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: December 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)
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:
Common Stock, $0.001 par value 40,371,681
(Class) (Outstanding as of December 31, 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)
Consolidated Condensed Balance Sheets
December 31, 2005 (unaudited) and June 30, 2005 (restated) ..................................F-1
Unaudited Consolidated Condensed Statements of Operations for
the three and six months ended -December 31, 2005, for three
and six months ended December 31, 2004 and cumulative
from inception on October 29, 2003 through December 31, 2005 .................................F-2
Unaudited Consolidated Condensed Statements of Cash Flows for
the six months ended December 31, 2005, for six months ended
December 31, 2004 and cumulative
from inception on October 29, 2003 through December 31, 2005..................................F-3
Consolidated Condensed Statements of Stockholders' equity for the period from
inception on October 29, 2003 through December 31, 2005 (unaudited)...........................F-4
Notes to Consolidated Financial Statements (unaudited)..........................................F-5
Item 2. Management's Discussion and Analysis or Plan of Operation................................3
Item 3. Controls and Procedures..................................................................4
Part II OTHER INFORMATION
Item 1. Legal Proceedings........................................................................5
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..............................5
Item 3. Defaults upon Senior Securities..........................................................5
Item 4. Submission of Matters to a Vote of Security Holders......................................5
Item 5. Other Information........................................................................5
Item 6. Exhibits and Reports on Form 8-K.........................................................5
Signatures........................................................................................6
2
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, JUNE 30,
2005 2005
------------- -------------
(unaudited) (restated)
ASSETS
------
Current Assets
Cash in bank $ 10,103 $ 107,700
Prepaid Expenses 6,528 --
------------- -------------
$ 16,631 $ 107,700
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 10,282 $ --
State income tax payable -- 1,600
Accrued legal fees-related party -- 10,000
Accrued liquidating damages 64,991 --
Accrued payroll 26,200 13,600
------------- -------------
Total Current Liabilities 101,473 25,200
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 10,000,000
shares authorized, none issued -- --
Common stock, par value $.001, 100,000,000 shares
authorized, 40,671,681 issued and 40,371,681 outstanding 40,671 40,671
Common stock subscription receivable (1,000) (1,000)
Paid in capital 549,927 577,818
(Deficit) accumulated during the development stage (354,144) (235,693)
Shareholder - Advanced royalties (285,795) (264,795)
Shares held in escrow (34,500) (34,500)
------------- -------------
Total Stockholders' Equity (Deficit) (84,841) 82,501
------------- -------------
$ 16,631 $ 107,700
============= =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-1
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS SIX MONTHS CUMULATIVE FROM
ENDED ENDED OCTOBER 29, 2003
DECEMBER 31, DECEMBER 31, (INCEPTION) TO
2005 2004 2005 2004 DECEMBER 31, 2005
------------ ------------ ------------ ------------ -----------------
(RESTATED) (RESTATED)
REVENUES $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ -----------------
EXPENSES
General and administrative:
Consulting Fees -- -- -- -- 58,501
Other 31,954 11,094 112,462 23,199 221,834
Research & Development 4,085 -- 5,989 -- 73,809
------------ ------------ ------------ ------------ -----------------
Total expenses 36,038 11,094 118,451 23,199 354,144
------------ ------------ ------------ ------------ -----------------
NET (LOSS) $ (36,038) $ (11,094) $ (118,451) $ (23,199) $ (354,144)
============ ============ ============ ============ =================
NET (LOSS) PER SHARE * * * *
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 40,371,681 34,717,333 40,371,681 34,717,333
============ ============ ============ ============
* less than $.01 per share
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-2
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
CUMULATIVE FROM
OCTOBER 29,
SIX MONTHS 2003
ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31,
2005 2004 2005
----------------- ----------------- -----------------
(RESTATED)
OPERATING ACTIVITIES
Net (loss) from operations $ (118,451) $ (23,199) $ (354,144)
Adjustments to reconcile net (loss) to net cash
provided (used) by operating activities:
Common Stock issued for Services -- -- 93,501
Contributions to capital 2,100 13,330 69,610
Changes in operating assets and liabilities:
(Decrease) in state income tax payable (1,600) 800 --
Increase in accounts payable 10,282 2,499 9,756
(Decrease) in trust funds -- 553
(Increase) in prepaid expenses (6,528) (6,528)
Increase in accrued payroll 12,600 6,625 16,200
----------------- ----------------- -----------------
Total adjustments 16,854 23,254 183,092
----------------- ----------------- -----------------
NET CASH PROVIDED (USED BY) OPERATING ACTIVITIES (101,597) 55 (171,052)
----------------- ----------------- -----------------
INVESTING ACTIVITIES:
Shareholder advances - Advanced royalties (21,000) -- (285,796)
----------------- ----------------- -----------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (21,000) -- (285,796)
----------------- ----------------- -----------------
FINANCING ACTIVITIES
Proceeds from sale of common stock, net 35,000 -- 477,819
Increase (Decrease) in accounts payable - related party (10,000) -- (10,868)
----------------- ----------------- -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 25,000 -- 466,951
----------------- ----------------- -----------------
NET INCREASE IN CASH (97,597) 55 10,103
CASH, BEGINNING OF PERIOD 107,700 -- --
----------------- ----------------- -----------------
CASH, END OF PERIOD $ 10,103 $ 55 $ 10,103
================= ================= =================
SUPPLEMENTAL CASH INFORMATION
Income Taxes Paid $ 1,600 $ 1,600
================= =================
SUPPLEMENTAL NON-CASH INFORMATION
Common Stock Subscribed,10,000 shares $ 1,000
Common Stock Subscription receivable (1,000)
-----------------
$ --
=================
Common stock issued for legal service retainer
held in escrow, 300,000 shares $ 34,500
=================
Accrued liquidating damages to sharholders $ 64,991 $ 64,991
================= =================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
(Deficit)
Common Accumulated
Common Stock Stock Shares Shareholder During Total
---------------------- Paid-in Subscription Held in Advanced Development Stockholders'
Shares Amount Capital Receivable Escrow Royalty Stage Equity
---------- -------- -------- ----------- --------- ----------- ----------- -----------
Inception,
Oct 30, 2003,
Stock issued
for services
@ $.001 per 1,000 $ 1 $ -- $ -- $ -- $ 1
April 21, 2004
Stock issued
for services
@ $0.001 per
share 20,999,000 20,999 1 21,000
Contributed
Capital 15,232 15,232
Net (Loss),
for the
period ended
April 27, 2004 (37,033) (37,033)
---------- -------- -------- ----------- --------- ----------- ----------- -----------
BALANCE,
APRIL 27, 2004 21,000,000 21,000 15,233 (37,033) (800)
Recapitalization,
April 27, 2004 13,717,333 13,717 (34,558) -- (20,841)
Contributed
Capital 3,308 3,308
Net (loss)
for period (9,308) (9,308)
---------- -------- -------- ----------- --------- ----------- ----------- -----------
BALANCE,
JUNE 30, 2004
(RESTATED) 34,717,333 34,717 (16,017) (46,341) (27,641)
Shares issued
October 15, 2004
@ $0.25 for
marketing
consulting
services 150,000 150 37,350 37,500
Shares issued
January 21,
2005 to escrow
@ $0.115 per
share 300,000 300 34,200 (34,500) --
Shares issued
January 21, 2005
@ $.115 per
share for legal 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
(CONTINUED)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
ARMOR ELECTRIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
(Deficit)
Common Accumulated
Common Stock Stock Shares Shareholder During Total
---------------------- Paid-in Subscription Held in Advanced Development Stockholders'
Shares Amount Capital Receivable Escrow Royalty Stage Equity
---------- -------- -------- ----------- --------- ----------- ----------- -----------
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
Common stock
subscribed,
March 4, 2005 at
$.10 per share 10,000 10 990 1,000
Shares issued
May 20, 2005
for cash at
$.10 per share 100,000 100 9,900 10,000
Common stock
subscription
receivable (1,000) (1,000)
Stock offering
costs (76,182) (76,182)
Shareholder
Advanced
Royalties (264,795) (264,795)
Contributed
Capital 48,970 48,970
Net (loss)
for period (189,352) (189,352)
---------- -------- -------- ----------- --------- ----------- ----------- -----------
BALANCE,
JUNE 30, 2005
(RESTATED) 40,671,681 40,671 577,818 (1,000) (34,500) (264,795) (235,693) 82,501
(UNAUDITED)
Contributed
Capital 2,100 2,100
Adjustment to
Stock offering
costs 35,000 35,000
Liquidating
Damages (64,991) (64,991)
Shareholder
Advanced
Royalties (21,000) (21,000)
Net (loss)
for six months (118,451) (118,451)
---------- -------- -------- ----------- --------- ----------- ----------- -----------
BALANCE,
DECEMBER 31, 2005 40,671,681 $ 40,671 $549,927 $ (1,000) $ (34,500) $ (285,795) $ (354,144) $ (84,841)
========== ======== ======== =========== ========= =========== =========== ===========
(UNAUDITED)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
ARMOR ELECTRIC, INC.
Notes to Financial Statements (unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated 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 December 31, 2005 and the
results of its operations and cash flows for the three and six months ended
December 31, 2005 and 2004 have been made. Operating results for the six months
ended December 31, 2005 are not necessarily indicative of the results that may
be expected for the year ended June 30, 2006.
These consolidated 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, 2005.
On April 27, 2004 Armor acquired all of the issued and outstanding shares of
common stock of Nova Electric, Inc. (Nova, or the Company) a development stage
Nevada Corporation, formed October 29, 2003, in exchange for 21 million
restricted shares of common stock of Armor, pursuant to Section 368 (a) (1) (B)
of the Internal Revenue Code, which provides for a tax-free exchange under that
reorganization provision.
This stock exchange transaction, which is treated as a recapitalization of Nova
for accounting purposes, resulted in a change of control wherein the financial
statements included herein are those of the acquired company, Nova, the
accounting parent, consolidated with, Armor, Nova's accounting subsidiary, as
required for proper financial presentation purposes only. For legal purposes,
Armor is the parent and Nova is the subsidiary.
At the date of the stock exchange, all of the net assets of Armor were acquired
by Nova at fair value which equaled Armor's book value. Nova's fiscal year end
is June 30.
NOTE 2 - SUBSEQUENT EVENTS
JOINT VENTURE AGREEMENT
On January 12, 2006, the Company entered into a Letter of Intent to form a Joint
Venture Company, ( JVC), with Nu Pow'r, LLC (Nu Pow'r) in which Armor will be
responsible for all capitalization and administrative management.
F-5
On January 17, 2006, the Company entered into a Joint Venture Agreement with Nu
Pow'r to form a JVC. The formation agreement includes commitments for
contributions from both Companies. The Company will be responsible for initial
capitalization of $250,000 and on-going responsibility for providing Operational
as well as Research and Development capital as necessary. The agreement also
provides for payments to Nu Pow'r for EPS (Electric Propulsion System)
Technologies totaling $5,000,000 paid to Nu Pow'r in cash payments and
$5,000,000 for 50% equity in the JVC. The payment schedule for the $5,000,000 to
the JVC is as follows; a payment of $50,000 payable on January 13, 2006, this
payment has been made; a payment of $50,000 upon execution of the JVC agreement;
a payment of $150,000 between January 17 and April 1, 2006 as needed for
operations of the JVC.
When all these payments have been made the Company will receive a 25% equity
interest in the JVC, and receive an option to get an additional 25% equity
interest for an additional payment of $250,000. The balance of $4,750,000 (
$4,500,000, respectively) will be paid through a percentage of 25% of gross
profits from sales. The Company will be responsible for Marketing and Sales of
products for the JVC, as well as Administrative services. The agreement also
provides for profit distributions for a specific contract identified as "BIMO".
Net profit distributions from BIMO will be split 33.33% each between Nu Pow'r,
Pinstripe Financial LLC (Pinstripe), a related party from whom the initial
funding for the JVC will be derived, and the Company. All other net profits and
net losses will be divided as to the equity interest owned at the time of
distribution by the Joint Venture parties.
The JVC may be cancelled at any time by the mutual consent of all Joint
Venturers.
F-5
ITEM 2. 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 considered a development stage company in the business of
developing and marketing electronic propulsion and battery power systems for
electric powered vehicles. The costs and expenses associated with the
preparation and filing of this quarterly report and other operations of the
Company have been paid for by private placement financing and loans from
shareholders and officers of the Company.
PLAN OF OPERATION
- ------------------
The Company acquired all the rights held by Nova Electric Systems Inc., (Nova)
when it entered into a stock exchange agreement whereby the Company exchanged
all the outstanding shares of Nova for Company shares.
Nova acquired rights from Nu Age Electric Inc., to certain agreements between Nu
Age and a large manufacturer of bicycles and scooters, 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
proto-type working models at the Las Vegas facility and the intent of Nova to
continue to develop a wide variety of commercial viable vehicles and products
here.
Nova will also work closely with their strategic partner, Nu Age Electric Inc.,
who has developed the agreements with Hero Cycles for manufacturing
and sales capabilities but also with other additional sales distributorships for
these electric powered products in the countries of Brazil, Mexico, Chile,
Germany, Italy, the Caribbean, Canada, the USA and other exceptional locations.
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- -----------------------------------------------
The Company has incurred operating losses since its inception related primarily
to development and general administration costs. During the three months ended
December 31, 2005, the Company posted a loss of $36,038 and the Company has
posted a cumulative loss of $354,144 since inception
The Company's main focus during the three months ended December 31, 2005 has
been continued development of the marketing rights acquired from Nova Electric
Systems Inc.
GENERAL & ADMINISTRATIVE EXPENSES
- ----------------------------------
General and administrative expenses were $31,954 during the three months ended
December 31, 2005, The Company anticipates this will increase as operations
increase.
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------
Since inception, the Company has financed its operations from private financing.
The company has suffered recurring losses from operations and has a working
capital deficiency of $84,842(current assets less current liabilities) as of
December 31, 2005.
3
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
In order to develop the Company's marketing strategy and launch its product, the
Company anticipates it will require approximately $100,000 in the coming year
for general and administrative expenses as well as a minimum of $250,000 to
meets its obligations under the Joint Venture agreement, dated January 17, 2006,
with Nu Pow'r, to earn a 25% interest in the Joint Venture Company (JVC). Beyond
that the Company may earn an additional 25% interest in the JVC upon the payment
of an additional $250,000. However only the initial $250,000 must be paid in
installments by April 1, 2006, the next $250,000 can be paid at any time during
the term of the agreement. The $100,000 for general and administrative expenses
could be provided through additional financing by way of private placements such
as the Company has done in the past. The $250,000 for the JVC will be financed
in cooperation with Pinstripe Financial LLC, which has made a commitment, and
has been rewarded with a percentage of the profits on a certain sales contract
referenced in Joint Venture agreement. The Company is confident that it will
successfully raise the total $250,000 cash payments required under the JV
agreement in cooperation with Pinstripe.
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-14 (c) of the Securities Exchange Act of 1934) as of
December 31, 2005 have concluded that the registrants' disclosure controls and
procedures are adequate and effective to ensure that material 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 registrants' principal executive officers and principal financial officer
have concluded that there were no significant changes in the registrants'
internal controls or in other factors that could significantly affect these
controls subsequent to December 31, 2005 the date of their most recent
evaluation of such controls, and that there was no significant deficiencies or
material weaknesses in the registrant's internal controls.
4
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
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) Reports on Form 8-K filed during the three months ended December 31,
2005.
No Current Reports on Form 8-K were filed during the three months ended
December 31, 2005
5
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: February 21, 2006 ARMOR ELECTRIC INC.
/S/ Merrill Moses
------------------------------------
Merrill Moses
President
6