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: June 30, 2002
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or
[ ] 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: 33-22175
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SAFETEK INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2226896
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(State or other jurisdiction or (I.R.S. Employer Identification No)
incorporation or organization)
5509 11th Avenue, Brooklyn, New York 11219
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(Address of principal (Zip Code)
executive offices)
718-436-8246
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(Issuer's telephone number)
(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 issuer was required to file such reports, and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: June 30, 2002: 70,381,657
shares of Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
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Safetek International, Inc.
Form 10-QSB
For the Quarter ended June 30, 2002
Part I. Financial Information Page Page
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Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets as of June 30, 2002
and December 31, 2001 3-4
Consolidated Statements of Operations for the Three and Six
months ended June 30, 2002 and 2001 5
Consolidated Statements of Cash Flows for the Six
months ended June 30, 2002 and 2001 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Caution Regarding Forward-Looking Information
Financial Condition and Plan of Operations
Liquidity and Capital Resources 8-9
Part II. Other Information
Item 1. Legal Proceedings. 9
Item 2. Changes in Securities. 9
Item 3. Defaults upon Senior Securities. 9
Item 4. Submission of Matters to a Vote of Security Holders. 9
Item 5. Other Information. 9
Item 6. Exhibits and Reports on Form 8-K
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
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June 30, December 31,
2002 2001
(Unaudited)
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Current Assets
Cash $ 305 $ 1,745
Accounts receivable 1,585 1,670
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Total current assets 1,890 3,415
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Construction in Progress - Equipment 300,000 --
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Total assets $ 301,890 $ 3,415
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See accompanying notes to consolidated financial statements
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Deficit
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June 30, December 31,
2002 2001
(Unaudited)
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Current Liabilities:
Accounts payable $ 278,429 $ 177,394
Due to stockholders 39,494 41,444
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Total current liabilities 317,923 218,838
Subordinated convertible redeemable debenture 330,043 350,542
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Total liabilities 647,966 569,380
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Redeemable convertible preferred shares (4,648 shares,
par value $.0001, redeemable prior to February 21, 2002
at $50 per share, 1,000,000 shares authorized) 124,171 124,171
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Stockholders' deficit:
Common stock, $.0001 par value authorized 500,000,000 shares,
issued and outstanding 70,381,657 and 40,659,319 shares
at June 30, 2002 and December 31, 2001 respectively 7,038 4,065
Additional paid-in capital 2,885,401 2,557,225
Accumulated deficit (3,362,686) (3,251,426)
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Total stockholders' deficit (470,247) (690,136)
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Total liabilities and stockholders' deficit $ 301,890 $ 3,415
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See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Six Months Ended Three Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net sales $ -- $ 376 -- --
Cost of Sales -- -- -- --
------------ ------------ ------------ ------------
Gross profit -- 376 -- --
------------ ------------ ------------ ------------
Expenses
General and administrative 111,260 59,285 52,993 53,359
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Total expenses 111,260 59,285 52,993 53,359
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Net operating loss (111,260) (58,909) (52,993) (53,359)
Other income (expense):
Other income -- 19,643 -- --
------------ ------------ ------------ ------------
Net income (loss) $ (111,260) $ (39,266) $ (52,993) $ (53,359)
============ ============ ============ ============
Basic earnings per share $ (.002) $ (0.06) $ (.001) $ (.04)
============ ============ ============ ============
Weighted average number of shares outstanding 55,520,488 650,426 61,544,590 1,201,185
============ ============ ============ ============
See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For The Six Months Ended June 30, 2002 and 2001
(Unaudited)
2002 2001
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Cash flows from operating activities:
Net loss $(111,260) $ (39,266)
Adjustments to reconcile net loss to net cash
used by operating activities:
Cash provided by (used for) changes in:
Accounts receivable 85 --
Accounts payable and accrued expenses 101,035 75,315
Advanced to/from stockholders (1,950) 30,500
Issuance of common stock for services 20,500 --
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Net cash provided in operating activities 8,410 66,549
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Cash flows from investing activities:
Construction in progress - equipment (300,000) --
Purchase of intangible asset
-- (450,000)
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Net cash used in investing activities (300,000) (450,000)
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Cash flows from financing activities:
Proceeds from issuance of stock -- 2,918
Proceeds from issuance of debentures and exercise of stock option 290,150 378,650
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Net cash provided by financing activities 290,150 381,568
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Net decrease in cash (1,440) (1,883)
Cash at beginning of period
1,883 1,745
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Cash at end of period $ 305 $ --
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Supplemental disclosures:
Cash paid during the year for:
Interest -- --
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Income taxes -- --
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See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to consolidated Financial Statements
June 30, 2002
(Unaudited)
Part I
Item 1. Presentation of Unaudited Consolidated Financial Statements
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The unaudited consolidated financial statements have been
prepared in accordance with rules of the Securities and Exchange
Commission and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial
position, results of operations and cash flows, in conformity
with generally accepted accounting principles. The information
furnished in the opinion of management, reflects all adjustments
(consisting only of normal recurring accruals) necessary to
present fairly the financial position as of June 30, 2002 and
results of operations and cash flows for the three and six months
ended June 30, 2002 and 2001. The results of operations are not
necessarily indicative of results which may be expected for any
other interim period, or for the year as a whole.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
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Caution Regarding Forward-Looking Information
---------------------------------------------
This quarterly report contains certain forward-looking statements
and information relating to the Company that are based on the
beliefs of the Company or management as well as assumptions made
by the information currently available to the Company or
management. When used in this document, the words "anticipate,"
"believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are
intended to identify forward-looking statements. Such statements
reflect the current view of the Company regarding future events
and are subject to certain risks, uncertainties and assumptions
including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated,
expected or intended. In each instance, forward-looking
information should be considered in light of the accompanying
meaningful cautionary statements herein.
Financial Condition and Plan of Operations
Safetek was reorganized in May 2001 for the purpose of providing
embryonic companies with good concepts and promising patented
ideas, presented to them by inventors and actual proof of
concepts and working prototypes, in order to bring these products
to fruition.
On January 5, 2002, the Company entered into an agreement with
Evotech Inc. to develop a wireless Internet access product
hereafter called the Wireless Multi-Service Access System (WMAS).
Pursuant to the agreement, the Company will provide capital funds
for the WMAS product to Evotech Inc with an estimated budget of
approximately $600,000 of which $200,000 was paid during the
quarter ended March 31, 2002 and $100,000 accrued as of June 30,
2002. After developing this product, the Company will pay Evotech
Inc. commissions of 50% of any sales of this product.
As of June 30, 2002, the Company has generated limited revenues
and will not generate any meaningful revenue until it fully
develops its products and expands its marketing offerings. During
the six months ended June 30, 2002, the Company incurred a net
operating loss of $111,260. The Company is subject to all of the
risks, expenses, delays, problems and difficulties frequently
encountered in the establishment of a new business. The Company's
independent auditors included an explanatory paragraph in their
report on the Company's financial statements for the year ended
December 31, 2001 stating that such financial statements were
prepared assuming the Company will continue as a going concern
and that the Company's significant losses from operations through
1999, suspension of substantially all operating activities in
2000 and significant operating loss for the ended December 31,
2001, as well as our stockholders' deficiency of $690,136 as of
December 31, 2001, raised substantial doubt about the Company's
ability to continue as a going concern.
As of June 30, 2002, the Company had a cash balance of
approximately $305. On May 25, 2001, the Company received
subscriptions from investors to purchase 8% Series A Senior
Subordinated Convertible Redeemable Debentures (the "Debentures")
of the Company in the aggregate principal amount of $1,000,000,
of which approximately $438,475 was paid as of such date and the
balance of which may be paid to the Company provided, among other
things, there has been full conversion or repayment of the
initial $438,475 aggregate principal amount of the Debentures.
The Debentures are due and payable on May 25, 2003. Based on such
proceeds and other cash resources, the Company believes it has
maintained its operations to date as currently conducted but such
proceeds and other resources will not be sufficient to satisfy
the Company's cash requirements for the next twelve (12) months.
Therefore, the Company will be required to raise additional funds
in the very near future. During the next few months, the Company
will consider raising additional funds through equity or debt
offerings. If successful in raising funds, the Company will
endeavor to expand the marketing and product services offerings
and/or develop or acquire additional business operations.
Part II Other Information
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Item 1. Legal Proceedings - None
Item 2. Changes in Securities:
Common Stock
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Additional
Number of Paid in
Of Shares Par Value capital
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Balance at March 31, 2002 55,212,792 5,520 2,717,152
Debentures Converted 12,778,915 1,279 147,863
Options Exercised 1,249,950 125 --
Services rendered 1,140,000 114 20,386
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Balance at June 30, 2002 70,381,657 7,038 2,885,401
========== ========== ==========
During the quarter ended June 30, 2002 a stock option was exercised
and 1,249,950 shares of restricted common stock were sold at par
value.
Item 3. Defaults on Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled meetings during the
reporting period.
Item 5. Other information - None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 99 - Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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.
Dated: August 14, 2002 SAFETEK INTERNATIONAL, INC.
By: /s/ Shumel M. Shneibalg
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Shmuel M. Shneibalg,
President and Director