U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended:
March 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 000-18272
CHINA TITANIUM & CHEMICAL CORP.
(Exact name of small business issuer as specified in its charter)
NEVADA | 87-0467339 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
1530-9th Ave S.E.
Calgary, Alberta Canada
(Address of principal executive offices)
Telephone: (403) 693-8000
(Issuer’s telephone number)
W-WAVES USA, INC.
(Former name, former address and former fiscal year, if changed since last report)
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
No
X
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the last practicable date:
388,209 shares of Class A common stock, $0.001 par value, as of August 31, 2004.
Transitional Small Business Disclosure Format (check one):
Yes
No X
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month periods ended March 31, 2004 and 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-KSB for the year ended Dec ember 31, 2003.
Page | |
Unaudited Consolidated Financial Statements | |
Consolidated Balance Sheet | F1 |
Consolidated Statements of Operations | F2 |
Consolidated Statements of Cash Flows | F3 to F4 |
Consolidated Statements of Stockholders’ Deficit | F5 to F6 |
Notes to Unaudited Consolidated Financial Statements | F7 to F11 |
1
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
Unaudited
March 31, 2004 | ||||
CURRENT ASSETS | ||||
Cash | $ | - | ||
Accounts Receivable, net | - | |||
Sales tax receivable | 2,116 | |||
R&D tax credit receivable | - | |||
Inventory | - | |||
Total Current Assets | 2,116 | |||
CAPITAL ASSETS | - | |||
INTANGIBLE ASSETS | ||||
Trademarks, patents | - | |||
TOTAL ASSETS | $ | 2,116 | ||
CURRENT LIABILITIES | ||||
Accounts payable and accrued liabilities | $ | 446,812 | ||
Payable – related parties (Note 4) | 525,026 | |||
Income taxes payable | 497 | |||
Bank loan | 16,031 | |||
Bank overdraft | 172 | |||
Note payable – Acquisition | 90,030 | |||
Note payable – related parties (Note 4) | 146,682 | |||
TOTAL CURRENT LIABILITIES | 1,225,250 | |||
STOCKHOLDERS’ DEFICIT | ||||
Common Stock $0.001 par value, authorized 50,000,000 shares Issued and outstanding 16,620,276 shares | 16,621 | |||
Additional paid-in capital | 3,000,762 | |||
Accumulated deficit | (4,240,517) | |||
(1,223,134) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 2,116 | ||
The accompanying notes are an integral part of these consolidated financial statements
F-1
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
Unaudited
Three Months ENDED March 31, 2004 | Three Months ENDED March 31, 2003 | From Inception to March 31, 2004 | |||
Revenue | $ | 0 | $ | 1,618 | 109,148 |
Cost of sales | 0 | 0 | 81,843 | ||
GROSS PROFIT | 0 | 1,618 | 27,305 | ||
OPERATING EXPENSES | |||||
Salaries and consulting | 0 | 26,242 | 2,273,286 | ||
Interest expense | 0 | 17,614 | 260,187 | ||
General and administrative | 20,000 | 102,658 | 1,510,213 | ||
20,000 | 146,514 | 4,043,686 | |||
LOSS FROM OPERATIONS | (20,000) | (144,896) | (4,016,381) | ||
GAIN (LOSS) ON DISPOSAL OF ASSETS | 0 | 0 | (224,136) | ||
NET LOSS | $ | (20,000) | $ | (144,896) | (4,240,517) |
BASIC AND DILUTED LOSS PER SHARE Net loss per weighted average share | $ | (0.001) | $ | (0.01) | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | 16,620,276 | 16,620,276 | |||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flow
Unaudited
Three Months Ended | |||||
March 31, 2004 | March 31, 2003 | From Inception to March 31, 2004 | |||
OPERATING ACTIVITIES | |||||
Net loss | $ | (20,000) | $ | (144,896) | (4,240,517) |
Adjustment to reconcile net loss to net cash used by operating activities | |||||
Loss on write down of assets | 0 | 0 | 224,136 | ||
Depreciation and amortization | 0 | 3,481 | 242,745 | ||
(20,000) | (141,415) | (3,773,636) | |||
Changes in assets and liabilities: | |||||
Accounts receivable | 0 | (269) | 0 | ||
Sales tax receivable | 0 | 413 | (2,116) | ||
R&D tax credit receivable | 0 | 61,114 | 0 | ||
Inventory | 0 | (1,085) | 0 | ||
Intangible and other assets | 0 | 0 | (125,903) | ||
Accounts payable and accruals | 20,000 | 0 | 884,629 | ||
Prepaid expenses | 0 | 0 | 0 | ||
Payables-related parties | 0 | 90,554 | 94,230 | ||
Income taxes | 0 | (320) | 497 | ||
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES | $ | 0 | 8,992 | (2,922,299) | |
FINANCING ACTIVITIES | |||||
Cash of subsidiary | 0 | 0 | 1,152 | ||
Additional paid in capital | 0 | 0 | 1,050,000 | ||
Note payable acquisition | 0 | 0 | 90,030 | ||
Note payable-related corporations | 0 | 1,500 | 2,096,389 | ||
Bank loan | 0 | 908 | 16,031 | ||
Bank overdraft | 0 | 0 | 172 | ||
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES | $ | 0 | $ | 2,408 | 3,253,774 |
INVESTING ACTIVITIES | |||||
Goodwill on acquisition of subsidiaries | 0 | 0 | (162,087) | ||
Disposition of assets | 0 | 0 | 52,606 | ||
Acquisition of capital assets | 0 | 0 | (221,994) | ||
Patents | 0 | (4,433) | 0 | ||
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES | 0 | (4,433) | (331,475) | ||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 0 | 6,967 | 0 | ||
Cash and cash equivalents at beginning of period | 0 | 3,048 | 0 | ||
CASH & CASH EQUIVALENTS AT END OF PERIOD | $ | 0 | $ | 10,015 | 0 |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flow (Continued)
(Unaudited)
Three Months Ended | |||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | March 31, 2004 | March 31, 2003 | From Inception to March 31, 2004 | ||
Cash paid during the period for: | |||||
Interest | $ | 0 | $ | 482 | 124,973 |
Income taxes | 0 | 320 | 1,385 | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||
Issuance of 5,450,000 shares upon reorganization | $ | 0 | $ | 0 | 5,450 |
Issuance of shares to retire debt | 0 | 0 | 0 | ||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Deficit
FOR THE PERIOD MARCH 19, 1999 (DATE OF INCEPTION) TO MARCH 31, 2004
Common Stock | Accumulated Deficit | Total | ||||||||||
Shares | Amount | Additional Paid in Capital | Treasury Stock | |||||||||
Balance at March 19, 1999 | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |
Disposition of Subsidiary | 0 | 0 | 0 | (2,885) | 0 | (2,885) | ||||||
Acquisition of Arrow Management, Inc. | 5,580,700 | 5,581 | 0 | 0 | 0 | 5,581 | ||||||
Issuance of treasury stock upon reorganization | 0 | 0 | 0 | 2,885 | 0 | 2,885 | ||||||
Issuance of 5,450,000 shares upon reorganization | 5,450,000 | 5,450 | 0 | 0 | 0 | 5,450 | ||||||
Net Loss | 0 | 0 | 0 | 0 | (897,986) | (897,986) | ||||||
BALANCE 12/31/99 | 11,030,700 | 11,031 | 0 | 0 | (897,986) | (886,955) | ||||||
Additional paid-in capital | 0 | 0 | 1,050,000 | 0 | 0 | 1,050,000 | ||||||
Net loss | 0 | 0 | 0 | 0 | (1,723,395) | (1,723,395) | ||||||
Balance at December 31, 2000 | 11,030,700 | 11,031 | 1,050,000 | 0 | (2,621,381) | (1,560,350) | ||||||
Issuance of restricted shares at $0.35 for debt | 5,569,505 | 5,570 | 1,943,757 | 0 | 0 | 1,949,327 | ||||||
Net loss | 0 | 0 | 0 | 0 | (948,195) | (948,195) | ||||||
Balance at December 31, 2001 | 16,600,205 | 16,601 | 2,993,757 | 0 | (3,569,576) | (559,218) | ||||||
Issuance of restricted shares at $0.35 for debt | 20,071 | 20 | 7,005 | 0 | 0 | 7,025 | ||||||
Net loss | 0 | 0 | 0 | 0 | (171,594) | (171,594) | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Deficit (continued)
FOR THE PERIOD MARCH 19, 1999 (DATE OF INCEPTION) TO MARCH 31, 2004
Balance at December 31, 2002 | 16,620,276 | 16,621 | 3,000,762 | 0 | (3,741,170) | (723,787) | ||||||
Net Loss | 0 | 0 | 0 | 0 | (479,347) | (479,347) | ||||||
Balance at December 31, 2003 | 16,620,276 | $ | 16,621 | $ | 3,000,762 | $ | 0 | $ | (4,220,517) | $ | (1,203,134) | |
Net Loss | 0 | 0 | 0 | 0 | (20,000) | (20,000) | ||||||
Balance at March 31, 2004 | 16,620,276 | $ | 16,621 | $ | 3,000,762 | $ | 0 | $ | (4,240,517) | $ | (1,223,134) | |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly known as W-Waves USA, Inc.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2004
Note 1 - Management's Statement
The financial statements included herein have been prepared by China Titanium & Chemical Corp. and Subsidiaries (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the December 31, 2003, unaudited financial statements and the accompanying notes included in the Annual Report on Form 10-KSB. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the f acts that will exist, and procedures that will be accomplished by the Company later in the year.
The management of the Company believes that the accompanying unaudited financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the periods presented.
Note 2 – Organization and Business Activities
Arrow Management, Inc. (Arrow) was incorporated under the laws of the State of Nevada on January 14, 1988. On September 30, 1993, Arrow issued 5,250,700 shares of its common stock to acquire 99.45% of the outstanding stock of Panorama, an affiliated company. The transaction was accounted for under the pooling-of-interests method of accounting, thus, the financial statements were restated as if the Companies had been consolidated for all periods presented. In December 1996, Arrow cancelled 350,000 shares of its common stock held for issuance to a shareholder of Panorama. As a result of this transaction, Arrow's ownership of Panorama was reduced from 99.45% to 90.73%. On November 19, 1999, Arrow exchanged its interest in Panorama for 3,094,700 sh ares held as treasury stock. At approximately the same time, Arrow entered into a plan of reorganization with W-Waves USA, Inc. (W-Waves) (a Delaware corporation) to issue the 3,094,700 shares of treasury stock and an additional 5,450,000 previously un-issued shares to acquire 100% of the outstanding stock of W-Waves.
The transaction was accounted for as a reverse acquisition. On October 21, 1999, Arrow filed a Certificate of Name Change with the State of Nevada changing its name to W-Waves USA, Inc. (the Company). As of
September 2003, the Company and its subsidiaries ceased operations relating to the marketing of it’s technologies and products in the audio industry. The Company has determined to see other business opportunities for merger and/or acquisition and to divest itself of its subsidiaries.
The Company will pursue interests in various other business opportunities that, in the opinion of management, may provide a profit to the Company. Additional external financing or other capital may be required to proceed with any business plan that may be developed by the Company.
Note 3 – Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, W-Waves USA Inc., (Delaware), White Wolf Audio Video Electronics Systems Inc., Radison Acoustique Ltée and X-D LAB R&D Inc. All significant intercompany transactions and balances have been eliminated.
F-7
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly Known as W-Waves USA, Inc.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Three Months EndedMarch 31, 2004
Note 3 – Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company recognizes revenue equal to the cash to be received from the assembly and repair of acoustic systems when the buyer has made an unconditional commitment to pay and the earnings process has been completed by the finalization of a transaction.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with original maturities of less than three months to be cash equivalents.
Comprehensive Income
Since 1999, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income". This statement establishes rules for the reporting of comprehensive income and its components. The adoption of SFAS No.130 had no significant impact on total stockholders’ deficit as of December 31, 2003.
Income Taxes
Income taxes are computed using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on the differences between the financial and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. Statement of Financial Accounting Standards No.109, requires a valuation allowance against deferred tax assets if based on the weight of available evidence, it is more likely than not that some or all of its deferred tax assets will not be realized.
Depreciation and Amortization
Property and equipment are stated at cost. Depreciation is calculated on a diminishing balance basis over the estimated useful lives of the assets, generally five to seven years. Trademarks and patents are depreciated on a straight-line basis over a period of twenty years. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and common equivalent shares outstanding during the period. Common equivalent shares consist of shares issuable upon the exercise of stock warrants. At December 31, 2003, 11,179,152 warrants are outstanding. They have not been included in basic or diluted calculations as the effect is antidilutive.
F-8
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly Known as W-Waves USA, Inc.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Three Months EndedMarch 31, 2004
Note 3 – Summary of Significant Accounting Policies (continued)
Allowance for Doubtful Accounts
The Company provides an allowance for uncollectible accounts which are doubtful of collection. The allowance is based upon management's periodic analysis of receivables, evaluation of current economic conditions and other pertinent factors. Ultimate losses may vary from current estimates and, as additions to the allowance become necessary, they are charged against earnings in the period they become known. Losses are charged and recoveries are credited to the allowance.
Impairment of Long-Lived Assets
The Company evaluates the recoverability of long-lived assets in accordance with "SFAS" No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of". SFAS No.121 requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets.
Advertising Costs
The Company recognizes advertising expenses in accordance with Statement of Position 93-7, "Reporting on Advertising Costs". As such, the Company expenses the cost of communicating advertising in the period in which the advertising space or airtime is used. There were no advertising costs for the period ended March 31, 2004.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and accounts receivable. Cash is deposited with high credit, quality financial institutions. Accounts receivable are typically unsecured and are derived from revenues earned from customers located throughout the United States. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses; historically, such losses have been within management's expectations.
Fair Value of Financial Instruments
The Company's financial instruments, including cash, accounts receivable, accounts payable, notes payable and long-term obligations are carried at cost, which approximates their fair value because of the short-term maturity of these instruments.
Goodwill
Goodwill resulting from acquisition of subsidiaries was being amortized on straight-line basis over the estimated life of the benefit of five years. During 2003, all of the assets of the subsidiaries were written off to a nominal value of $1.00.
New Accounting Pronouncements
In December of 2002, the FASB issued SFAS 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – An Amendment of FASB Statement No. 123.” FAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirement of Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.
In April, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.
F-9
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Formerly Known as W-Waves USA, Inc.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Three Months EndedMarch 31, 2004
Note 3 – Summary of Significant Accounting Policies (continued)
In May, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer measures certain financial instruments with characteristics of both liabilities and equity and requires that an issuer classify a financial instrument within its scope as a liability (or asset in some circumstances). SFAS No. 150 was effective for financial statements entered into or modified after May 31, 2003 and otherwise was effective and adopted by the Company in 2003.
None of the above new pronouncements have current application to the Company, but may be applicable to the Company’s future financial reporting.
Note 4 – Note Payable – Related Corporations
At March 31, 2004, advances totalling $146,682 made to the Company by related parties are outstanding. Such advances include interest and are due upon demand.
Also at March 31, 2004, the Company owes $525,026 to various related parties for accounts payable and accrued expenses.
Note 5 – Going-Concern
As of March 31, 2004, the Company has an accumulated deficit of $4,240,517and its current liabilities exceeded its current assets by $1,223,134. Those factors could create an uncertainty about the Company's ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional capital and ultimately, upon the Company's attaining profitable operations. The management of the Company intends to seek additional funding which will be utilized to fund additional product development and continue operations.
The Company is in the process of undertaking a private offering of its common stock to raise working capital.
Note 6 – Subsequent Events
On July 27, 2004, the Company issued a total of 22,200,572 shares to repay the amount of $22,200.57 against certain loans totaling $25,236.93 invoiced to the Company as at July 27, 2004 for operations. This effected a change in control of the Company.
On July 23, 2004, the Board of Directors of W-Waves USA Inc. (the “Corporation”) recommended to the shareholders that it is in the best interests of the Corporation that its capital stock be consolidated at the ratio of one hundred (100) shares of existing shares common stock into one (1) share of common stock and increasing its authorized capital stock from 50 million to 100 million Class A common shares. The Board approved that the record date for consideration of such actions be July 29, 2004 or such later date as the Corporation’s President may deem necessary or prudent. The Board also recommended to the shareholders that they approve change of the Corporation’s name to “China Titanium & Chemical Corp.”
On August 6, 2004, the Corporation filed a definitive Information Statement on Schedule 14C with the Securities and Exchange Commission and mailed such Information Statement to its shareholders of record as of July 29, 2004. The Corporation received prior to August 6, 2004, a written consent of shareholders holding a majority of the issued and outstanding shares of the Corporation’s Class A Common Stock approving each of the foregoing actions. The Information Statement stated that the Corporation would not take any corporate action with regards to the approved changes until a period of twenty (20) days from the date of the filing and mailing of the Information Statement expired.
F-10
Note 6 – Subsequent Events (continued)
On August 30, 2004, the Corporation filed a Certificate of Amendment with the Nevada Secretary of State effecting the foregoing changes.
The Corporation has applied for a new CUSIP number and ticker symbol as a result of the filing of the aforementioned Certificate of Amendment and expects that changes to both will be effective as of September 3, 2004.
F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Plan of Operation
At present, the Company has no operations and the Company does not have sufficient cash and liquid assets to satisfy its cash requirements on a monthly basis. The Company has no finances with which to fund any ongoing operations. Presently the Company is relying on loans from existing shareholders in order to meet its expenses. In order to identify merger or acquisition candidates the Company will need to raise additional working capital which is anticipated to be $100,000. The Company will be attempting to raise these funds by either debt or equity financings. There is no assurance that the Company will be successful in raising this amount of capital or meeting its anticipated operational goals.
The Company anticipates it will require approximately $100,000 over the next twelve months to fund operations which will include the divestiture of its subsidiaries and identifying and closing a viable business opportunity or merger candidate for the Company. The Company will require additional funds over the next three years should it be successful in achieving its goals of finding a new acquisition. The amount and timing of additional funds required can not be definitively stated as at the date of this report and will be dependent on a variety of factors. The Company is not dedicating any further funding to its subsidiaries. Funds provided during the last fiscal year have been raised through loans from related parties. The Company cannot be certain that we will be able to raise any additional capital to fund our ongoing operations. As noted above, the Company is actively pursui ng the divestiture of its subsidiaries.
The Company has no operations and no commitments for capital expenditures as of the date of this report. It does not intend to undertake any further research and development over the next twelve (12) months, nor does it expect to purchase any plants or equipment or have any significant changes in the number of employees.
The Company had a net loss of $20,000 for the three-month period ended March 31, 2004 as compared to a net loss of $144,896 as at March 31, 2003. The March 31, 2004 net loss is related to general and administrative expenses as compared to the March 31 2003 net loss which was related to $102,658 for general and administrative expenses, $17,614 for interest expenses and $26,242 for salary & consulting expenses. The decrease in losses is due to the fact that the Company has suspended all operations.
Net current assets, as at March 31, 2004 was $2,116.The Company has no funds with which to carry on operations. As at March 31, 2004 the Company had a negative working of $1,223,134 and stockholders deficit of $1,223,134. The Company has no working capital to fund operations and has ceased all operations of its wholly owned subsidiaries. The Company will be required to raise funds either by way of loans or equity to continue operations.
ITEM 3. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and acting Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and acting Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing, our President and our acting Chief Financial Officer concluded that our disclosure controls and procedures are effective.
There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action.
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PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
The Company’s wholly owned subsidiary, White Wolf Audio Video Electronics Systems Inc., was served with a Statement of Claim from Simon Roy seeking $135,000CDN plus 7% interest and additional indemnity for monies owing to him from January 1, 2000, plus 50,000 shares of W-Waves USA, Inc. and legal costs. The Company filed a defense in this action claiming that Mr. Roy received a cash amount as full and complete payment of Mr. Roy’s claims. In July 2004, the parties reached a settlement of this dispute. The settlement requires that White Wolf assign all of its trademarks and patents relating to certain loudspeaker technology to Mr. Roy.
ITEM 2.
CHANGES IN SECURITIES
Not Applicable
ITEM 3.
DEFAULT UPON SENIOR SECURITIES
Not Applicable
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5.
OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits:
REGULATION S-B NUMBER | EXHIBIT | REFERENCE |
31 | Rule 13a – 14(a)/15d-14(a) Certification | Filed herewith |
32 | Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
(b)
Reports on Form 8-K: None.
-3-
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.
CHINA TITANIUM & CHEMICAL CORP. AND SUBSIDIARIES
Date: August 31, 2004
By:/s/ Michel Bourbonnais_____
Name: Michel Bourbonnais
Title: President and Director
-4-
