UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ---------- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- ---------- OF 1934
For the transition period from ____________ to ___________
Commission File Number: 33-22175
SAFETEK INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2226896
- ---------------------------- ----------------------------
(State of incorporation) (IRS Employer ID Number)
5509 11th Avenue, Brookly, NY 11219
(Address of principal executive offices)
718-436-8246
(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 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 latest practicable date: September 30, 2002 - 74,601,657 shares
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
Safetek International, Inc.
And Subsidiaries
Consolidated Financial Statements
September 30, 2002 and 2001
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Form 10-Q For The Quarter Ended September 30, 2002
Table of Contents
Part 1 - Financial Information
- ------ ---------------------
Financial Statements and notes to financial statements
Management's Discussion and Analysis of financial condition and results
of operations
Part 2 - Other Information
- ------ -----------------
Legal Proceedings
Changes in Securities
Defaults Upon Senior Securities
Other Information
Exhibits and Reports on Form 8-K
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
------
September 30, December 31,
2002 2001
(Unaudited)
------------- -------------
Current Assets
Cash $ 77 $ 1,745
Accounts receivable 1,585 1,670
------------- -------------
Total current assets 1,662 3,415
------------- -------------
Construction in Progress - Equipment 400,000 --
------------- -------------
Total assets $ 401,662 $ 3,415
============= =============
(Continued)
See accompanying notes to consolidated financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Liabilities and Stockholders' Deficit
-------------------------------------
September 30, December 31,
2002 2001
(Unaudited)
------------- -------------
Current Liabilities:
Accounts payable $ 449,878 $ 177,394
Due to stockholders 52,874 41,444
------------- -------------
Total current liabilities 502,752 218,838
Subordinated convertible redeemable debenture 293,783 350,542
------------- -------------
Total liabilities 796,535 569,380
------------- -------------
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
------------- -------------
Stockholders' deficit:
Common stock, $.0001 par value authorized 500,000,000 shares, issued
and outstanding 74,601,657 and 40,659,319 shares
at September 30, 2002 and December 31, 2001 respectively 7,460 4,065
Additional paid-in capital 2,921,239 2,557,225
Accumulated deficit (3,447,743) (3,251,426)
------------- -------------
Total stockholders' deficit (519,044) (690,136)
------------- -------------
Total liabilities and stockholders' deficit $ 401,662 $ 3,415
============= =============
See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
Consolidated Statements of Stockholders' Deficit
For the nine months ended September 30, 2002 and 2001
Common Stock
-------------------------- Additional
Number of Paid-in Accumulated Stockholders'
Shares Par Value Capital Deficit Deficit
------------ ------------ ------------ ------------ ------------
Balances at December 31, 2000 93,548 9 2,441,181 (2,588,163) (146,973)
Net loss for the year ended
December 31, 2001 -- -- -- (663,263) (663,263)
Shares issued for services 4,000,000 400 29,600 -- 30,000
Exercise of stock option 21,662,793 2,166 -- -- 2,166
Shares converted from subordinated
Convertible redeemable debentures 14,902,978 1,490 86,444 -- 87,934
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2001 40,659,319 4,065 2,557,225 (3,251,426) (690,136)
Net loss for the period March 31, 2002 -- -- -- (58,267) (58,267)
Shares converted from subordinated
Convertible redeemable debentures 14,304,473 1,430 159,927 -- 161,357
Exercise of stock option 249,000 25 -- -- 25
------------ ------------ ------------ ------------ ------------
Balance at March 31, 2002 55,212,792 5,520 2,717,152 (3,309,693) (587,021)
Net loss for the period June 30, 2002 -- -- -- (52,993) (52,993)
Shares issued for services 1,140,000 114 20,386 -- 20,500
Shares converted from subordinated
Convertible redeemable debentures 12,778,915 1,279 147,863 -- 149,142
Exercise of stock option 1,249,950 125 -- -- 125
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2002 70,381,657 7,038 2,885,401 (3,362,686) (470,247)
Net loss for the period September 30, 2002 -- -- -- (85,057) (85,057)
Shares converted from subordinated
Convertible redeemable debentures 4,220,000 422 35,838 -- 36,260
------------ ------------ ------------ ------------ ------------
Balance at September 30, 2002 74,601,657 7,460 2,921,239 (3,447,743) (519,044)
============ ============ ============ ============ ============
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For The Nine Months Ended September 30, 2002 and 2001
(Unaudited)
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss $(196,317) $ (65,074)
Adjustments to reconcile net loss to net cash
used by operating activities:
Cash provided by changes in:
Accounts receivable 85 --
Accounts payable and accrued expenses 272,484 101,459
Advanced to/from stockholders 11,430 30,760
Issuance of common stock for services 20,500 --
--------- ---------
Net cash provided by operating activities 108,182 67,145
--------- ---------
Cash flows from investing activities:
Construction in progress - equipment (400,000) --
Purchase of intangible asset -- (450,000)
--------- ---------
Net cash used in investing activities (400,000) (450,000)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of stock -- 2,350
Proceeds from issuance of debentures and exercise of stock option 290,150 378,650
--------- ---------
Net cash provided by financing activities 290,150 381,000
--------- ---------
Net decrease in cash (1,668) (1,855)
Cash at beginning of period 1,745 1,883
--------- ---------
Cash at end of period $ 77 $ 28
========= =========
Supplemental disclosures:
Cash paid during the year for:
Interest -- --
========= =========
Income taxes -- --
========= =========
See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Nine Months Ended Three Months Ended
September 30, September 30,
(unaudited) (unaudited)
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net Sales $ -- $ 516 $ -- $ 140
Cost of Sales -- 30 -- 30
------------ ------------ ------------ ------------
Gross Profit -- 486 -- 110
------------ ------------ ------------ ------------
Expenses
General and Administrative 196,317 85,203 85,057 25,918
------------ ------------ ------------ ------------
Total Expenses 196,317 85,203 85,057 25,918
------------ ------------ ------------ ------------
Net Operating Loss (196,317) (84,717) (85,057) (25,808)
------------ ------------ ------------ ------------
Other Income (Expenses):
Other Income -- 19,643 -- --
------------ ------------ ------------ ------------
Net income (loss) $ (196,317) $ (65,074) $ (85,057) $ (25,808)
============ ============ ============ ============
Basic earnings per share $ (.003) $ (.023) $ (.001) $ (.003)
============ ============ ============ ============
Weighted average number
of shares outstanding 58,903,465 2,787,398 72,491,657 6,991,657
============ ============ ============ ============
See accompanying notes to financial statements.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to consolidated Financial Statements
September 30, 2002
(Unaudited)
Part I
1. Presentation of Unaudited Consolidated Financial Statements
-----------------------------------------------------------
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
September 30, 2002 and results of operations and cash flows
for the three and nine months ended September 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.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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.
2. 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). 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 $200,000 accrued as of
September 30, 2002. After developing this product, the Company
will pay Evotech Inc. commissions of 50% of any sales that are
made of this product.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to consolidated Financial Statements (Continued)
September 30, 2002
(Unaudited)
In another recent development, the company is involved in
discussions to acquire a CPE (Customer Premise Equipment)
product in the broadband industry. More details regarding this
development should be available by the end of the fourth
quarter of 2002.
3. Results of Operation, Liquidity and Capital Resources
For the Quarter ended September 30, 2002, the Company had no
revenues. The investment referred to in note 2 above is
virtually the only asset of the Company. The liabilities of
the Company primarily relate to funds received from 8% series
A Senior subordinated convertible redeemable debentures to
provide capital for new projects as well as to fund general
operating expenses and accrued expenses relating to the
project described in note 2.
Part II Other Information
-----------------
1. Legal Proceedings - None
2. Changes in Securities:
Common Stock
------------
Additional
Number of Paid in
Of Shares Par Value capital
---------- ---------- ----------
Balance at June 30, 2002 70,381,657 7,038 2,885,401
Debentures Converted 4,220,000 422 35,838
---------- ---------- ----------
Balance at September 30, 2002 74,601,657 7,460 2,921,239
========== ========== ==========
3. Defaults on Senior Securities - None
4. Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled meetings during
the reporting period.
5. Other information - None
6. Exhibits and Reports on Form 8-K - None
Item 3 Controls And Procedures
-----------------------
a. Evaluation of Disclosure Controls and Procedures:
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the reports filed under the
Exchange Act is accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. Within the 90 days prior to the filing
of this report, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon and as of the date of that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.
b. Changes in Internal Controls:
There were no changes in the Company's internal controls or in other
factors that could have significantly affected those controls subsequent to the
date of the Company's most recent evaluation.
CERTIFICATION PURSUANT TO SECTON 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Samuel Shneibalg, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Safetek
International, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 4, 2002
By: /s/ Samuel Shneibalg
------------------------------------
Samuel Shneibalg
Chairman and Chief Executive Officer