U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarter ended February 28, 2001
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[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to __________________
Commission File No. 0-32043
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TexMont, Inc.
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(Name of Small Business Issuer in its Charter)
Nevada 76-0594908
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(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
#201 - 1166 Alberni Street
Vancouver, BC V6C 3Z3 Canada
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(Address of Principal Executive Offices)
(604) 689-3141
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Issuer's Telephone Number
N/A
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(Former Name or Former Address, if changed since last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No ___ (2) Yes X No ___
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(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date:
May 16, 2001
Common - 2,500,000 shares, par value $0.001 per share, outstanding
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item
6 of this Report.
Transitional Small Business Issuer Format Yes X No ___
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TexMont, Inc.
FORM 10-QSB
For the quarter ended February 28, 2001
INDEX Page
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Part I Financial Information
Item 1. Financial Statements
Balance Sheets ............................................... F-1
Statements of Operations ..................................... F-2
Statements of Cash Flows ..................................... F-3
Notes to the Financial Statements ............................ F-4
Item 2. Management's Discussion and Analysis or Plan of Operation ........ F-6
PART II - Other Information ................................................ F-7
SIGNATURES ................................................................. F-8
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Company required to be filed with this 10-QSB
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Company.
TexMont, Inc.
(A Development Stage Company)
Interim Financial Statements
February 28, 2001
(Unaudited)
TexMont, Inc.
(A Development Stage Company)
Balance Sheets
(expressed in U.S. dollars)
February 28, May 31,
2001 2000
$ $
(unaudited) (audited)
Asset
License (Note 3) - -
Liabilities and Stockholders' Equity
Current Liabilities - -
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Contingent Liability (Note 1)
Stockholders' Equity (Deficit)
Common Stock, 10,000,000 shares authorized with a par value of $0.001; 2,500,000
shares issued and outstanding 2,500 2,500
Additional Paid-in Capital 1,787 1,787
Deficit Accumulated During the Development Stage (4,287) (4,287)
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- -
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- -
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F-1
TexMont, Inc.
(A Development Stage Company)
Statements of Operations
(expressed in U.S. dollars)
Accumulated
From
June 25,
Three Nine 1998
Months Months (Date of
Ended Ended Inception)
February 28, February 28, to February 28,
2001 2000 2001 2000 2001
$ $ $ $ $
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue - - - - -
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Expenses
Amortization of license - - - 167 2,000
Audit - - - - 1,500
Organizational expenses - - - - 787
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- - - 167 4,287
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Net Loss for the Period - - - (167) (4,287)
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Loss Per Share - Basic - - - (0.001) -
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Weighted Average Shares Outstanding 2,500,000 2,500,000 2,500,000 2,500,000 -
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F-2
TexMont, Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
Nine months ended
February 28,
2001 2000
$ $
(unaudited) (unaudited)
Cash Flows to Operating Activities
Net loss for the period - (167)
Less non-cash working capital items - 167
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Net Cash Used by Operating Activities - -
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Change in cash - -
Cash - beginning of period - -
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Cash - end of period - -
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Non-Cash Financing Activities - -
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Supplemental Disclosures
Interest paid - -
Income tax paid - -
F-3
TexMont, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(expressed in U.S. dollars)
1. Development Stage Company
TexMont, Inc. herein (the "Company") was incorporated in the State of
Nevada, U.S.A. on June 25, 1998. The Company acquired a license to market
and distribute a product. As discussed in Note 3, this license is in
jeopardy and the Company has retained the right to sue the vendor.
The Company's new business plan is as a "blank check" company. Under the
Securities Act of 1933, a blank check company is defined as a development
stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies and is issuing "penny stock"
securities.
In a development stage company, management devotes most of its activities
in investigating business opportunities. Planned principal activities have
not yet begun. The ability of the Company to emerge from the development
stage with respect to any planned principal business activity is dependent
upon its successful efforts to raise additional equity financing and find
an appropriate merger candidate. There is no guarantee that TexMont will be
able to raise any equity financing or find an appropriate merger candidate.
There is substantial doubt regarding the Company's ability to continue as a
going concern.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is May 31.
(b) Licenses
Costs to acquire licenses are capitalized as incurred. These costs were
amortized on a straight-line basis over one year.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the periods. Actual results could differ from those
estimates.
(e) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
F-4
3. License
The Company's only asset is a license to distribute and produce an oxygen
enriched water product for remediation of sewage and waste water in septic
tanks and waste water treatment facilities, and for other similar uses, and
the rights accruing from this license. The Company's original business plan
was to determine the feasibility of the sewage and waste remediation
application, and, if proved to be feasible for this application, become a
producer. The Company acquired the three-year license from Mortenson &
Associates on May 28, 1999 by issuing 2,000,000 shares at a fair market
value of $.001 or $2,000. The general partner of Mortenson & Associates is
also a spouse of a former director and officer of the Company. Mortenson &
Associates acquired its right to sublicense Biocatalyst to the Company from
NW Technologies.
The Company filed a Form S-1 Registration Statement with the SEC on July
30, 1999. In December, 1999, David R. Mortenson, Mortenson & Associates'
principal, notified the Company that he was involved in a legal dispute
with NW Technologies, and would be unable to fulfill his obligations under
the license to the Company. As a result, the Company's ability to implement
its business plan was seriously undermined, and on February 15, 2000, the
Company requested withdrawal of its Form S-1 Registration Statement. On
February 18, 2000, Mortenson & Associates, the Company, and the Company's
sole shareholder, Michael Jackson, entered into a settlement agreement.
Under the terms of the settlement agreement, Mortenson & Associates'
affiliate, Vitamineralherb.com will grant to Mr. Jackson a license to
distribute vitamins and similar products in part for his agreement not to
pursue his individual claims against Mortenson & Associates. The settlement
agreement provides that Mortenson will prosecute his claims against NW
Technologies diligently, with a goal toward recovering the rights. Pursuant
to the settlement agreement, the Company has retained its right to
prosecute its claims against Mortenson & Associates for breach of contract.
The Company has no plans to pursue a claim at this time.
4. Related Party Transaction
The License referred to in Note 3 was sold to the Company by a partnership
whose general manager is the spouse of a former director and officer of the
Company for consideration of 2,000,000 shares for total fair market
consideration of $2,000. These shares were paid evenly to the ten partners.
F-5
Item 2. Management's Discussion and Analysis or Plan of Operation
This Form 10-QSB contains forward-looking statements. The words "anticipate",
"believe", "expect", "plan", "intend", "estimate", "project", "could", "may",
"foresee", and similar expressions identify forward-looking statements that
involve risks and uncertainties. You should not place undue reliance on
forward-looking statements in this Form 10-QSB because of their inherent
uncertainty. The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto and other financial information
included in this Form 10-QSB. Actual results could differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below.
OVERVIEW
The Company's business plan is to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular acquisition
in mind and has not entered into any negotiations regarding such an acquisition.
Neither the Company's sole officer and director nor any affiliate has engaged in
any negotiations with any representative of any company regarding the
possibility of an acquisition or merger between the Company and such other
company.
Management anticipates seeking out a target company through solicitation. Such
solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Management may engage in such solicitation
directly or may employ one or more other entities to conduct or assist in such
solicitation. Management and its affiliates will likely pay referral fees to
consultants and others who refer target businesses for mergers into public
companies in which management and its affiliates have an interest. Payments
would be made if a business combination occurs, and may consist of cash or a
portion of the stock in the Company retained by management and its affiliates,
or both.
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity which desires to seek the
perceived advantages of a corporation which has a class of securities registered
under the Exchange Act. The Company will not restrict its search to any specific
business, industry, or geographical location and the Company may participate in
a business venture of virtually any kind or nature. Management anticipates that
it will be able to participate in only one potential business venture because
the Company has nominal assets and limited financial resources. See "Item 1,
Financial Statements." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
While the terms of a business transaction to which the Company may be a party
cannot be predicted, it is expected that the parties to the business transaction
will desire to avoid the creation of a taxable event and thereby structure the
acquisition in a "tax-free" reorganization under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations with a target company,
management expects to focus on the percentage of the Company which target
company shareholders would acquire in exchange for their shareholdings in the
target company. Depending upon, among other things, the target company's assets
and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage of ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing, will outline
the manner of bearing costs, including costs associated with the Company's
attorneys and accountants, and will include miscellaneous other terms.
F-6
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at or within a reasonable period of time after
closing of the proposed transaction. The Company is subject to all of the
reporting requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements as
part of or within 60 days following its Form 8-K to be filed with the Securities
and Exchange Commission upon consummation of a merger or acquisition, as well as
the Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.
RESULTS OF OPERATIONS
During the period from June 25, 1998 (inception) through February 28, 2001, the
Company has engaged in no significant operations other than organizational
activities. No revenues were received by the Company during this period.
For the current fiscal year, the Company anticipates incurring a loss as a
result of expenses associated with registration under the Securities Exchange
Act of 1934, and expenses associated with implementing its business plan. The
Company anticipates that until these procedures are completed, it will not
generate revenues other than interest income, if any, and may continue to
operate at a loss thereafter, depending upon the performance of the business.
LIQUIDITY AND CAPITAL RESOURCES
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity. Consequently, the Company's balance sheet as of February
28, 2001 reflects current assets of $-0-.
The Company will carry out its plan of business as discussed above. The Company
cannot predict to what extent its liquidity and capital resources will be
diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.
The Company will need additional capital to carry out its business plan to
engage in a business combination. No commitments to provide additional funds
have been made by management or stockholders. Accordingly, there can be no
assurance that any additional funds will be available on terms acceptable to the
Company or at all. Irrespective of whether the Company's cash assets prove to be
inadequate to meet its operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
F-7
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TexMont, Inc.
Date: May 16, 2001 By: /s/ Michael Jackson
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Michael Jackson, President
F-8