UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number: 000-32249
ARMOR ELECTRIC INC.
(Exact name of small business issuer as specified in its charter)
Nevada 65-0853784
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
201 Lomas Santa Fe, Suite #420, Solana Beach, CA 92075
(Address of principal executive offices)
(858) 720-0123
(Issuer's telephone number)
Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
Common Stock, $0.001 par value 39,631,681
(Class) (Outstanding as of May 20, 2005)
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
ARMOR ELECTRIC INC.
FORM 10-QSB
INDEX
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets March 31, 2005(unaudited)
and June 30, 2004 ..................................................F-1
Unaudited Condensed Statements of Operations for the
three months ended March 31, 2005 and 2004..........................F-2
Unaudited Condensed Statements of Cash Flows for the
three months ended March 31, 2005 and 2004..........................F-3
Consolidated Statement of Stockholders' equity for the period from
June 5, 1998 (Inception) to March 31, 2005 (unaudited)..............F-4
Notes to Financial Statements (unaudited)...........................F-5
Item 2. Management's Discussion and Analysis or Plan of Operation.............3
Item 3. Controls and Procedures...............................................5
Part II OTHER INFORMATION
Item 1. Legal Proceedings.....................................................6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds...........6
Item 3. Defaults upon Senior Securities.......................................6
Item 4. Submission of Matters to a Vote of Security Holders...................6
Item 5. Other Information.....................................................6
Item 6. Exhibits and Reports on Form 8-K......................................7
Signatures.....................................................................7
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ARMOR ELECTRIC, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
MARCH 31 JUNE 30,
2005 2004
---------- ----------
ASSETS (unaudited)
------
CURRENT ASSETS
Cash $ 167,101 $ --
Funds held in trust by related party 553 553
---------- ----------
Total Current Assets 167,654 553
OTHER CURRENT ASSETS
Contract Rights, at cost 200,000 --
---------- ----------
Total Other Current Assets 200,000 --
$ 367,654 $ 553
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 527 $ 527
Accounts payable-related parties 15,867 15,867
Accrued payroll 20,925 11,000
---------- ----------
Total Current Liabilities 37,319 27,394
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.001, 10,000,000 shares
authorized, none issued
Common stock, par value $.001, 100,000,000 shares
authorized, 34,717,333 issued and outstanding - 2004
40,111,681 issued and outstanding - 2005 40,111 34,717
Paid-in capital 493,609 6,873
(Deficit) accumulated during development stage (203,385) (68,431)
---------- ----------
Total Stockholders' Equity (Deficit) 330,335 (26,841)
---------- ----------
$ 367,654 $ 553
========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-1
ARMOR ELECTRIC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
CUMULATIVE
THREE MONTHS ENDED NINE MONTHS ENDED FROM
MARCH 31 MARCH 31 JUNE 5, 1998
--------------------------- --------------------------- (INCEPTION) TO
2005 2004 2005 2004 MARCH 31, 2005
------------ ------------ ------------ ------------ ------------
REVENUE $ -- $ -- $ -- $ -- $ --
EXPENSES:
General and administrative:
Consulting Fees 62,596 -- 62,596 -- 62,596
Other 18,584 2,385 33,938 5,956 102,369
Research & Development 38,420 -- 38,420 -- 38,420
------------ ------------ ------------ ------------
Total Expenses 119,600 2,385 134,954 5,956 203,385
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (119,600) $ (2,385) $ (134,954) $ (5,956) $ (203,385)
============ ============ ============ ============ ============
NET (LOSS) PER COMMON SHARE-BASIC * * * *
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 38,401,681 13,717,333 36,168,560 13,717,333
============ ============ ============ ============
* less than $.01 per share
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-2
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
CUMMULATIVE
NINE MONTHS ENDED FROM
MARCH 31 JUNE 5, 1998
----------------------- (INCEPTION) TO
2005 2004 MARCH 31, 2005
---------- ---------- ----------
OPERATING ACTIVITIES:
Net (loss) from operations $(134,954) $ (5,956) $(203,385)
Contributions to capital 8,130 900 12,930
Common Stock issued for services 35,000 -- 50,010
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Changes in:
Trust funds -- -- (553)
Accounts payable -- 71 527
Accrued payroll 9,925 1,875 20,925
---------- ---------- ----------
Net Cash provided (Used) by Operating Activities (81,899) (3,110) (119,546)
---------- ---------- ----------
INVESTING ACTIVITIES:
Contract rights acquired at cost (200,000) -- (200,000)
---------- ---------- ----------
Net Cash provided (Used) by Investing Activities (200,000) -- (200,000)
---------- ---------- ----------
FINANCING ACTIVITIES:
Proceeds from sale of common stock, net 449,000 -- 464,240
Accounts payable - related parties -- 3,110 22,407
---------- ---------- ----------
Net Cash provided by Financing Activities 449,000 3,110 486,647
---------- ---------- ----------
NET INCREASE IN CASH 167,101 -- 167,101
CASH, beginning of period -- -- --
---------- ---------- ----------
CASH, end of period $ 167,101 $ -- $ 167,101
========== ========== ==========
SUPPLEMENTAL CASH FLOWS INFORMATION
Common stock issued in exchange for
shareholder loan $ 6,540
==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(DEFICIT)
ACCUMULATED
COMMON STOCK DURING THE
--------------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------ ------------ ------------ ------------ ------------
Balances, inception (UNAUDITED) -- $ -- $ -- $ -- $ --
Shares issued January 10, 1998, for services
at $.001 per share 10,500,000 10,500 (5,250) -- 5,250
Net (loss) for the year -- -- -- (5,250) (5,250)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 1998 (UNAUDITED) 10,500,000 10,500 (5,250) (5,250) --
Shares issued August 31, 1998, for cash
at $.001 per share 42,000 42 168 -- 210
Shares issued August 31, 1998, for services
at $.001 per share 1,952,000 1,952 7,808 -- 9,760
Shares issued September 30,1998, for cash
at $.001 per share 2,000 2 8 -- 10
Shares issued October 12,1998, for cash
at $.001 per share 4,000 4 16 -- 20
Net( loss) for the year -- -- -- (10,000) (10,000)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 1999 (UNAUDITED) 12,500,000 12,500 2,750 (15,250) --
Shares issued February 8, 2000 for cash
at $.001 per share 150,000 150 14,850 -- 15,000
Net (loss) for the year -- -- -- (5,275) (5,275)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 2000 (UNAUDITED) 12,650,000 12,650 17,600 (20,525) 9,725
(AUDITED)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Net (loss) for the year -- -- -- (14,155) (14,155)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 2001 12,650,000 12,650 18,800 (34,680) (3,230)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Net (loss) for the year -- -- -- (4,272) (4,272)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 2002 12,650,000 12,650 20,000 (38,952) (6,302)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Shares issued December 18, 2002 @ $.001
per share for shareholder 1,067,333 1,067 5,473 -- 6,540
Net (loss) for the year -- -- -- (11,110) (11,110)
------------ ------------ ------------ ------------ ------------
BALANCES, JUNE 30, 2003 13,717,333 13,717 26,673 (50,062) (9,672)
Contributed capital-office overhead -- -- 1,200 -- 1,200
Shares issued April 27, 2004 @ $.001
per share to acquire marketing rights 21,000,000 21,000 (21,000) -- --
Net (loss) for the year -- -- -- (18,369) (18,369)
------------ ------------ ------------ ------------ ------------
F-4a
BALANCES, JUNE 30, 2004 34,717,333 34,717 6,873 (68,431) (26,841)
(UNAUDITED)
Contributed capital-operating expenses -- -- 8,130 -- 8,130
Shares issued August 2, 2004 @ $.23
for marketing services 502,000 502 114,958 -- 115,460
Cancellation of shares issued for marketing
services December 17, 2004 (502,000) (502) (114,958) -- (115,460)
Shares issued January 21, 2005 @ $.115
per share for legal services provided 304,348 304 34,696 -- 35,000
Shares issued February 4, 2005 for cash
at $.10 per share 300,000 300 29,700 -- 30,000
Shares issued February 8, 2005 for cash
at $.10 per share 1,050,000 1,050 103,950 -- 105,000
Shares issued February 9, 2005 for cash
at $.10 per share 100,000 100 9,900 -- 10,000
Shares issued February 16, 2005 for cash
at $.10 per share 350,000 350 34,650 -- 35,000
Shares issued February 17, 2005 for cash
at $.10 per share 350,000 350 34,650 -- 35,000
Shares issued February 18, 2005 for cash
at $.10 per share 100,000 100 9,900 -- 10,000
Shares issued February 20, 2005 for cash
at $.10 per share 100,000 100 9,900 -- 10,000
Shares issued February 22, 2005 for cash
at $.10 per share 2,600,000 2,600 257,400 -- 260,000
Shares issued February 28, 2005 for cash
at $.10 per share 100,000 100 9,900 -- 10,000
Shares issued March 4, 2005 for cash
at $.10 per share 40,000 40 3,960 -- 4,000
Stock offering costs -- -- (60,000) -- (60,000)
Net (loss) for nine months -- -- -- (134,954) (134,954)
------------ ------------ ------------ ------------ ------------
BALANCES, MARCH 31, 2005 (UNAUDITED) 40,111,681 $ 40,111 $ 493,609 $ (203,385) $ 330,335
============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4b
ARMOR ELECTRIC, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation of the
Company's financial position as of March 31, 2005 and the results of its
operations for the three and nine months ended March 31, 2005 and 2004 and cash
flows for the nine months ended March 31, 2005 and 2004 have been made.
Operating results for the nine months ended March 31, 2005 are not necessarily
indicative of the results that may be expected for the year ended June 30, 2005.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Form 10-KSB
for the year ended June 30, 2004.
NOTE 2. COMMON STOCK AND WARRANTS
The Company had two private placements of common stock during the current
quarter totaling approximately $509,000, representing the sale of 5,090,000
shares of common stock . Total offering costs in connection therewith were
$60,000 of which $35,000 was paid for by common stock issuance of 304,348 shares
at a value of $.115 per share, and the balance was paid for in cash.
In connection with the above private placements 5,599,000 stock purchase
warrants were issued including 509,000 as a finder's fee to Granite Financial
Group, Inc. The warrants have an exercise price of $.15 per share during the
term of their existence which expires on February 22, 2012.
NOTE 3. CONTRACT RIGHTS ACQUIRED
In addition to the 21,000,000 shares issued in April 2004, recorded for no
value, to acquire Contract Rights pertaining to a number of agreements relating
to the final development and sales of electric motorized propulsion, the Company
was also contingently obligated to pay $650,000 upon receiving adequate
financing, to the same Company. On March 1, 2005, the Company, paid $200,000
towards this contingent obligation which was capitalized under the caption of
Contract Rights. The balance when paid will be added to this account. Since,
Contract Rights were determined to have an indefinite life, there is no
amortization recorded. Accordingly, Contract Rights will be subjected to
impairment testing each reporting period.
F-5
The Company also began incurring consulting fees during the current quarter in
connection with the search for strategic partners who could facilitate the
Company's business plan, including financing for orders to be placed with
foreign vendors and development of dealerships for product sales.
NOTE 4. PROPOSED FILING OF REGISTRATION STATEMENT
The Company agreed to file a registration statement on form SB-2 to register the
underlying security as a requirement in obtaining its two private placements
during the current quarter. This registration statement was filed on May 11,
2005.
NOTE 5. RESEARCH AND DEVELOPMENT
We expense research and development costs as they are incurred. Research and
Development costs are included in the statement of operations caption of the
same name. Of this amount approximately $5,000 was paid for outside services
related to the development of new technology, with the remainder of the amount
paid for prototypes of the existing technology, which was included within the
Contract Rights capitalized during the quarter.
ITEM 2. Plan of Operation
Now that the Company has received financing under two private placements of
common stock during the current quarter, it is proceeding to development the
business opportunity which it finalized in April 2004, which was the acquisition
of certain contracts rights leading to the ultimate set up of dealerships for
the sale of electric powered vehicles. This plan which is currently under way
involves obtaining strategic partners with whom the Company can arrange
financing for its products and provide marketing for the set up of a
distribution network for product sales. The Company has also commenced research
and development on new technology which could lead to additional products for
the Company to sell.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from historical results and
percentages and results anticipated by the forward-looking statements. The
Company has sought to identify the most significant risks to its business, but
cannot predict whether or to what extent any of such risks may be realized nor
can there be any assurance that the Company has identified all possible risks
that might arise. Investors should carefully consider all of such risks before
making an investment decision with respect to the Company's stock.
Overview
The Company is a development stage company in the business of developing certain
distribution rights to electric vehicle and electric propulsion systems.
Plan of Operation
The Company has had no operations since inception and is financially dependent
on its shareholders, who have financed its existence to date.
For the near term, the Company continues to develop the rights it was assigned
by Nova Electric Systems Inc., ("Nova") through an asset purchase agreement
dated April 27, 2004. Nova is in the business of developing and marketing
electronic propulsion and battery power systems for electric powered vehicles.
Under the asset purchase agreement with Nova, the Company issued 21,000,000
Common Shares in the capital stock of the Company. Under the asset purchase
agreement, the Company also agreed to pay, upon obtaining financing, $650,000
USD. The Company had not paid or recorded any of this contingent consideration
pursuant to the asset purchase agreement as of the end of the quarter ended
December 31, 2004 because it had not yet acquired the necessary financing, as
provided for in the agreement.
Financing for the above additional consideration was arranged during the first
calendar quarter of 2005 through two private placements of the Company's common
stock totaling $520,000. Substantial stock offering and legal fees in connection
with this financing were also incurred. The stock sold through the two private
placements are the shares that are being registered in this prospectus.
3
Through an agreement between Nova and NuAge Electric Inc., Armor holds the
rights for the use of certain proprietary technology to install electric
propulsion systems on a variety of electric powered vehicles to include, but not
limited to, mountain bikes, regular cycles, children's cycle toys and riding
vehicles, recreation ATV units, scooters, motorcycles, go-karts, NEV
(Neighborhood Electric Vehicle) cars, race cars, regular passenger cars, buses
and all other types of two and three wheeled vehicles, water craft and in
addition, a wide variety of other vehicles and products.
Armor has also acquired the rights from NuAge Electric Inc., to certain
agreements between NuAge and the largest bicycle manufacturer in the world, Hero
Cycles in India, for the joint venture to manufacture and distribute many of the
electric powered two and three wheel vehicles in India and for distribution from
the Hero manufacturing facilities worldwide.
The Nova Business Plan details a number of electric powered vehicles built as
prototype working models at the Las Vegas facility and it is the intent of Armor
to work closely with their strategic partner, NuAge to continue to develop a
wide variety of commercially viable vehicles and products there.
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ----------------------------------------------
The Company has incurred operating losses since its inception related primarily
to development general administration costs. During the three months ended March
31, 2005, the Company posted a loss of $ 119,600 compared to a loss of $ 2,385
for the three months ended March 31, 2004.
The Company's main focus during the three months ended March 31, 2004 has been
continued development of the marketing rights acquired from Nova Electric
Systems Inc. and financing of the Agreement used to obtain those rights.
GENERAL & ADMINISTRATIVE EXPENSES
- ---------------------------------
General and administrative expenses increased to $81,180 during the three months
ended March 31, 2005 compared to $2,385 for the three months ended March 31,
2004. The increase is due to the beginning of increased operations within the
Company, including increased Consulting fees.
4
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Since inception, the Company has financed its operations from private financing.
The company has suffered recurring losses from operations but has recently
undergone financing activities and has working capital of $130,334.76 (current
assets less current liabilities).
FINANCING
- ---------
The Company's capital requirements have not been significant in the past but the
Company anticipates it will increase as development and product launch begins.
CASH REQUIREMENTS AND NEED FOR ADDITIONAL FUNDS
To date, the Company has invested approximately $21,000 paid in stock and
$200,000 in acquiring the marketing rights of its product.
In its attempts to develop the Company's marketing strategy and launch a
product, the Company anticipates it will require approximately $1,500,000.00 in
the coming year. To satisfy these cash requirements, the Company will likely
have to raise additional funds in the coming year. There are no assurances that
the Company will be able to obtain the additional financing.
ITEM 3. CONTROLS AND PROCEDURES
The registrant's Principal executive officers and principal financial officer,
based on their evaluation of the registrant's disclosure controls and procedures
(as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of
March 31, 2005 have concluded that the registrants' disclosure controls and
procedures are adequate and effective to ensure that information relating to the
registrants and their consolidated subsidiaries is recorded, processed,
summarized and reported within the time periods specified by the SEC's rules and
forms, particularly during the period in which this quarterly report has been
prepared. The registrant's Principal executive officers and principal financial
officer have also concluded, based on the evaluation described above, that
information required to be disclosed in the reports filed or submitted under the
Exchange Act is accumulated and communicated to the Company's management,
including the chief executive officer and chief financial officer, to allow
timely decisions regarding required disclosure.
The registrants' principal executive officers and principal financial officer
have concluded that there were no changes in our internal controls or in other
factors that have materially affected, or that are reasonably likely to
materially affect, the Company's internal control over financial reporting,
subsequent to March 31, 2005, the date of their most recent evaluation of
such controls.
5
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Between February 8 and April 18, 2005, in private placement transactions under
Regulation D and Regulations S of the SECURITIES ACT, 1933, the Company sold
5,200,000 shares of Common Stock and 5,460,000 common share purchase warrants to
the Selling Security Holders. The warrants have an exercise price of $0.15 and
an expiry date of February 22, 2012. These shares and the shares that will be
issued when and if thee warrants are exercised, are the shares that are being
registered in this prospectus.
Granite Financial Inc. ("Granite") is a broker-dealer who received 260,000 of
the warrants with an exercise price of $0.15 and an expiry date of February 22,
2012 as compensation for acting as a placement agent in the private placement
transactions. Other than the warrants issued to Granite, no brokerage or
finder's fees or commissions were paid by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the private placement transactions.
Gross proceeds to the Company from the private placement transaction was
$520,000. Approximate expenses relating to the transactions are estimated at
$101,662. Therefore, net proceeds are estimated at $418,338. These proceeds will
be used for paying off the amount due under an Acquisition Agreement with Nova
Electric, Inc. and to pay operating expenses.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1.1(1) Articles of Incorporation dated June 5, 1998
3.1.2(1) Articles of Amendment dated August 31, 1999
3.1.3 (2) Articles of Amendment dated June 4, 2004
3.2(1) Bylaws 31.1 Section 302 Certification
32.1 Section 906 Certification of CEO
32.2 Section 906 Certification of CFO
------------------------------------
(1) Previously filed as an exhibit to the Company's Form 10-SB as filed on
January 6, 2003
(2) Previously filed as an exhibit to the Company's Form 10-KSB as filed on
October 15, 2004
b) The following current report on Form 8-K was filed during the period
ended March 31, 2005:
On March 9, 2005, the Company filed a report on Form 8-K under Item 5, and 7
disclosing that it had entered into private placement transactions
with various purchasers pursuant to section 4(2) of the Securities Act and
Rule 506 thereof, and an offering under Regulation S pursuant to rules 901
to 905 of the Securities Act.
On the same Form 8-K, the Company further announced that it has been approved
for listing in Standard & Poor's Corporation Records of publicly traded
companies.
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.
Date: May 20, 2005 ARMOR ELECTRIC INC.
/S/ MERRILL MOSES
------------------------------------
Merrill Moses
President
7