U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended January 31, 2002
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 000-32093
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SLW ENTERPRISES INC.
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(Name of Small Business Issuer in its Charter)
Washington 91-2022980
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(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
4015 Palm-Aire Drive West, #1002
Pompano Beach, FL USA 33069
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(Address of Principal Executive Offices)
(416) 782-9169
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Issuer's Telephone Number
Suite 210, 580 Hornby Street
Vancouver, British Columbia, Canada V6C 3B6
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(Former Name or Former Address, 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 Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
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(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE 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:
March 13, 2002
Common - 16,042,002 common shares
DOCUMENTS INCORPORATED BY REFERENCE: None.
Transitional Small Business Issuer Format Yes No X
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TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. Financial Statements (unaudited). . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets as of January 31, 2002 and April 30, 2001 (audited). . . . . . . 4
Statements of Operations for the three and nine months ended
January 31, 2002 and 2001, and the period from Inception
(March 24, 2000) through January 31, 2002 . . . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows for the nine months ended January 31,
2002 and 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . 10
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . 12
Item 5. Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . 12
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Company required to be filed with this 10-QSB
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Company.
SLW ENTERPRISES INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
JANUARY 31, 2002
(Unaudited)
3
SLW Enterprises Inc.
(A Development Stage Company)
Interim Balance Sheet
January 31, April 30,
2002 2001
$ $
(unaudited) (audited)
ASSETS
Current Assets
Cash 540 2,255
Prepaid expenses 5,000 -
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Total Assets 5,540 2,255
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable - 4,338
Accrued liabilities 450 750
Due to related party (Note 4) 52,500 35,000
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Total Liabilities 52,950 40,088
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Contingency (Note 1)
Stockholders' Deficit
Common Stock: $0.0001 par value; authorized 100,000,000 common shares;
2,600,000 shares issued and outstanding respectively 260 260
Additional Paid-in Capital 25,740 25,740
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26,000 26,000
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Preferred Stock: $.0001 par value; authorized 20,000,000 preferred shares;
none issued - -
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Deficit Accumulated During the Development Stage (73,410) (63,833)
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Total Stockholders' Deficit (47,410) (37,833)
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Total Liabilities and Stockholders' Deficit 5,540 2,255
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Subsequent Event (Note 6)
(See Accompanying Notes to the Interim Financial Statements)
4
SLW Enterprises Inc.
(A Development Stage Company)
Interim Statements of Operations
(unaudited)
Accumulated From
March 24, 2000
(Date of Inception) Three months ended Nine months ended
to January 31, January 31, January 31,
2002 2002 2001 2002 2001
$ $ $ $ $
Revenue - - - - -
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Expenses
Accounting and legal 24,375 (1,017) - 3,369 500
Bank charges 104 30 15 70 15
Consulting fees 10,000 2,500 5,000 5,000 5,000
License written-off 35,000 - - - -
Office 631 192 - 192 -
Transfer agent and filing fees 3,300 (20) 1,327 946 1,327
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Net loss (73,410) (1,685) (6,342) (9,577) (6,842)
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Net Loss Per Share (Basic and diluted) - - - -
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Weighted Average Number of Shares
Outstanding 2,600,000 1,600,000 2,600,000 1,600,000
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(See Accompanying Notes to the Interim Financial Statements)
5
SLW Enterprises Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
(unaudited)
Nine months ended
January 31,
2002 2001
$ $
Cash Flows Used by Operating Activities
Net loss (9,577) (6,842)
Changes in operating assets and liabilities:
Prepaid expenses (5,000) -
Accounts payable and accrued liabilities (4,638) 1,327
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Net Cash Used by Operating Activities (19,215) (5,515)
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Cash Flows From (Used by) Financing Activities
Common shares issued - 10,000
Advances from a related party 17,500 -
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Net Cash From Financing Activities 17,500 10,000
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Increase (Decrease) In Cash (1,715) 4,485
Cash at Beginning of Period 2,255 -
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Cash at End of Period 540 4,485
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Non-Cash Financing Activities - -
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Supplemental Disclosures
Interest paid - -
Income tax paid - -
(See accompanying Notes to the Interim Financial Statements)
6
SLW Enterprises Inc.
A Development Stage Company)
Notes to the Interim Financial Statements
January 31, 2002
(unaudited)
1. Development Stage Company
SLW Enterprises Inc. herein (the "Company") was incorporated in the State
of Washington, U.S.A. on March 24, 2000. The Company acquired a license to
market and distribute vitamins, minerals, nutritional supplements, and
other health and fitness products in which the grantor of the license
offers these products for sale from various suppliers on their Web Site.
The Company is in the development stage. In a development stage company,
management devotes most of its activities in developing a market for its
products. Planned principal activities have not yet begun. The ability of
the Company to emerge from the development stage with respect to any
planned principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise
any equity financing or sell any of its products at a profit. There is
substantial doubt regarding the Company's ability to continue as a going
concern.
The Company filed an SB-2 Registration Statement with the U.S. Securities
Exchange Commission, which was declared effective on December 7, 2000. The
Company sold and issued 1,000,000 common shares at $0.01 per share for cash
proceeds of $10,000. The Company is listed on the OTC Bulletin Board under
the symbol SLWE.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is April 30.
(b) License
The cost to acquire the License was initially capitalized. The
carrying value of the License was evaluated in each reporting period
to determine if there were events or circumstances that would indicate
a possible inability to recover the carrying amount. Such evaluation
is based on various analyses including assessing the Company's ability
to bring the commercial applications to market, related profitability
projections and undiscounted cash flows relating to each application
which necessarily involves significant management judgment. Where an
impairment loss has been determined the carrying amount is
written-down to fair market value. Fair market value is determined as
the amount at which the License could be sold in a current transaction
between willing parties. The License was written-off to operations due
to the lack of historical cash flow of the License and lack of a
market to resell the License.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(d) Revenue Recognition
The Company will receive from the Grantor of the License, commissions
of one-half of all the profit on all sales made through the Grantor's
Web Site. The commission revenue will be recognized in the period the
sales have occurred. The Company will report the commission revenue on
a net basis as the Company is acting as an Agent for the Grantor and
does not assume any risks or rewards of the ownership of the products.
This policy is prospective in nature as the Company has not yet
generated any revenue.
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2. Summary of Significant Accounting Policies (continued)
(e) Use 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 periods. Actual results could differ from
those estimates.
(f) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
3. License
The Company's asset is a license to market vitamins, minerals, nutritional
supplements and other health and fitness products through the Grantor's Web
Site. The Company desires to market these products to medical
practitioners, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
practitioners, school and other fund raising programs and other similar
types of customers in Montana, North Dakota, South Dakota and Wyoming. The
License was acquired on April 13, 2000 for a term of three years. The
Company must pay an annual fee of $500 for maintenance of the Grantor's Web
Site commencing on the anniversary date. The Grantor of the License retains
50% of the profits.
The Company paid total consideration of $35,000 for the License with a note
payable of $35,000. See Note 4.
The License was written-off to operations due to the lack of historical
cash flow and lack of a market to resell the license.
4. Related Party Transaction
The License referred to in Note 3 was assigned to the Company by the sole
director and President of the Company for consideration of the assumption
of a note payable of $35,000. The License was recorded at the transferors
cost of $35,000 which was also fair market value at the time.
The Grantor of the License is not related to the Company.
The amounts owing to a Company controlled by the President are non-interest
bearing, unsecured and due on demand. On February 21, 2002 these amounts
were repaid from proceeds of a loan provided by a new shareholder. See Note
6.
5. Commitment
The Company entered into a Business Agreement with Magnum Financial Corp.
("Magnum") whereby Magnum was to assist the Company with the approval of
trading on the OTC Bulletin Board. The Company has paid $5,000 upon
acceptance of this agreement and was to pay $5,000 upon listing for trading
on the OTC BB and a further $5,000 three weeks after listing for trading on
the OTC BB. This agreement was cancelled and the amount owing was waived.
8
6. Subsequent Events
On February 1, 2002 pursuant to a Stock Purchase Agreement, a shareholder
and the sole director and officer of the Company sold 1,600,000 shares
being a 61.5% interest in the Company. The purchase price was $139,500 for
the shares and a further $52,500 was loaned to the Company to settle
amounts due to a related party.
The Company intends to acquire HiEnergy Microdevices, Inc. ("HiEnergy"), a
Delaware corporation in the business of developing a proprietary remote
detection technology used for security and industrial control purposes,
which it intends to eventually bring to market. Currently the proposed
structure of the acquisition is still being negotiated between the Company
and HiEnergy but is expected to be finalized prior to the end of March
2002. The acquisition of HiEnergy is anticipated to result in a change in
control of the Company by way of a reverse takeover.
On February 20, 2002, the Board of Directors of the Company approved a
dividend distribution to its shareholders on a 6.17-for-one basis of the
Company's outstanding shares of common stock. The stock dividend entitled
each shareholder of record at the close of business on March 4, 2002 to
receive 5.17 additional shares of common stock for each share owned. The
additional shares were to be distributed by the Company's transfer agent on
March 6, 2002. The Company's common stock was eligible to be quoted on a
post-dividend basis beginning on March 7, 2002.
On February 20, 2002, the Board of Directors of the Company approved the
issuance of up to 1,500,000 shares of common stock (on a post-stock
dividend basis) at $1.00 per share in connection with a private placement
offering to accredited investors under Rule 506 of Regulation D under the
Securities Act of 1933, as amended. The closing of the private placement
offering is contingent upon the closing of the acquisition of HiEnergy by
the Company.
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Item 2. Management's Discussion and Analysis or Plan of Operation
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Except for the historical information presented in this document, the matters
discussed in this Form 10-QSB, and specifically in the "Management's Discussion
and Analysis or Plan of Operation," or otherwise incorporated by reference into
this document contain "forward looking statements" (as such term is defined in
the Private Securities Litigation Reform Act of 1995). These statements can be
identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "intends", "should", or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties. The safe harbor provisions of
Section 21B of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended, apply to forward-looking statements
made by the Company. You should not place undue reliance on forward-looking
statements. Forward-looking statements involve risks and uncertainties. The
actual results that the Company achieves may differ materially from any
forward-looking statements due to such risks and uncertainties. These
forward-looking statements are based on current expectations, and the Company
assumes no obligation to update this information. Readers are urged to
carefully review and consider the various disclosures made by the Company in
this report on Form 10-QSB and in the Company's other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect the Company's business.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the Financial
Statements and accompanying notes and the other financial information appearing
elsewhere in this report.
PLAN OF OPERATION
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During the period from March 24, 2000 through January 31, 2002, the Company has
engaged in no significant operations other than organizational activities,
acquisition of the rights to market Vitamineralherb and preparation for
registration of its securities under the Securities Act of 1933, as amended. No
revenues were received by the Company during this period.
For the current fiscal year
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
shareholders' equity. Consequently, the Company's balance sheet as of January
31, 2002, reflects total assets of $5,540. The Company has incurred a loss of
$93,410 to date. The Company has recorded a prepaid expense, which represents
the prepaid portion of a non-refundable fee of $10,000 paid to Equitrade
Securities Corporation (an investment banking firm) pursuant to an agreement
dated August 9, 2001. The Company received $52,500 in connection with the
acquisition of a controlling interest in the Company, which was used to fund the
operations and repay the note payable of $35,000. This advance is non-interest
bearing, unsecured and due on demand. The Company had $540 in cash at January
31, 2002.
The Company's failure to generate revenues and conduct operations since its
inception raises substantial doubt about the Company's ability to continue as a
going concern.
The original shareholder paid for legal expenses upon inception in the amount of
$16,000 for which she received 1,600,000 shares of common stock of the Company.
The Company filed an SB-2 Registration Statement with the U.S. Securities
Exchange Commission, which was declared effective on December 7, 2000. The
Company sold and issued 1,000,000 common shares at $0.01 per share for cash
proceeds of $10,000. The Company is listed on the OTC Bulletin Board under the
symbol SLWE.
The Company's business plan is to conduct market research within the territory
in which it has the rights to sell the Vitamineralherb.com products to determine
the potential target markets. Based on the market research, the Company will
determine whether to continue to develop a marketing plan and engage in efforts
to sell the products. Based primarily on discussions with the licensor, the
10
Company believes that during its first operational quarter, it will need a
capital infusion of approximately $85,000 to achieve a sustainable sales level
where ongoing operations can be funded out of revenues. The capital infusion is
intended to cover the costs of implementing the business plan. The Company
intends to obtain additional financing through an equity offering or capital
contributions from its shareholders.
On February 20, 2002, Rheal Cote acquired 1,600,000 shares of the Company's
common stock from Suzanne Wood pursuant to a stock purchase agreement signed on
February 1, 2002. Mr. Cote paid a purchase price of $139,500, from his personal
funds, to Suzanne Wood and further paid $52,500, from his personal funds, as a
capital contribution to the Company for the purpose of paying all amounts due
and owing from the Company to Ms. Wood. As of February 20, 2002, the issued and
outstanding securities of the Company consisted of 2,600,000 shares of common
stock, par value $0.0001 per share. Therefore, Mr. Cote beneficially owned
approximately 61.5% of the issued and outstanding common stock of the Company.
Also on February 20, 2002, Ms. Wood resigned as a Director and as President,
Secretary and Treasurer of the Company. Mr. Cote and Barry Alter were appointed
members of the Board of Directors of the Company (the "Board") and Mr. Alter was
appointed the President, Secretary and Treasurer of the Company.
The purpose of acquiring a controlling interest in the Company by Mr. Cote is
(i) to enable him to acquire and continue implementing the current business plan
of the Company, which currently involves conducting market research to assess
the market for distribution of vitamins, minerals and supplements in a defined
territory through the Internet, and (ii) to fulfil his obligations under the
letter of intent, dated January 24, 2002, executed by Mr. Cote and HiEnergy
Microdevices, Inc. ("HiEnergy") to effect the Company's acquisition of HiEnergy,
a Delaware corporation in the business of developing a proprietary remote
detection technology used for security and industrial control purposes, which it
intends to eventually bring to market.
The letter of intent contemplated that the acquisition of HiEnergy would be
conducted through a reverse triangular merger (the "Merger") whereby a wholly
owned subsidiary of the Company would merge with and into HiEnergy and the
Company would issue its common stock to the shareholders of HiEnergy in exchange
for all of the outstanding common stock of HiEnergy. Since execution of the
letter of intent, uncertainty has developed as to the ability to consummate the
contemplated Merger in compliance with an exemption from the registration
requirement of the Securities Act of 1933, as amended. The parties are
currently discussing alternative transaction structures to effect the business
combination.
In connection with the anticipated acquisition of HiEnergy, the parties have
agreed that the current shareholders of HiEnergy will receive a controlling
interest in the Company equal to approximately 70.5% of its issued and
outstanding common stock based on a capitalization of 26,000,000 shares. In
connection with that objective, Mr. Cote plans to relinquish his control
position in the Company subject to the taking effect of the business combination
between the Company and HiEnergy by resigning as a director and surrendering to
the Company all but 300,000 shares of the common stock of the Company that he
holds.
The Company will need additional capital to carry out its business plan. The
Company has commenced a private placement offering of up to 1,500,000 shares of
common stock at $1.00 per share. The closing of the private placement offering
is contingent upon the closing of the acquisition of HiEnergy by the Company.
There can be no assurance that any of the funds that the Company needs will be
available to it. The Company currently has no commitments for capital
expenditures.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
None.
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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.
SLW ENTERPRISES INC.
Date: March 13, 2002 By: /s/ Barry Alter
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Barry Alter
President, Secretary, Treasurer and
Director
13