UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIALEX MINERALS INC.
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2005
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number 000-29827
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RELIANT HOME WARRANTY CORPORATION
-----------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0656668
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 700, 200 Yorkland Blvd.
Toronto, Ontario, Canada M2J 5C1
------------------------------------
(Address of principal executive offices)
416 445-9500
---------------------------------------
(Issuer's telephone number)
APPICABLE ONLY TO CORPORATE ISSUERS
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
EQUITY, AS OF THE LATEST PRACTICABLE DATE: May 13, 2005 - 78,019,774
-------------------------------
ITEM 1 FINANCIAL STATEMENTS
RELIANT HOME WARRANTY CORPORATION
(Formerly Dialex Mineral Inc)
FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD
ENDED MARCH 31, 2005
CONTENTS
Balance Sheet
Statement of Shareholders' Deficit
Statement of Earnings
Statement of Cash Flows
Notes to Financial Statements
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005 AND 2004
CONTENTS
--------
Report of Independent Registered Public Accounting Firm 1
Consolidated Balance Sheets 2
Consolidated Statements of Changes in Stockholders' Equity 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
Reliant Home Warranty Corporation
We have reviewed the accompanying interim consolidated balance sheet of
Reliant Home Warranty Corporation (Formerly Dialex Minerals Inc.) as at March
31, 2005 and the related consolidated statements of operations and cash flows
for the three-month periods ended March 31, 2005 and 2004. These interim
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the interim financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States of America.
We have previously audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated
balance sheet of Reliant Home Warranty Corporation as at December 31, 2004, and
the related consolidated statements of operations, stockholder's deficiency, and
cash flows for the year then ended. The auditor's report on those financial
statements includes an explanatory paragraph referring to the matters in Note 2
of those financial statements and indicated that these matters raised
substantial doubt about the Company's ability to continue as a going concern. As
indicated in Note 2 of the Company's unaudited interim financial statements as
of March 31, 2005, the Company was still unable to secure additional funds
through equity financing and has no long-term contracts related to its business
plans. The accompanying interim financial information does not include any
adjustments that might result from the outcome of this uncertainty.
/s/ SF Partnership LLP
-------------------------------
Toronto, Canada CHARTERED ACCOUNTANTS
May 9, 2005
- 1 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Consolidated Balance Sheets
March 31, 2005 and December 31, 2004
(Expressed in United States Dollars)
(Unaudited)
As at As at
March 31 December 31
2005 2004
---------- -----------
ASSETS
Current
Cash $ 7,440 $ --
----------- -----------
7,440 --
Intangible Asset 4,932 --
Assets of Discontinued Operations (note 4) -- 1,364,002
----------- -----------
$ 12,373 $ 1,364,002
=========== ===========
LIABILITIES
Current
Accounts payable $ 57,729 209,964
Advances from related companies 21,911 16,189
Liabilities of discontinued operations (note 4) -- 370,400
----------- -----------
79,640 596,553
----------- -----------
STOCKHOLDERS' DEFICIENCY
Capital Stock (note 5) 154,048 78,048
Additional Paid-In Capital 5,257,260 5,323,396
Accumulated Deficit (5,478,576) (4,633,995)
----------- -----------
(67,268) 767,449
----------- -----------
$ 12,373 $ 1,364,002
=========== ===========
APPROVED ON BEHALF OF THE BOARD
/s/ Kevin Hamilton /s/ Val Guilis
- --------------------------------- --------------------------------------
Director Director
(The accompanying notes are an integral part
of these consolidated financial statements)
- 2 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Consolidated Statements of Changes in Stockholders' Deficiency
Period Ended March 31, 2005
(Expressed in United States Dollars)
(Unaudited)
Common Stock Additional Total
-------------------------- Paid-In Accumulated Stockholders'
Shares Par Value Capital Deficit Equity
----------- ----------- ----------- ------------ -----------
Deficit - December 31, 2003 169,751 $ 37,344 $ 3,847,462 $(4,693,637) $ (808,831)
=========== =========== =========== ============ ===========
Acquisition of Condor
Diamond 1,545,454 34,000 953,143 -- 987,143
Issuance of shares
for property 20,455 450 45,704 -- 46,154
Issuance of shares
for services 272,920 6,004 452,337 -- 458,341
Issuance of shares
for services 11,364 250 24,750 -- 25,000
Foreign exchange on
translation -- -- -- -- 9,842
Net earnings -- -- -- 49,800 49,800
----------- ----------- ----------- ----------- -----------
Deficit - December 31, 2004 2,019,944 $ 78,048 $ 5,323,396 $(4,643,837) $ 767,449
=========== =========== =========== =========== ===========
Acquisition of 1604494
Ontario Inc. 76,000,000 76,000 (66,136) -- 9,864
Net loss three months
period ended March
31, 2005 -- -- -- (844,581) (844,581)
----------- ----------- ----------- ----------- -----------
Balance, March 31,
2005 78,019,944 $ 154,048 $ 5,257,260 $(5,478,576) $ (67,268)
=========== =========== =========== =========== ===========
(The accompanying notes are an integral part
of these consolidated financial statements)
- 3 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Consolidated Statements of Operations
For The Three Months Ended March 31, 2005 and 2004
(Expressed in United States Dollars)
(Unaudited)
March 31, March 31,
2005 2004
Revenue $ -- $ --
Cost of Sales -- --
----------- -----------
Gross Profit -- --
----------- -----------
Operating Expenses
Management fees -- 70,286
Consulting 10,890 17,343
General and administrative 3,780 12,207
Professional fees 19,351 21,371
----------- -----------
Total Operating Expenses 34,021 121,207
----------- -----------
Loss from Continuing Operations (34,021) (121,207)
----------- -----------
Discontinued Operations
Results from discontinued operations (note 4) (810,560) --
----------- -----------
Net Loss (844,581) (121,207)
----------- -----------
Net Loss Per Common Share - Basic and Diluted
Loss from continuing operations $ -- $ (0.06)
Loss from discontinued operations (0.09) --
----------- -----------
Net loss per common share basic and diluted $ (0.09) $ (0.06)
Weighted Average Number of Common Shares - Basic 8,775,500 2,008,583
(The accompanying notes are an integral part
of these consolidated financial statements)
- 4 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2005 and 2004
(Expressed in United States Dollars)
(Unaudited)
March 31, March 31,
2005 2004
----------- -----------
Cash Flows from Operating Activities
Net loss $ (34,021) $ (121,207)
Adjustments to reconcile net loss to net cash used
in operating activities
Accounts payable 30,807 (267,687)
Surplus of acquired subsidiary -- 123,010
Issuance of shares for services -- 428,756
Deposits -- 71,429
Advances from related companies 5,722 207,965
----------- -----------
2,508 442,266
Results from Discontinued Operations (810,560) --
Items not affecting cash:
Loss on disposal of assets 1,364,002 --
Gain on write off of liabilities (183,042) --
----------- -----------
370,400 --
Liabilities of discontinued operations (370,400) --
----------- -----------
Cash Flows from Investing Activities
Investment in mining properties -- (442,266)
Purchase of intangible asset 4,932 --
----------- -----------
4,932 (442,266)
----------- -----------
Cash Flows from Financing Activities
----------- -----------
Net Increase in Cash 7,440 --
Cash- beginning of year -- --
----------- -----------
Cash- end of year $7,440 --
- 5 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
1. Description of Business
Reliant Home Warranty Corporation (Formerly Dialex Minerals Inc.) (the
"Company") was incorporated in the State of Florida on December 18, 1995
under the trade name of Ronden Vending Corp.
On March 24, 2005, the Company entered into a stock exchange agreement with
BSA Group Limited, in trust as trustee for the stockholders of 1604494
Ontario Inc. Under this agreement the Company exchanged 76,000,000 common
shares for 100% of the issued and outstanding stocks of 1604494 Ontario
Inc. As a result of the stock exchange the Company obtained control over
1604494 Ontario Inc. Legally the Company is the parent of 1604494 Ontario
Inc., however, as a result of the stock exchange, control of the combined
companies passed to the stockholders of 1604494 Ontario Inc., which for
accounting purposes is deemed to be the acquirer.
Upon completion of the stock exchange, the Company changed the nature of
its business and now offers a proprietary line of Home Value Warranty
Programs, designed for sale to purchasers of residential real estate
(single family homes and condominiums).
2. Going Concern
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America with the
assumption that the Company will be able to realize its assets and
discharge its liabilities in the normal course of business.
The Company has sustained operating losses since inception. The Company's
continuation as a going concern is uncertain and dependant on successfully
bringing its services to market, achieving future profitable operations and
obtaining additional sources of financing to sustain its operations, the
outcome of which cannot be predicted at this time.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
- 6 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
3. Basis of Financial Statement Presentation and Summary of Significant
Accounting Policies
Basis of Financial Statement Presentation
The accompanying unaudited interim financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America for interim financial information and the requirements of
item 310 (b) of Regulation S-B. Accordingly, certain information and
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 the rules and
regulations of the Securities and Exchange Commission. The financial
statements reflect adjustments (consisting only of normal recurring
adjustments), which, in the opinion of management, are necessary for a fair
presentation of the results for the periods presented. The results from
operations for the interim periods are not indicative of the results
expected for the full fiscal year or any future period. Certain prior
period amounts have been reclassified to conform to correct period
presentation.
Summary of Significant Accounting Policies
a) Basis of Consolidation
The stock exchange between the Company and 1604494 Ontario Inc. has been
recorded as the recapitalization of the Company, with the net assets of the
Company brought forward at their historical basis. The intention of the
management of 1604494 Ontario Inc. was to acquire the Company as a shell
company listed on NASDAQ BB OTC. Management does not intend to pursue the
business of the Company and accordingly has changed the nature of the
business as described in Note 1. As such, accounting for the merger as the
recapitalization of the Company is deemed appropriate.
b) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and cash deposited with
financial institutions, including money market accounts, and commercial
paper purchased with an original maturity of three months or less.
c) Concentration of Cash
The company at times maintains cash balances in accounts that are not fully
federally insured. Uninsured balances as of March 31, 2005 were nil (2004 -
nil).
- 7 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
3. Basis of Financial Statement Presentation and Summary of Significant
Accounting Policies (cont'd)
d) Income (Loss) Per Common Share
Income (loss) per common share is computed on the weighted average number
of common or common and common equivalent shares outstanding during each
year. Basic Earnings-Per-Share ("EPS") is computed as net income (loss)
applicable to common stockholders' divided by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issued through stock
options, warrants, and other convertible securities when the effect would
be dilutive. For the three month period ended at March 31, 2005 weighted
average number of common shares equal diluted weighted average number of
common shares
e) Intangible Assets
Intangible Assets with an indefinite life are accounted for at cost and are
tested for impairment annually or more frequently if events or changes in
circumstances indicate that the assets might be impaired. When the carrying
amount exceeds the fair value, an impairment loss is recognized in the
statement of earnings in amount equal to the excess.
f) Use of Estimates
Preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and related notes to financial
statements. These estimates are based on management's best knowledge of
current events and actions the Company may undertake in the future. Actual
results may ultimately differ from estimates, although management does not
believe such changes will materially affect the financial statements in any
individual year.
- 8 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
3. Basis of Financial Statement Presentation and Summary of Significant
Accounting Policies (cont'd)
g) Recent Accounting Pronouncements
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4" (Statement 151). This statement amends
the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). As currently worded in ARB 43,
Chapter 4, the term "so abnormal" was not defined and its application could
lead to unnecessary noncomparability of financial reporting. This Statement
eliminates that term and requires that those items be recognized as
current-period charges regardless of whether they meet the criterion of "so
abnormal." In addition, this Statement requires that allocation of fixed
production overhead to the costs of conversion be based on the normal
capacity of the production facilities. The adoption of Statement 151 will
not have a material impact on the Company's consolidated financial
statements.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
Assets - an amendment of APB Opinion No. 29" (Statement 153). This
Statement amends Opinion 29 to eliminate the exception for non-monetary
exchanges of similar productive assets and replaces it with a general
exception for exchanges of non-monetary assets that do not have commercial
substance. A non-monetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result
of the exchange. The adoption of FAS 153 will not have a material impact on
the Company's consolidated financial statements.
In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based
Payment" (Statement 123). This Statement requires a public entity to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award (with
limited exceptions). That cost will be recognized over the period during
which the employee is required to provide service in exchange for the award
requisite service period (usually the vesting period). No compensation cost
is recognized for equity instruments for which employees do not render the
requisite service. Employee share purchase plans will not result in
recognition of compensation cost if certain conditions are met; those
conditions are much the same as the related conditions in Statement 123.
This Statement is effective for public entities that do not file as a small
business issuers as of the beginning of the first interim or annual
reporting period that begins after June 15, 2005. This Statement applies to
all awards granted after the required effective date and to awards
modified, repurchased, or cancelled after that date. The cumulative effect
of initially applying this Statement, if any, is recognized as of the
required effective date and is not expected to have a material impact on
the Company's consolidated financial statements.
- 9 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
4. Discontinued Operations
On February 2, 2005, the Company divested of all of the issued and
outstanding shares of its wholly owned subsidiary Condor Diamond Corp. to
Condor Gold Corp. in consideration of any and all liabilities owing by the
Company to Condor Gold Corp. and its directors and officers.
The results of the discontinued operations are follows:
2005 2004
------------ ------------
Revenue -- --
Operating loss from discontinued operations -- --
Gain (loss) on discontinued operations (810,560) --
------------ ------------
Loss from discontinued operations (810,560) --
------------ ------------
The were no discontinued operations in the first quarter of 2004.
5. Capital Stock
Authorized
100,000,000 Common shares, par value of $0.001 per share
25,000,000 Preferred shares, par value of $0.001 per share, non-
2005 2004
------------ ------------
Issued
78,019,944
Common shares (2004 - 44,188,816) $ 154,048 $ 81,848
============ ============
On February 2, 2005, the Company undertook a reverse split of its
outstanding common shares on the basis of one new share for twenty-two old
shares, thereby reducing its outstanding common shares from 44,438,786 to
2,019,945 prior to the acquisition of a subsidiary company. The reverse
split has retroactively been taken into consideration in the consolidated
financial statements and in the calculation of earnings per share.
On March 24, 2005, pursuant to a Stock Exchange Agreement, the BSA Group
Limited, in trust for the shareholders of 1604494 Ontario Inc., an Ontario
private company, acquired control of the Company by acquiring from treasury
76,000,000 shares of the Company in exchange for all of the issued and
outstanding shares of 1604494 Ontario Inc.
- 10 -
RELIANT HOME WARRANTY CORPORATION
(FORMERLY DIALEX MINERALS INC.)
Notes to Consolidated Financial Statements
March 31, 2005 and 2004
6. Related Party Transactions
Advances from related companies are non interest bearing and had no
specific terms of repayment.
- 11 -
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
General
- -------
The information in this section should be read together with the consolidated,
unaudited interim financial statements that are included elsewhere in this Form
10-QSB. These interim financial statements do not contain all disclosures
required under generally accepted accounting principles for annual financial
statements and should therefore be read in conjunction with the most recent
annual financial statements. The significant accounting policies follow that of
the most recently reported annual financial statements.
Company History
- ---------------
Reliant Home Warranty Corporation (the "Company" or "Reliant") was incorporated
in the State of Florida on December 18, 1995, as Ronden Vending Corp on December
24, 1996; the Company incorporated a wholly owned subsidiary called Ronden
Acquisition, Inc a Florida corporation. Ronden Acquisition Inc., then merged
with Video Home Shopping, Inc. (a Tennessee corporation), and Ronden
Acquisition, Inc., was the surviving Florida Corporation. In 1996, Video Home
Shopping, Inc was a network marketing and distribution company which offered a
wide range of products and services to consumers through the medium of video
tape. After the merger, however, the Company decided not to continue with the
network marketing and distribution operations of Video Home Shopping, Inc of
Tennessee.
On January 9, 1997, articles of merger were filed for the Company as the
surviving corporation of a merger between the Company and its wholly owned
subsidiary, Ronden Acquisitions, Inc. This completed the forward triangular
merger between Video Home Shopping, Inc Ronden Acquisitions Inc and the Company.
On January 9, 1997, articles of amendment were filed to change the name of the
Company from Ronden Vending Corp. to VHS Network, Inc. On April 9, 1997, the
Company incorporated VHS Acquisitions, Inc. as a wholly owned subsidiary.
In April 1997, the Company was restructured by way of a reverse take-over
involving its wholly owned subsidiary, VHS Acquisitions, Inc. a Florida company,
and VHS Network, Inc., a Manitoba, Canada controlled Private Corporation.
On April 12, 2000, the Company acquired all of the outstanding common shares of
China- eMall Corporation, an Ontario private company. This represents a 100%
voting interest in China-eMall Corporation.
On December 1, 2001 the Company acquired all the outstanding common shares of
TrueNet Enterprise Inc., an Ontario private company.
On September 22, 2003 the Company changed its name to Dialex Minerals Inc. and
completed a reverse split of its issued and outstanding common shares on the
basis of ten (10) common shares for one (1) new common share.
On February 9, 2004, the Company completed a transaction acquiring all the
outstanding shares of Condor Diamond Corp. an Ontario private company.
On February 2, 2005, pursuant to a Stock Exchange Agreement and a registration
statement filed on Form 14-3 with the Securities and Exchange Commission, the
Company changed its name from Dialex Minerals Inc. to Reliant Home Warranty
Corporation and undertook a reverse split of its outstanding common shares on
the basis of one (1) new share for twenty-two (22) old shares reducing its
outstanding common shares from 44,438,786 to 2,019,945 prior to the acquisition
of 1604494 Ontario Inc.
- 12 -
On March 16, 2005 Sandro Sordi in Trust acquired control of the Company, by
acquiring a majority of the issued and outstanding shares of the Company,
through the execution of a share purchase agreement with Condor Gold Corp and
RTO Zarex Ltd.
Effective March 23, 2005 and prior to the approval of the Stock Exchange
Agreement, the former directors of the Corporation, Alexander Stewart, Wallace
Stonehouse, Kirk Boyd, Stephen Stewart and Neil Novak, resigned upon the
appointment of new directors, Kevin Hamilton, Valeri Guilis, Boyd Soussana and
the Honourable John Roberts. On March 24, 2005, pursuant to the Stock Exchange
Agreement, The BSA Group Limited ("BSA"), in trust for the shareholders of
1604494 Ontario Inc., an Ontario private company, acquired control of the
Company by acquiring from treasury 76,000,000 shares of the Company in exchange
for all of the issued and outstanding shares of 1604494 Ontario Inc. The total
amount of issued and outstanding shares in the Company thereby increased to
78,019,945.
Coincident with acquisition of the home warranty insurance business, Corporation
divested all of issued and outstanding shares, of Condor Diamond Corp. the
Corporation wholly-owned subsidiary to Condor Gold Corp., in consideration in
return of any and all liabilities owing by the Corporation to Condor Gold Corp.
and its directors and officers.
The Company has changed the nature of its business and now offers a proprietary
line of Home Value Warranty Programs, designed for sale to purchasers of
residential real estate (single family homes and condominiums).
Going Concern
- -------------
The Company is in the process of commercially exploiting its intellectual
property as well as evaluating and acquiring other intellectual property, which
is a commercial fit for the Company. As a result, the Company has not yet
generated a profit from its operations. The Company's continued existence, and
its ability to continue as a going concern will be funded by a combination of
operational cash flow as well as additional capital that it anticipates rising.
Company has negative working capital.
Goals and Objectives
- --------------------
The Company is engaged in marketing a series of proprietary home warranty and
equity protection programs.
Cash Requirements
- -----------------
The Company intends to meet its cash requirements through a combination of
operational cash flow as well as sales of its securities.
Operations
- ----------
Results for Three Months Ended March 31, 2005
- ---------------------------------------------
For both the three-month periods ended March 31, 2005 and 2004 we had no
revenues.
Operating Expenses for the three months ending March 31, 2005 were $34,021 as
compared to $121,207 for the three months ended March 31, 2004, reflecting the
acquisition and consolidation of 1604494 Ontario Inc, and divesting of Condor
Diamond Corp. All non-essential expenses have been eliminated in an effort to
reduce operating losses.
- 13 -
Liquidity and Capital Resources
- -------------------------------
Revenues for the three month period ended March 31, 2005 were $NIL as a result
of no activity in the company properties. The ability of the Company to continue
as a going concern is dependent on its ability to generate sales, obtain capital
funding and seek other joint ventures and alliances with third parties.
Changes in Financial Position
- -----------------------------
Total liabilities decreased to $79,640 on March 31, 2005 from $596,553 on
December 31, 2004 as a result of the divesting Condor Diamond Corp and.,
reduction in trade payables with the settlement of a dispute with a supplier and
write-down of related party notes and advances. Shareholders' equity decreased
from $767,449 on December 31, 2004 to ($(67,267) during the first three months
of 2005 as a result divesting Condor Diamond Corp. The Company has changed the
nature of its business and now offers a proprietary line of Home Value Warranty
Programs, designed for sale to purchasers of residential real estate (single
family homes and condominiums) and management is currently seeking new capital
investment, joint ventures and alliances with third parties.
ITEM 3. CONTROLS & PROCEEDURES
Evaluation of Disclosure Controls and Procedures
- ------------------------------------------------
The Company maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and other
disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. Within 90 days prior to the filing of this
report, the Company's Chief Executive Officer and Chief Financial Officer have
reviewed and evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures with the assistance and
participation of other members of management. Based upon that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures are effective for
gathering, analyzing and disclosing the information the Company is required to
disclose in the reports it files under the Securities Exchange Act of 1934
within the time periods specified in the SEC's rules and forms.
Changes in Internal Controls
- ----------------------------
The company has not made any significant changes to its internal controls
subsequent to the Evaluation Date. The company has not identified any
significant deficiencies or material weaknesses or other factors that could
significantly affect these controls, and therefore, no need for corrective
action to be taken.
- 14 -
PART 11
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be involved as a plaintiff or defendant in
various legal actions arising in the normal course of business. It does not
anticipate any material liability as a result of any such litigation. At present
the Company is not involved as a plaintiff or defendant in any legal action
arising in the normal course of business.
ITEM 2. CHANGES IN SECURITIES
On September 5, 2003, the Company announced that it would conduct a reverse
split of its issued and outstanding shares on the basis of 10 common shares for
one new common share. The Company at that date had 37,345,268 common shares
issued and outstanding, after the reverse split there were 3,734,526 common
shares issued and outstanding. On February 9, 2004, the Company issued
34,000,000 common shares for the acquisition of 100% of the issued and
outstanding common shares of Condor Diamond Corp.
On March 3, the Company authorized the issuance of 6,004,426 S-8 shares pursuant
to debt settlement agreements totaling $428,875.
On February 2, 2005, Company undertook a reverse split of its outstanding common
shares on the basis of one (1) new share for twenty-two (22) old shares reducing
its outstanding common shares from 44,438,786 to 2,019,945 prior to the
acquisition of 1604494 Ontario Inc.
On March 24, 2005, Corporation issued 76,000,000 shares for the acquisition of
100% of the issued and outstanding common shares of 1604494 Ontario Inc., an
Ontario private company, and pursuant to a Stock Exchange Agreement (the "Stock
Exchange Agreement"), The BSA Group Limited ("BSA"), in trust for the
shareholders of, acquired control of the Registrant, Reliant Home Warranty
Corporation ("Corporation") by acquiring from treasury 76,000,000 shares of the
Corporation in exchange for all of the issued and outstanding shares of 1604494
Ontario Inc. As of the date thereof, the Corporation has a total of 78,019,945
issued and outstanding common shares. Therefore the shareholders of 1604494
Ontario Inc. have acquired ninety-seven point four percent (97.4%) of the issued
and outstanding common shares of the Company.
Kevin Hamilton acquired beneficial ownership of 20,085,667 common shares in the
capital of the Company, which he is deemed to beneficially own which are held by
a corporation, the total of which represents 25.7 % of the issued and
outstanding consolidated common shares of the Company. Such common shares of the
Company were issued to Kevin Hamilton pursuant to the Stock Exchange Agreement
whereby the consideration used by Kevin Hamilton was the exchange of one common
share of 1604494 Ontario Inc. for each one common share of the Company acquired.
RS Atlantic Holdings Inc. a private company acquired ownership of 18,921,220
common shares in the capital of the Company, the total of which represents 24.2
% of the issued and outstanding consolidated common shares of the Company. Such
common shares of the Company were issued to RS Atlantic Holdings Inc pursuant to
the Stock Exchange Agreement whereby the consideration used by RS Atlantic
Holdings Inc was the exchange of one common share of 1604494 Ontario Inc. for
each one common share of the Company acquired.
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HS Holdings Inc. a private company acquired ownership of 18,753,113 common
shares in the capital of the Company, the total of which represents 24.0 % of
the issued and outstanding consolidated common shares of the Company. Such
common shares of the Company were issued to HS Holdings Inc pursuant to the
Stock Exchange Agreement whereby the consideration used by HS Holdings Inc was
the exchange of one common share of 1604494 Ontario Inc. for each one common
share of the Company acquired.
The total amount of issued and outstanding shares in the Company thereby
increased to 78,019,945.
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 AND REPORTS.
Exhibits
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2.1* Agreement and Plan of Reorganization between VHS Network, Inc. and
Exodus Acquisition Corporation, dated May 6, 2000.
3.1* Articles of Incorporation for VHS Network, Inc.
3.2* Articles of Merger for VHS Network, Inc.
3.3* Articles of Amendment for VHS Network, Inc.
3.4* By-Laws of VHS Network, Inc.
4.1* Specimen Stock Certificate.
10.1* Share Exchange Agreement made April 15, 2000 among VHS Network, Inc.,
China eMall Corporation, Gang Chai, Qin Lu Chai, Uphill Capital Inc.,
Charles He, Qing Wang, and Forte Management Corporation.
10.2* License Agreement between Groupmark Canada Limited, and VHS Network,
Inc. dated January 1, 2000.
10.3* Management Services Agreement between VHS Network, Inc. and Groupmark
Canada Limited, dated April 1997.
10.4* Agreement and Plan of Merger dated as of December 26, 1996 made among
Ronden Vending Corporation and Ronden Acquisition, Inc., Video Home
Shopping, Inc. (A Tennessee Corporation), Progressive Media Group,
Inc. and Pamela Wilkerson.
10.5* Agreement and Plan of Merger dated as of December 30, 1996 between
Ronden Vending Corporation and Ronden Acquisition, Inc.
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Exhibits, (continued)
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10.6* Agreement and Plan of Reorganization dated April 10, 1997 among VHS
Network, Inc. and VHS Acquisition, Inc. and VHS Network (Canada) Inc.*
10.8** Form of Acquisition Agreement between the Company and TruNet
Enterprise Inc.
10.9 Articles of Amendment to Articles of Incorporation of VHS Network,
Inc. September 5, 2003.
99.1 Certifications Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
To Section 906 Of The Sarbanes-Oxley Act Of 2002
* Previously filed as an exhibit to the Company's Registration Statement on Form
SB2 filed with the Commission and incorporated by reference herein.
** Filed as exhibit 10.8 to the Company's form 10K-SB filed with the Commission
on April 16, 2002 and incorporated by reference herein.
Reports on Form 8-K
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On February 12, 2002, the Company filed a Current Report on Form 8-K with the
Commission disclosing the Company's change of accountants
On July 25, 2003, the Company filed a Current Report on Form 8-K with the
Commission disclosing the Company's change of accountants
On September 22, 2003, the Company filed a Current Report on Form 8-K with the
Commission disclosing change in control of registrant.
On March 28, 2005, the Company filed a Current Report on Form 8-K with the
Commission disclosing changes in control of registrant.
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.
Reliant Home Warranty Corporation
Date May 16, 2005 /s/ Kevin Hamilton
-----------------------------------
(Signature) Kevin Hamilton
Chief Executive Officer
Date May 16, 2004 /s/ Val Guilis
------------------------------------
(Signature) Val Guilis
Chief Financial Officer
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