UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
- --------------------------------------------------------------------------------
(Mark one) [X] Quarterly Report Under Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended February 28, 2003
[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934
For the transition period from ______________ to _____________
- --------------------------------------------------------------------------------
Commission File Number: 333-100110
SimplaGene USA, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 01-0741042
- ---------------------------- ---------------------------
(State of incorporation) (IRS Employer ID Number)
11900 Wayzata Blvd., Suite 100, Hopkins, MN 55305
-------------------------------------------------
(Address of principal executive offices)
(952) 541-1155
(Issuer's telephone number)
- --------------------------------------------------------------------------------
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 X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: March 26, 2003: 1,950,000
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
SIMPLAGENE USA, INC.
(a development stage enterprise)
Form 10-QSB for the Quarter ended February 28, 2003
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 10
Item 3 Controls and Procedures 13
Part II - Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 14
Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002 15
2
PART I
Item 1 - Financial Statements
SIMPLAGENE USA, INC.
(a development stage enterprise)
Balance Sheet
February 28, 2003
(Unaudited)
February 28,
2003
------------
ASSETS
Current Assets
Cash in bank $ 943
--------
Total Assets $ 943
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable - trade $ -
--------
Total Liabilities -
--------
Commitments and Contingencies
Shareholders' Equity
Accounts payable - trade $ -
--------
Commitments and contingencies
Stockholders' equity
Preferred stock - $0.001 par value
10,000,000 shares authorized.
None issued and outstanding. -
Common stock - $0.001 par value.
50,000,000 shares authorized.
1,950,000 shares issued and outstanding 1,950
Additional paid-in capital 17,550
Deficit accumulated during the development stage (18,557)
--------
Total stockholders' equity 943
--------
Total Liabilities and Stockholders' Equity $ 943
========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
SIMPLAGENE USA, INC.
(a development stage enterprise)
Statements of Operations and Comprehensive Loss
Six and Three months ended February 28, 2003 and
Period from August 2, 2002 (date of inception) through February 28, 2003
(Unaudited)
Period from
Six months Three months August 2, 2002
ended ended (date of inception)
February 28, February 28, through
2003 2003 February 28, 2003
--------- --------- ---------
Revenues $ - $ - $ -
Cost of Sales - - -
--------- --------- ---------
Gross Profit - - -
--------- --------- ---------
Operating expenses
Organizational and start-up costs 1,847 1,000 1,847
General and administrative expenses 16,720 4,574 16,720
Depreciation and amortization - - -
--------- --------- ---------
Total operating expenses 18,557 5,574 18,557
--------- --------- ---------
Loss from operations and
before provision for income taxes (18,557) (5,574) (18,557)
Provision for income taxes - - -
--------- --------- ---------
Net Income (18,557) (5,574) (18,557)
Other comprehensive income - - -
--------- --------- ---------
Comprehensive Loss $ (18,557) $ (5,574) $ (18,557)
========= ========= =========
Loss per weighted-average share
of common stock outstanding,
computed on net loss -
basic and fully diluted $ (0.01) nil $ (0.01)
========= ========= =========
Weighted-average number
of common shares outstanding 1,950,000 1,950,000 1,950,000
========= ========= =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
SIMPLAGENE USA, INC.
(a development stage enterprise)
Statements of Cash Flows
Six months ended February 28, 2003
and Period from August 2, 2002 (date of inception) through February 28, 2003
(Unaudited)
Period from
Six months August 2, 2002
ended (date of inception)
February 28, through
2003 February 28, 2003
------------ -------------------
Cash Flows from Operating Activities
Net Loss $(18,557) $(18,557)
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation - -
------------ -------------------
Net cash provided by (used in) operating
activities (18,557) (18,557)
------------ -------------------
Cash Flows from Investing Activities - -
------------ -------------------
Cash Flows from Financing Activities
Proceeds from sale of common stock - 19,500
------------ -------------------
Net cash provided by financing activities - 19,500
------------ -------------------
Increase (Decrease) in Cash and Cash Equivalents (18,557) 943
Cash and cash equivalents at beginning of period 19,500 -
------------ -------------------
Cash and cash equivalents at end of period $ 943 $ 943
============ ===================
Supplemental Disclosures of Interest and
Income Taxes Paid
Interest paid during the period $ - $ -
============ ===================
Income taxes paid (refunded) $ - $ -
============ ===================
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE A - Organization and Description of Business
SimplaGene USA, Inc. (Company) was incorporated on August 2, 2002 under the laws
of the State of Nevada. The Company was formed to market hepatitis B virus (HBV)
genetic data gathered by Ningbo SimplaGene Institute, a Chinese research
institute, to pharmaceutical firms and research organizations. We intend to
market this information on compact disc for use in scientific research and drug
studies. Anticipated uses of this information include, analyzing mechanisms of
viral infection, developing new pharmaceuticals, conducting standardized
testing, and conducting other research. We do not intend to engage in any
research activity and do not believe our business will be subject to any
meaningful government regulation.
The Company has had no substantial operations or substantial assets since
inception. Accordingly, the Company is considered in the development stage.
NOTE B - Preparation of Financial Statements
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of August 31.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Registration Statement Under The Securities Act of
1933 on Form SB-2. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending August 31, 2003.
For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial statements
and makes all operating decisions and allocates resources based on the best
benefit to the Company as a whole.
6
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - Going Concern Uncertainty
As the Company is less than one (1) year old and continues to be in the process
of formalizing its initial business plan and raising capital, the Company is
considered in the development stage and, as such, has generated no significant
operating revenues.
The Company's current management anticipates that the initial capitalization
will be sufficient to maintain the corporate status of the Company in the
immediate future. Because of the Company's lack of operating assets, the
Company's continuance may become fully dependent either future sales of
securities and/or advances or loans from significant stockholders or corporate
officers to provide sufficient working capital to preserve the integrity of the
corporate entity during the development phase.
There is no assurance that the Company will be able to obtain additional funding
through the sales of additional securities or, that such funding, if available,
will be obtained on terms favorable to or affordable by the Company.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
NOTE D - Summary of Significant Accounting Policies
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Organization costs
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
3. Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. At August 31, 2002, the deferred tax asset and deferred tax
liability accounts, as recorded when material to the financial statements,
are entirely the result of temporary differences. Temporary differences
represent differences in the recognition of assets and liabilities for tax
and financial reporting purposes, primarily accumulated depreciation and
amortization, allowance for doubtful accounts and vacation accruals.
As of August 31, 2002, the deferred tax asset related to the Company's net
operating loss carryforward is fully reserved. If these carryforwards are
not utilized, they will begin to expire in 2020.
7
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D - Summary of Significant Accounting Policies - Continued
4. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of August 31, 2002, the Company had no
warrants and/or options outstanding.
NOTE E - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
NOTE F - Income Taxes
The components of income tax (benefit) expense for the six months ended February
28, 2003 and for the period from August 8, 2002 (date of inception) through
February 28, 2003, respectively, are as follows:
Period from
Six months August 2, 2002
ended (date of inception)
February 28, through
2003 February 28, 2003
------------ -------------------
Federal:
Current $ - $ -
Deferred - -
------- ------
- -
------- ------
State:
Current - -
Deferred - -
------- ------
- -
------- ------
Total $ - $ -
====== ======
As of February 28, 2003, the Company has a net operating loss carryforward of
approximately $18,000 to offset future taxable income. Subject to current
regulations, this carryforward will begin to expire in 2023. The amount and
availability of the net operating loss carryforwards may be subject to
limitations set forth by the Internal Revenue Code. Factors such as the number
of shares ultimately issued within a three year look-back period; whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of the carryforwards.
8
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE F - Income Taxes - Continued
The Company's income tax expense for the six months ended February 28, 2003 and
for the period from August 8, 2002 (date of inception) through February 28,
2003, respectively, differed from the statutory rate of 34% as follows:
Period from
Six months August 2, 2002
ended (date of inception)
February 28, through
2003 February 28, 2003
------------ -------------------
Statutory rate applied to income before income taxes $(6,300) $(6,300)
Increase (decrease) in income taxes resulting from:
State income taxes - -
Difference between book method and statutory
recognition differences on organization costs 260 260
Other, including reserve for deferred tax asset
and application of net operating loss carryforward (6,040) (6,040)
------------ -------------------
Income tax expense $ - $ -
============ ===================
Temporary differences, consisting primarily of statutory deferrals of expenses
for organizational costs and statutory differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of February 28, 2003, respectively:
February 28,
2003
------------
Deferred tax assets
Net operating loss carryforwards $ 6,040
Less valuation allowance (6,040)
------------
Net Deferred Tax Asset $ -
============
During the six month period ended February 28,2003, the valuation allowance
increased by approximately $6,040.
NOTE G - Equity Transactions
At its August 2, 2002 capitalization, the Company sold an aggregate 1,950,000
shares of restricted, unregistered common stock to its initial shareholders for
gross proceeds of approximately $19,500.
NOTE H - Subsequent Event
The Company is in the process of managing a self-underwritten public offering of
securities, pursuant to a Form SB-2 Registration Statement under the Securities
Act of 1933. It is offering up to 1,000,000 shares of common stock at a public
offering price of $0.10 per share. This is its initial public offering and there
is currently no public market for the common stock. On April 8, 2003, the
Company deposited payments of $100,000 on subscriptions for 1,000,000 shares of
common stock in its public offering. The Company expects the offering will close
and the net proceeds of the offering will be available for implementing its
operations by the middle of April 2003.
9
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(1)Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: the Company is a development
stage enterprise that has not engaged in any active business operations; the
Company has yet to implement a marketing program for its product; the Company's
business is untried and unproven and it is management's belief alone regarding
the marketability of genomic data that is the basis for embarking on this
business; new technologies and development of new genome data bases could render
our products obsolete; general economic and market conditions; competition; the
ability to protect technology; and other factors referenced in this and previous
filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2)General
SimplaGene USA, Inc. is a Nevada corporation formed on August 2, 2002, to market
hepatitis B virus (HBV) genetic data gathered by Ningbo SimplaGene Institute, a
Chinese research institute, to pharmaceutical firms and research organizations.
We intend to market this information on compact disc for use in scientific
research and drug studies. Anticipated uses of this information include,
analyzing mechanisms of viral infection, developing new pharmaceuticals,
conducting standardized testing, and conducting other research. We do not intend
to engage in any research activity and do not believe our business is subject to
any meaningful government regulation.
Dr. Xinbo Wang, Jingwei Wang, and Jing Deng, who are officers, directors, and
stockholders of SimplaGene USA, are the President, Chief Executive Officer, and
Vice President, respectively, of Ningbo SimplaGene Institute. Further, Dr. Xinbo
Wang is the sole owner of Ningbo SimplaGene Institute.
We are a development stage business and have yet to commence sales operations or
generate any revenue. Our plan is to use the net proceeds of a pending initial
public offering of our common stock to create an e-commerce web site on the
Internet for the product and develop sales materials that can be used in direct
sales efforts with potential customers.
(3)Results of Operations, Liquidity and Capital Resources and Plan of Operation
We are in the development stage and have not generated revenues from our
inception on August 2, 2002 through February 28, 2003. For the period from our
incorporation on August 2, 2002 through February 28, 2003, our activities
related primarily to our incorporation and the preparation and filing of a
Registration Statement under the Securities Act of 1933 on Form SB-2.
Accordingly, our cumulative financial results, from inception to February 28,
2003, are not meaningful as an indication of future operations.
Upon inception, we received $19,500 in net proceeds from our founders and
initial investors. At February 28, 2003, we had approximately $943 in cash and
cash equivalents. To date, we show negative cash flows. We expect losses from
operations and negative cash flow to continue for the foreseeable future. If our
revenues and our spending levels are not adjusted accordingly, we may not
generate sufficient revenues to achieve profitability. Even if we achieve
profitability, we may not sustain or increase such profitability on a quarterly
or annual basis in the future.
10
(4) Plan of Operation
The proposed business of SimplaGene USA is to distribute hepatitis B virus
genetic data owned by Ningbo SimplaGene Institute. Our business will not require
us to engage in any product research or development activity. Our business is
limited to developing and maintaining a sales capability for the hepatitis B
virus data. We have not conducted any market studies or contacted any potential
users to determine whether there is a market for this data product. It is
management's belief alone that there may be a market for this data that serves
as the basis for us embarking on this venture.
We have not engaged in any material operations or generated any revenues.
Following completion of our self- underwritten public offering of our common
stock, we will develop our Internet web site, produce advertising and
promotional materials, and make initial contact with prospective users of the
HBV data we intend to distribute. We do not plan to purchase any computer
equipment with the proceeds of this offering, as Craig Laughlin, a Company Vice
President, has indicated his willingness to allow us to use equipment he owns
personally until we generate revenue from the sale of product and have
sufficient capital to purchase our own. Our proposed business venture has no
other significant capital requirements for equipment to fulfill our business
plan. Our objective is to commence marketing efforts within three to four months
following completion of the offering, so that we can generate revenue to sustain
our operations following completion of the offering. The following chart
illustrates our intended development of the business during the 12 months
following completion of the offering and the estimated cost.
Period Activity Estimated Cost
------ -------- --------------
Three to four months following Engage website designer and create Website design and launch, $3,000
completion of offering website; design and print marketing
brochure based on website design; Marketing brochure and mailing, $14,000
develop internally from Internet and
other reference sources mailing list of
HBV researchers; launch website and mail
brochure to mailing list.
From four months to 12 months Evaluate response to marketing with Website revision, $1,000
following completion of offering respect to both product and pricing.
Make adjustments to marketing Brochure revision and printing, $6,000
approach. Revise website and
marketing materials as needed.
We cannot predict when the first product sale may occur because we will not
determine how customers will receive our product offering until we actually
begin our marketing effort. From the initial rollout we hope to obtain
information on the market for the product and adjust the marketing approach
based on our evaluation of the response, with a view to generating revenue from
sale of the product during the period of six to 12 months following completion
of the offering.
We may consider engaging the services of an independent marketing consultant if,
after the first four to six months of our marketing effort, we believe there is
room for improvement in the response. Based on informal inquiries of the costs
of such services, we believe the cost would be at least $1,000 per month and
could be more depending on the experience and size of the consultant's
organization and the scope of the engagement.
We will rely on third party suppliers to build our website and produce our
marketing materials, subject to the supervision and approval of our executive
officers. We have not entered into an agreement with anyone to perform these
11
services, so our estimates of the cost for these services is based solely on
management's informal investigation of pricing by third party suppliers. Actual
costs may vary, and to the extent such costs significantly exceed our estimates,
we may need to seek additional financing to implement our business or not be
able to implement our business as planned.
We expect our executive officers will initially render services on a part-time
basis as required for the development of our web site and marketing materials,
and make initial contacts with prospective users of the data product. Our
executive officers will provide such services without compensation in
consideration of the benefits they expect to derive as stockholders from
commencement of business operations, and because SimplaGene USA will not have
the capital to pay compensation unless it generates revenue from operations or
obtains additional financing. At such time as we have sufficient capital, we
expect we will enter into formal arrangements to compensate our executive
officers for their services on terms yet to be decided. Furthermore, if we are
successful in establishing meaningful operations, we expect our executive
officers will commit more time to the business and we will evaluate hiring
employees to support the development of our business. Regardless of whether we
are successful, we are required to file certain periodic reports with the
Securities and Exchange Commission, and will retain the services of outside
professionals, such as attorneys and accountants, to assist us with meeting this
obligation. We estimate the cost of these outside services will be at least
$5,000 over the 12 months following the completion of our public offering.
We currently maintain a mailing address at 11900 Wayzata Blvd., Suite 100,
Hopkins, MN 55305, which is the address of Craig Laughlin, a Company Vice
President, director, and stockholder. Other than this mailing address, the
Company does not currently maintain any other office facilities, and does not
anticipate the need for maintaining office facilities at any time in the
foreseeable future. The Company pays no rent or other fees for the use of the
mailing address as these offices are used virtually full-time by other
businesses and ventures of Mr. Laughlin.
It is likely that the Company will not establish an office until we are
successful in establishing meaningful operations. We expect that we will seek
and lease space suitable for our needs at a future date; however, it is not
possible, at this time, to predict what arrangements will actually be made with
respect to future office facilities or what the financial impact of any future
lease obligation may be.
Under our distribution agreement with Ningbo SimplaGene Institute, we hold the
exclusive right to distribute the data product in the United States, Canada, and
Mexico. Ningbo SimplaGene Institute has not entered into a distribution
agreement with any one else within or outside our territory, so prospective
users cannot obtain the product from any other source. We purchase the product
at a 30% discount to the actual sale price of the product license and renewals
we receive from a customer. We expect to offer the data product to prospective
users at $50,000, which includes the current version of the hepatitis B virus
data files and any updates within one year of initial purchase without
additional charge. After the first year, users must pay an annual fee of $10,000
to continue to use the product and receive additional updates. Ningbo SimplaGene
Institute is not aware of any other company selling viral genomic information,
so it has no basis for setting the price point for its data product on the basis
of similar products in the market. Consequently, the pricing was determined
arbitrarily, so it is possible that Ningbo SimplaGene Institute will adjust the
pricing based on the response to our marketing effort. Ningbo SimplaGene
Institute sets the product sale price and may adjust the selling price by giving
us 60 days advance notice of the new pricing. We are authorized to offer a 10
percent discount to the selling price set by Ningbo SimplaGene Institute. The
hepatitis B virus data is produced and delivered in the form of a compact disc
with data files. It is the responsibility of Ningbo SimplaGene Institute to
produce and deliver the product to us for redelivery to the end user against
purchase orders we place. Under the terms of our distribution agreement with
Ningbo SimplaGene Institute, it will maintain an inventory of product at our
office and we will not have to pay for any product until it is sold. Therefore,
we will not make any capital expenditures to acquire or maintain inventory. Dr.
Xinbo Wang, Jingwei Wang, and Jing Deng, who are officers, directors, and
stockholder of SimplaGene USA, are the President, Chief Executive Officer, and
Vice President, respectively, of Ningbo SimplaGene Institute. Further, Dr. Xinbo
Wang is the sole owner of Ningbo SimplaGene Institute.
We intend to meet our initial capital needs with the proceeds of our
self-underwritten public offering of securities, pursuant to a Form SB-2
Registration Statement under the Securities Act of 1933, for up to 1,000,000
shares of common stock at $0.10 per share. We believe the proceeds of the
offering will be adequate to fund our capital requirements for twelve months
12
following completion of the offering. If within that period we are not
successful in generating revenues that will sustain our operations, we will need
to obtain additional debt or equity financing to remain in operation. We have
not presently identified any sources of additional financing should that become
necessary, so we cannot predict whether additional financing will be available
on terms we find acceptable. If additional financing is needed and cannot be
obtained, we would likely be forced to curtail or terminate our operations. In
these circumstances, SimplaGene USA would not have any working capital, so it is
not expected that it would pursue participation in any other business venture,
whether through merger, purchase, or otherwise. Consequently, management may,
depending on the cost involved, elect to dissolve the corporate existence of
SimplaGene USA or simply allow it to lay dormant, but in either case your
investment in SimplaGene USA would be worthless.
Item 3 - Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer along with the Company's Chief Financial Officer. Based upon
that evaluation, the Company's Chief Executive Officer along with the Company's
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.
PART II
Item 1 - Legal Proceedings:
None
Item 2 - Changes in Securities:
On January 10, 2003, the U. S. Securities and Exchange Commission declared the
Company's Registration Statement Under The Securities Act of 1933 effective.
This document registered up to 1,000,000 shares of common stock for sale at
$0.10 per share. As of the date of this filing, the Company is self-underwriting
this offering and has not closed any portion of the offering.
Item 3 - Defaults on Senior Securities:
None
13
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
99.1 Certifications Pursuant to 18 USC, Section 1330, as adopted pursuant
to Section 906 of the Sarbanes- Oxley Act of 2002
Reports on Form 8-K
None
- --------------------------------------------------------------------------------
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.
SimplaGene USA, Inc.
Dated: April 14, 2003 /s/ Xinbo Wang
------------------------------------
Xinbo Wang
President and
Chief Executive Officer
Dated: April 14, 2003 /s/ Craig S. Laughlin
-----------------------------------
Craig S. Laughlin
Vice President and
Principal Financial and Accounting Officer
14
Certification Pursuant to 18 USC, Section 1350,
as Adopted Pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of SimplaGene USA, Inc. (Registrant) on
Form 10-QSB for the quarter ended February 28, 2003, as filed with the
Securities and Exchange Commission, on the date hereof, I, Xinbo Wang, Chief
Executive Officer of the Company, certify to the best of my knowledge, pursuant
toss.302 of the Sarbanes-Oxley Act of 2002, that:
1) I have reviewed this Quarterly Report on Form 10-QSB of SimplaGene USA,
Inc. for the quarter ended February 28, 2003.
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, if any, 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
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, if any, 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 functions):
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, if any, 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.
/s/ Xinbo Wang Dated: April 14, 2003
- --------------
Xinbo Wang
Chief Executive Officer
15
Certification Pursuant to 18 USC, Section 1350,
as Adopted Pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of SimplaGene USA, Inc. (Registrant) on
Form 10-QSB for the quarter ended February 28, 2003, as filed with the
Securities and Exchange Commission, on the date hereof, I, Craig S. Laughlin,
Chief Financial Officer of the Company, certify to the best of my knowledge,
pursuant toss.302 of the Sarbanes-Oxley Act of 2002, that:
1) I have reviewed this Quarterly Report on Form 10-QSB of SimplaGene USA,
Inc. for the quarter ended February 28, 2003.
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, if any, 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
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, if any, 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 functions):
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, if any, 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.
/s/ Craig S. Laughlin Dated: April 14, 2003
- ---------------------
Craig S. Laughlin
Chief Financial Officer
16