SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
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( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-30170
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TECE, INC.
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(exact name of Company as specified in its charter)
NEVADA 88-0390657
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
740 ST-MAURICE, SUITE 410, MONTREAL, CANADA H3C 1L5
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(Address of Principal Executive Offices)
(514) 954-3665
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(Issuers Telephone Number, Including Area Code)
INTERNET FOOD CO., INC.
251 JEANELL, SUITE 3
CARSON CITY, NV 89703
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(Former Name and Former Address)
Check whether the issuer (1) has filed all reports 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 Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
(X) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUER
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date: 22,363,148 shares of Common
Stock as of November 10, 2000.
Transitional Small Business Disclosure Format (check one):
( ) Yes (X) No
TECE, INC.
TABLE OF CONTENTS
Page No.
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PART I. FINANCIAL INFORMATION 3
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
To the Board of Directors
Internet Food Company, Incorporated
Monterey, California
I have reviewed the accompanying balance sheets of Internet Food Company,
Incorporated, as of September 30, 2000 and 1999 and the related statement of
operations stockholders' equity and the statement of cash flows for the nine
months then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of Internet Food Company, Incorporated.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such as opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements and the cumulative results of
operations and cash flows in order for them to be in conformity with generally
accepted accounting principles.
November 14, 2000
INTERNET FOOD COMPANY, INC.
BALANCE SHEET
September 30, 2000 and 1999
2000 1999
---- ----
ASSETS
Current assets
Cash and cash equivalents $ 1,353 $ 800
Accounts receivable-trade 0 295
Accounts receivable-barter 858 3,399
Due from affiliate 100 100
Inventory 460 1,500
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Total current assets 2,771 6,094
Equipment
Equipment 700 700
(Less) Accumulated depreciation (225) (150)
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475 550
Other assets
Trade name 6,050 6,050
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Total assets $ 9,296 $ 12,694
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 0 $ 2,994
Note payable-shareholder 3,000 0
Note payable-Monterey Ventures 0 10,113
Note payable-Robert Strahl 0 2,650
Note payable-Monterey Technologies 31,220 0
State corporate tax payable 0 400
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Total current liabilities 34,220 16,157
Shareholders' equity
Capital stock, par value $ .10, 50,000,000 authorized
17,780,695 shares issued and outstanding 17,781 17,781
Paid in capital 114,619 114,619
Common stock offering costs (6,150) (6,150)
Retained earnings (151,174) (129,713)
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Total shareholders' equity (24,924) (3,463)
Total liabilities and shareholders' equity $ 9,296 $ 12,694
======== =========
See accompanying notes and accountant's review report
2
INTERNET FOOD COMPANY, INC.
STATEMENT OF OPERATIONS
For the nine months ended September 30, 2000 and 1999
Nine months ended
2000 1999
Sales ........................................ $ 3,194 $ 15,278
Cost of sales ................................ 3,759 10,258
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Gross profit ................................. (564) 5,020
Operating expenses
Advertising ............................ 214 751
Bank charges ........................... 121 591
Consulting fees ........................ 672 26,510
Depreciation ........................... 75 150
Dues and subscriptions ................. 721 625
Equipment lease ........................ 0 2,937
License and permits .................... 0 336
Management fees ........................ 0 6,500
Office expense ......................... 553 1,186
Postage and delivery ................... 1,280 1,657
Professional fees ...................... 4,575 12,885
Rent ................................... 1,250 6,364
Travel and entertainment ............... 105 1,942
Telephone .............................. 1,168 1,070
Organization costs
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Total operating expenses ..... 10,734 63,504
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Loss from operations ......... (11,298) (58,484)
Other income and (expense)
Loss on sale of investments ............ 0 (499)
Interest expense ....................... 0 (660)
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(1,159)
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Loss prior to income taxes ................... (11,298) (59,643)
State corporate income tax ................... 800 800
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Net loss ..................................... $ (12,098) $ (60,443)
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Loss per common share ........................ $ (0.0007) $ (0.0034)
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Weighted average
of shares outstanding .................. 17,780,695 17,441,067
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See accompanying notes and accountant's review report
INTERNET FOOD COMPANY, INC.
STATEMENT OF CASH FLOWS - INDIRECT METHOD
For the nine months ended September 30, 2000 and 1999
Nine months
2000 1999
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Cash flows from operating activities
Net loss (12,098) $(60,443)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense 75 150
(Increase) Decrease in current assets 1,318 6,187
Increase (Decrease) in current liabilities 11,486 (15,753)
Net cash provided by operating activities 781 (69,859)
Investing activities
Business name purchase
Financing activities
Sale of common stock 67,700
Short term borrowing 1,000
Common stock offering costs
Cash provided by financing activities 68,700
Increase (Decrease) in cash and cash equivalents 781 (1,159)
Cash and cash equivalent at beginning of the period 572 1,959
Cash and cash equivalent at end of the year 1,353 $ 800
Supplemental disclosure of financing activities
Interest paid $ 585
Taxes paid 800 1,200
See accompanying notes and accountant's review report
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000 and 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the business - Internet Food Company, Inc. was
originally formed to sell retail gourmet and specialty cheese
on the internet and at a retail location. The Company was
incorporated under the laws of the State of Nevada on April
14, 1998. The Company is currently doing business as
California Cheese Connection. Operations did not commence
until July 1998. Refer to NOTE 10 Subsequent Event.
Pervasiveness of estimates - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that 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 revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and cash equivalents - For financial statement
presentation purposes, the Company considers all short term
investments with a maturity date of three months or less to be
cash equivalents.
Inventories - Inventories are recorded at the lower of cost or
market, using the first-in, first-out method. Inventories
consist principally of cheeses and specialty food items.
Bad debts and accounts receivable - No allowance for doubtful
accounts has been recorded as management believes all amounts
to be fully collectible.
Equipment- Equipment is recorded at cost. Maintenance and
repairs are expensed as incurred; major renewals and
betterments are capitalized. As the equipment on the balance
sheet was purchased at year-end, no provision for depreciation
is made in the current year.
Income taxes- Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist
of taxes currently due plus deferred taxes related primarily
to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax
reporting. The deferred tax assets and liabilities represent
the future tax return consequences of those differences, which
will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also
recognized for operating losses that are available to offset
future taxable income and tax credits that are available to
offset future federal income taxes.
6
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000 and 1999
NOTE 2 ACCOUNTS RECEIVABLE
Accounts receivable-Trade - Accounts receivable trade consists
primarily of sales to hotels and corporations purchasing gift
baskets. At September 30, 2000 there were no amounts in trade
receivables. At September 30, 1999 the total was $295. Terms
of all sales to these customers are net 30 days.
Accounts receivable-Barter - The Company is involved with an
exchange group whereby goods and services are bartered. The
individual members of this group purchase goods from another
member and a voucher is written for payment of the goods or
services provided. The Company then has a credit to purchase
goods and services from other members of the barter group. At
September 30, 2000 and 1999 the balance that the Company is
owed in goods and services of $858 and $3,399 respectively.
The Company uses the barter to purchase goods and services.
For the period ending September 30, 1999 the total amount
recorded as sales was $ 5,215 and $ 4,218 was recorded as
purchase of goods and services. For the nine months ended
September 30, 2000 $504 were recorded as sales and $1,220 for
services and purchases.
NOTE 3 SHORT TERM BORROWINGS
During the period ended September 30, 2000 an affiliated
company paid off all the outstanding notes and accounts
payable. Total amount of borrowings for the period ended
September 30, 2000 was $34,220 and $12,763 respectively.
NOTE 4 COMMON STOCK
Common stock -During the period ended September 30, 1999,
pursuant to an exemption under Rule 504 of Regulation D of the
Securities Act of 1933, as amended (the Act), the Company sold
solely to accredited and/or sophisticated investors, its
common stock. Each share has a par value of $.10. There were
twenty different transactions to different investors raising a
total of $ 67,700 during the period ended June 30, 1999. There
were no securities transactions for the six-month period
ending June 30, 2000.
Paid in capital - At incorporation the Company issued
15,385,000 shares of common stock with a fair value of $0.1 in
payment of services. This amount is shown as a negative paid
in capital amount since consideration was given in the form of
services at the time of incorporation and no
7
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000 and 1999
NOTE 4 COMMON STOCK
(Con't)
amount was reflected on the Company's books for the
consideration
The Company also issued 135,695 shares of common stock with a
fair value of $.10 to three individuals. The shares were given
to these individuals for advancing the Company money for
working capital purposes. These transactions occurred during
the prior year.
NOTE 5 RELATED PARTY TRANSACTIONS
On August 1, 1998 the Company entered into an agreement with a
shareholder to provide investment-banking services. During the
period ending September 30, 1999 the shareholder advanced the
Company $ 10,133 for operations. There were no repayments on
the advances. There were no advances during the period ended
June 30, 2000.
As previously discussed, the Company entered into agreements
with some of its shareholders to provide bridge loans for
continuing operations of the Company. Total proceeds from the
borrowings were $ 15,490 during the prior year. The Company
repaid $ 12,990 of the loans during the nine-month period
ending September 30, 1999. During the period ending September
30, 2000 those amounts were paid off from an affiliated
company.
Various shareholders of the Company have performed consulting
services for which the Company has paid them consulting fees.
For the period ending September 30, 1999 this amount paid to
the shareholders amounted to $ 22,946. Services include
clerical support, rent, office supplies etc.
NOTE 6 INCOME TAXES
The benefit for income taxes from operations consisted of the
following components. Current tax benefit of $21,000 resulting
from a net loss before income taxes, and deferred tax expense
$21,000 resulting from the valuation allowance recorded
against the deferred tax asset resulting from the net
operating loss. The change in the valuation allowance for the
period ending September 30, 2000 was $21,000. Net operating
loss carryforward will expire 2014.
The valuation allowance will be evaluated at the end of each
year, considering positive and negative evidence about whether
the asset will be realized. At the time the allowance will
either be increased or reduced.
8
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000 and 1999
NOTE 6 INCOME TAXES
(Con't)
reduction could result in the complete elimination of the
allowance if positive evidence indicates that the value of the
deferred tax asset is no longer required. It is management's
position that the deferred tax asset be recorded when there is
positive evidence it will be realized.
NOTE 7 STOCK OPTIONS
On January 1, 1999 and January 28, 1999 the Board of Directors
voted to issue stock options to various individuals. The
options are to be exercised at a price of $.01 per share.
There were a total of 1,040,000 options to be exercised. All
options were exercised by the due date. The options were
granted for services rendered.
NOTE 8 MATERIAL ADJUSTMENTS
Management represents that all material adjustments to the
financial statements have been made.
NOTE 9 GOING CONCERN
As of September 30, 2000, the Company has net losses since
inception, which raises substantial doubt about its ability to
continue as a going concern.
Management has subsequently been able to get its internet site
up and running. This is expected to provide additional sales.
Also, management has stepped up its efforts to increase its
sales to hotels and other businesses.
The Company's ability to continue as a going concern is
dependent upon successful public offering and ultimately
achieving profitable operations. There is no assurance that
the Company will be successful in its efforts to raise
additional proceeds or achieve profitable operations. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 10 SUBSEQUENT EVENT
Subsequent to the balance sheet date, two major shareholders
of the
9
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000 and 1999
NOTE 10 SUBSEQUENT EVENT
(Con't)
Company returned all their shares of stock to the Company with
the exception of 2,064,035 each. These shares were returned to
the Treasury in consideration for no consideration. The assets
of the corporation were transferred to a shareholder in
partial liquidation of stock and the corporation ceased doing
business of the sale of cheese and gift baskets. The notes
payable of the Company from the shareholder and the affiliated
company were forgiven subsequent to the balance sheet date,
thus there were no assets or liabilities in the Company as a
result of these transactions.
10
TECE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The discussion in this report on Form 10-QSB contains forward-looking statements
that involve risks and uncertainties. The Company's actual results may differ
materially from those discussed herein.
The discussion and analysis below should be read in conjunction with the
condensed consolidated interim Financial Statements of the Company and the notes
thereto included elsewhere herein.
Under a Share Exchange Agreement and related agreements, as amended (the
"Exchange Agreements"), dated October 10, 2000, among the Company (f/k/a
Internet Food Co., Inc.), its wholly-owned subsidiary, 3786137 Canada Inc., a
Canadian corporation ("3786137"), Tec TechnologyEvaluation.com, a Canadian
corporation ("TEC.com"), Manitex Capital Inc. , a Canadian corporation
("Manitex"), Intasys Corporation, an Ontario corporation ("Intasys"), and Don
Lobley ("Lobley," and together with Manitex and Intasys, the "Majority TEC.com
Shareholders"), on November 9, 2000 (i) 3786137 acquired from the Majority
TEC.com Shareholders common shares, no par value (the "TEC.com Common Shares"),
of TEC.com and convertible debentures (convertible into TEC.com Common Shares)
representing 67.6% of the issued and outstanding TEC.com Common Shares and (ii)
the Majority TEC.com Shareholders were issued exchangeable non-voting shares of
Class A preferred stock of 3786137 (the "Exchangeable Shares"), exchangeable on
a one-for-one basis at the option of their holders into an aggregate of
11,913,140 shares (the "Company Shares") of Common Stock, $.001 par value (the
"Common Stock"), of the Company. (The foregoing transactions are referred to
collectively hereinafter as the "Transactions.")
The Company Shares were issued under an Exchange and Voting Agreement (the
"Voting Agreement") among the Company, 3786137, TEC.com and Pierre Barnard (the
"Trustee"). In order to facilitate the Share Exchange, the Company also entered
into a Support Agreement (the "Support Agreement") to guarantee certain rights
to the holders of Exchangeable Shares, including the right to receive shares of
Common Stock in exchange for their Exchangeable Shares.
In connection with the Transactions, the Company completed a private placement
yielding gross proceeds of $4,000,000, in which it issued an aggregate of
1,000,000 units, each unit consisting of one share of Common Stock and one
common share purchase warrant (the "Warrant"). Each Warrant entitles its holder
to acquire one share of Common Stock at a price of $5.00 per share on or before
September 30, 2002.
Subject to required regulatory approvals, 3786137 presently intends to offer all
of the remaining holders of TEC.com Common Shares and the holders of debentures
convertible into TEC.com Common Shares the opportunity to exchange their TEC.com
Common Shares for Exchangeable Shares (the "Offer"). In the event that all of
the holders of such TEC.com securities were to tender them in the Offer, a total
of 5,721,158 additional Exchangeable Shares would be issued.
After giving effect to the Transactions and the private placement, there are
22,363,140 shares of Common Stock outstanding, taking into account a stock split
of the Common Stock which became effective October 5, 2000, and the cancellation
of certain outstanding shares of Common Stock. In addition, there are reserved
for issuance (i) 5,721,158 shares of Common Stock in the Offer, (ii) 262,500
shares of Common Stock upon exercise of the TEC.com stock options and (iii)
1,000,000 shares of Common Stock upon exercise of the Warrants. The Company also
intends to adopt an Employee Stock Option Plan, pursuant to which a total of
3,000,000 additional shares of Common Stock will be reserved for issuance.
Each beneficial holder of the Exchangeable Shares has voting rights in that
number of Company Shares equal in number to the number of the Exchangeable
Shares held by such holder. Consequently, the Majority TEC.com Shareholders hold
securities with voting rights equal to approximately 53.0 % of the total voting
power of the outstanding Common Stock. If all of the remaining outstanding
TEC.com Common Shares and convertible debentures are acquired by 3786137, the
former shareholders of TEC.com would hold, in the aggregate, approximately 60.0%
of the Common Stock on a fully diluted basis. At such time as the holders of
Exchangeable
Shares may exchange such shares for the Company Shares, they will have the right
to direct the disposition of such Company Shares.
The sole source of consideration for issuance to the Majority TEC.com
Shareholders of the Exchangeable Shares was the exchange of the TEC.com Common
Shares and debentures held by them. At such time as the Majority TEC.com
Shareholders may exchange their Exchangeable Shares for Company Shares, the sole
source of consideration for the transfer to them of the Company Shares will be
such Exchangeable Shares.
The Company was incorporated under the laws of the State of Nevada on April 14,
1998. The Company was formed to sell retail gourmet and specialty cheese on the
Internet and at a retail location. On October 31, 2000, the Company transferred
all of its assets and liabilities relating to such business to Ms. Demainew and
Ms. Button in consideration of the cancellation of certain shares of Common
Stock. Immediately prior to the Transactions, the Company had no material
operations, revenues, assets or liabilities. In anticipation of the
Transactions, the Company changed its name to "TECE, Inc."
At September 30, 2000, the Company's major sources of liquidity were $1,353 in
cash, $858 in accounts receivable, and $460 in inventory. Subsequent to that
date, the Company received gross proceeds of $4,000,000 from the private
placement of its securities. The Company does not have a line of credit with a
commercial bank. As of the date hereof, its principal commitments consist of
obligations under capital and operating leases and employment arrangements. The
Company anticipates that its cash and cash equivalents will be sufficient to
satisfy its cash flow requirements for at leat the next 4 months.
PART II. OTHER INFORMATION
Item 5. Other Information
Pursuant to a Share Exchange Agreement, as of November 9,
2000, the Company took a controlling interest in Tec
TechnologyEvaluation.com ("TEC"), a provider of web-based research and
analysis of computer hardware, communications and related information
technology industries. As a result of the transaction, the Company
experienced a change of control (the "Change of Control") and entered
into a new line of business. All of the assets and liabilities relating
to the Company's cheese sales were transferred to the Company's former
directors and officers in consideration of the cancellation of certain
shares of Common Stock. For a detailed description of the transaction,
the Change of Control and the Company's current business, see Item 2:
Management's Discussion and Analysis of Plan of Operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TECE, INC.
By: /s/ Michael Clayton
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Name: Michael Clayton
Title: Chief Financial Officer
Dated: November 27, 2000