cannot assure you that any additional funds will be available to Capital Tech to allow us to cover our expenses. Even if Capital Tech’s cash assets prove to be inadequate to meet Capital Tech’s operational needs, Capital Tech might seek to compensate providers of services by issuances of stock in lieu of cash.
We do not expect to purchase or sell any significant equipment, engage in product research or development and do not expect any significant changes in the number of employees.
8
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer, conducted an evaluation of our “disclosure controls and procedures” (as defined in Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-14(c)). Based on his evaluation, our chief executive officer and chief financial officer have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that all material information required to be filed in this quarterly report on Form 10QSB has been made known to him in a timely fashion.
Changes in Internal Controls
There have been no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date set forth above.
9
Item 1. Legal Proceedings. not applicable.
Item 2. Changes in Securities and Use of Proceeds. Not applicable
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
not applicable.
Item 5. Other Information. not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K.
none
(b) Exhibits
31 - Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
32 - Certification of Chief Financial Officer pursuant to Section 1350.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: December 27, 2004
Capital Tech, Inc. | ||
By | /s/ Richard Schreck | |
Richard Schreck | ||
President and Director | ||
10
Exhibit Index
| Exhibit No. | Description | |
| 31 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). | |
| 32 | Certification of Chief Financial Officer pursuant to Section 1350. | |
