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 quarterly period ended June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from to
Commission File No. 0-31507
PRECOM TECHNOLOGY, INC.
(Name of Small Business Issuer in Its Charter)
Florida
(State or Other Jurisdiction of
Incorporation or Organization)
06-1588136
(I.R.S. Employer
Identification No.)
2001 West Main Street, Suite 208, Stamford, CT 06902
(Address of Principal Executive Offices) (Zip Code)
(203) 961-0306
(Issuer's Telephone Number, Including Area Code)
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: As of August 14, 2001, the Company
had 1,940,820 shares of Common Stock outstanding, $0.001 par value.
PRECOM TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
Part I - FINANCIAL INFORMATION
TABLE OF CONTENTS
Page No.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statement of Changes in Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5 - 6
Notes to Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
PART II - OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Signatures 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The accompanying statements should be read in conjunction with the audited
financial statements for the year ended December 31, 2000. In the opinion of
management, all adjustments (consisting only of normal occurring accruals)
considered necessary in order to make the financial statements not misleading,
have been included. Operating results for the six months ended June 30,
2001 are not necessarily indicative of results that may be expected for
the year ending December 31, 2001. The financial statements
are presented on the accrual basis.
PRECOM TECHNOLOGY, INC.
FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
(UNAUDITED)
TABLE OF CONTENTS
Page No.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' (Deficit) 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 9
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Precom Technology, Inc.
We have reviewed the accompanying balance sheet of Precom Technology, Inc. as of
June 30, 2001 and the related statements of operations and cash flows for the
six months ended June 30, 2001 and 2000 and the statement of stockholders'
(deficit) for the six months ended June 30, 2001 in accordance with Statements
on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants. All information included in these financial
statements is the representation of the management of Precom Technology, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.
As discussed in Note 6, certain conditions indicate that the Company may be
unable to continue as a going concern. The accompanying financial statements do
not include any adjustments to the financial statements that might be necessary
should the Company be unable to continue as a going concern.
We have audited, in accordance with auditing standards generally accepted in the
United States of America, the balance sheet of Precom Technology, Inc. as of
December 31, 2000, and the related statements of operations, stockholders'
equity and cash flows for the year then ended (not presented herein); and in our
report dated January 30, 2001 we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 2000, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.
Moffitt & Company, P.C.
Scottsdale, Arizona
July 30, 2001
PRECOM TECHNOLOGY, INC.
BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000
ASSETS
June 30, December 31,
2001 2000
(Unaudited) (Audited)
----------- ---------
TOTAL ASSETS $ 0 $ 0
========= =========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable
Stock Transfer Agent $ 17,293 $ 17,293
Greenwich Financial Group 59,188 40,200
Legal and Accounting Fees 26,322 9,278
--------- ---------
TOTAL CURRENT LIABILITIES 102,803 66,771
--------- ---------
STOCKHOLDERS' (DEFICIT)
Preferred stock, par value $ 0.001 per share
Authorized 10,000,000 shares
Issued and outstanding - 0 - shares 0 0
Common stock, par value $ 0.001 per share
Authorized 50,000,000 shares
Issued and outstanding - 2,120,850 shares 2,121 2,121
Paid in capital in excess of par value of stock 363,242 363,242
Retained earnings (deficit) (468,166) (432,134)
--------- ---------
TOTAL STOCKHOLDERS' (DEFICIT) (102,803) (66,771)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) $ 0 $ 0
========= =========
See Accompanying Notes and Independent Accountants' Review Report.
2
PRECOM TECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------------ ------------------ ------------------ -----------------
REVENUE $ 0 $ 0 $ 0 $ 0
GENERAL AND ADMINISTRATIVE EXPENSES 9,444 17,200 36,032 17,200
------------- ----------- ------------------ -----------------
NET (LOSS) $ (9,444) $ (17,200) $ ( 36,032) $ ( 17,200)
============= =========== ================== =================
NET (LOSS) PER COMMON SHARE
Basic and diluted $ (.00) $ (.01) $ ( .02) $ ( .01)
============= =========== ================== =================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic and diluted 2,120,850 1,920,822 2,120,850 1,920,822
============= =========== ================== =================
See Accompanying Notes and Independent Accountants' Review Report.
3
PRECOM TECHNOLOGY, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
Paid in
Capital in
Excess of Retained
Preferred Stock Common Stock Par Value Earnings
Shares Amount Shares Amount of Stock (Deficit)
------ ------ ------ ------ -------- ---------
BALANCE, JANUARY 1, 2001 0 $0 2,120,850 $2,121 $363,242 $ (432,134)
NET (LOSS) FOR THE SIX
MONTHS ENDED JUNE 30, 2001 0 0 0 0 0 (36,032)
- -- --------- ------ -------- - >>>>>>>>
BALANCE, JUNE 30, 2001 0 $0 2,120,850 $2,121 $363,242 $ (468,166)
== ========= ====== ======== = ========
See Accompanying Notes and Independent Accountants' Review Report.
4
PRECOM TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------------ ------------------ ------------------ -------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net (loss) $ ( 9,444) $ ( 17,200) $ ( 36,032) $ ( 17,200)
Changes in operating assets and liabilities:
Accounts payable 9,444 17,200 36,032 17,200
------------- ------------------ ------------------ -------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 0 0 0 0
------------- ------------------ ------------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES 0 0 0 0
------------- ------------------ ------------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES 0 0 0 0
------------- ------------------ ------------------ -------------
NET INCREASE IN CASH 0 0 0 0
CASH AT BEGINNING OF PERIOD 0 0 0 0
------------- ------------------ ------------------ -------------
CASH AT END OF PERIOD $ 0 $ 0 $ 0 $ 0
============= ================== ================== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
INTEREST PAID $ 0 $ 0 $ 0 $ 0
============= ================== ================== =============
TAXES PAID $ 0 $ 0 $ 0 $ 0
============= ================== ================== =============
See Accompanying Notes and Independent Accountants' Review Report.
5
PRECOM TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
Precom Technology, Inc. was organized on September 1, 1996, under the laws
of the State of Florida. The Company is inactive and is seeking a merger
candidate. (See Note 9)
Accounting Estimates
--------------------
Management uses estimates and assumptions in preparing financial statements
in accordance with accounting principles generally accepted in the United
States of America. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were used.
Income Taxes
------------
Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the
amount of taxable income and pretax financial income and between the tax
basis of assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in the
financial statements at currently enacted income tax rates applicable to
the period in which the deferred tax assets and liabilities are expected to
be realized or settled as prescribed in FASB Statement No. 109, Accounting
for Income Taxes. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.
Net (Loss) Per Share
--------------------
The Company adopted Statement of Financial Accounting Standards No. 128
that requires the reporting of both basic and diluted earnings (loss) per
share. Basic earnings (loss) per share is computed by dividing net income
(loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss) per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock. In accordance with FASB 128, any anti-dilutive effects on net (loss)
per share are excluded.
NOTE 2 RESTATEMENT OF COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF PAR VALUE OF
STOCK
On February 5, 2001, the Company effected a 1 for 100 reverse stock split
on 19,208,522 shares of stock. On March 19, 2001, the Company then had a
10-1 forward stock split on 192,008 shares.
See Accompanying Notes and Independent Accountants' Review Report.
6
PRECOM TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
(UNAUDITED)
NOTE 2 RESTATEMENT OF COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF PAR VALUE OF
STOCK (CONTINUED)
The stock splits have been retroactively recorded in the financial
statements as if they occurred at the date of inception.
NOTE 3 INCOME TAXES
Significant components of the Company's deferred tax assets and liabilities
are as follows as of June 30, 2001 and 2000:
2001 2000
------------------ ------------------
Deferred tax assets
Net operating losses carryforward $ 63,000 $ 56,009
Less valuation allowance 63,000 56,009
------------------ ------------------
Net deferred tax assets $ 0 $ 0
================== ==================
Deferred tax liabilities $ 0 $ 0
================== ==================
A reconciliation of the valuation allowance
is as follows:
2001 2000
------------------ ------------------
Balance at beginning of period $ 57,959 $ 56,009
Addition for period 5,041 0
------------------ ------------------
Balance at end of period $ 63,000 $ 56,009
================== ==================
NOTE 4 NET OPERATING LOSS CARRYFORWARDS
The Company has the following net operating loss carryforwards at December
31, 2000:
Tax Year Amount Expiration date
-------- ------ ---------------
December 31, 1996 $ 16,703 2016
December 31, 1997 178,200 2017
December 31, 1998 171,241 2018
December 31, 1999 7,249 2019
December 31, 2000 12,396 2020
June 30, 2001 36,032 2021
---------------------
$ 421,821
=====================
Future changes in ownership may limit the ability of the Company to utilize
its net operating loss carryforwards.
See Accompanying Notes and Independent Accountants' Review Report.
7
PRECOM TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
(UNAUDITED)
NOTE 5 PREFERRED STOCK
No rights or preferences have been assigned to the preferred stock.
NOTE 6 GOING CONCERN
These financial statements are presented on the basis that the Company is a
going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. The Company has incurred net losses of $468,166
from inception. In addition, the Company has abandoned all development
activities and has no assets. These factors raise doubt as to the Company's
ability to continue as a going concern.
Management's plans to eliminate the going concern situation include but are
not limited to seeking a merger candidate.
NOTE 7 BUSINESS COMBINATION
In August 2000, the company merged with Provence Capital Corporation, Inc.
and accounted for the transaction as a pooling of interest. The Company
recorded the merger as follows:
Increase in common stock $ 200
Increase in paid in capital in excess of
par value of stock 6,770
The following unaudited information presents certain income statement data
of the separate companies for the period preceding the merger:
2000
----
Net sales
Precom Technology, Inc. $ 0
Provence Capital Corporation, Inc. 0
Net (loss)
Precom Technology, Inc. ( 42,170)
Provence Capital Corporation, Inc. ( 6,970)
There were no material transactions between Precom Technology, Inc. and
Provence Capital Corporation, Inc. prior to the merger. The effects of
conforming Provence Capital Corporation, Inc.'s accounting policies to
those of Precom Technology, Inc. were not material.
See Accompanying Notes and Independent Accountants' Review Report.
8
PRECOM TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
(UNAUDITED)
NOTE 8 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of June 30, 2001 is unaudited. In
management's opinion, such information includes all normal recurring
entries necessary to make the financial information not misleading.
NOTE 9 SHARE EXCHANGE WITH GROUPNOW, INC.
On June 4, 2001, The Board of Directors approved a Share Exchange Agreement
with GroupNow, Inc. and its shareholders to acquire all of the issued and
outstanding stock of GroupNow in exchange for 9,453,017 shares of our
common stock, par value $0.001. This transaction has the effect of a what
is commonly referred to as a "reverse acquisition" in that the Company is
the legal acquirer; however, GroupNow is the accounting acquirer. As a
condition of the Share Exchange Agreement, the Company expects to change
its name to GroupNow, Inc. and reverse split the common stock at a ratio of
1 for 20.
In connection with the legal form of this transaction, GroupNow, Inc, will
become a wholly- owned subsidiary of the Company. For accounting purposes,
the acquisition will be treated as a recapitalization of GroupNow rather
than a business combination. The Share Exchange is expected to close
following the Company's compliance with all federal and state filing
requirements.
See Accompanying Notes and Independent Accountants' Review Report.
9
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Forward-Looking Statements
- --------------------------
Forward-looking statements, based on management's current views and assumptions,
are made throughout the Management's Discussion and Analysis and elsewhere in
this report to stockholders. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results and those presently anticipated or projected. Among the
factors that may affect operating results are the following: success of the
Company's change in focus; competitive environment; and general economic
conditions.
Results of Operations
- ---------------------
The Company had no operations in the second quarter of 2001.
Future Outlook
- --------------
The Company has entered into an agreement to merge with a Company known as Group
Now. Group Now is an integrator, a Company focused on acquiring and managing the
integration of companies that have common or similar strengths and operations.
Group Now plans to acquire cash flow positive companies in specific industries
and integrate those industry-specific companies into a unified, nationally
branded organization that offers much greater growth potential than that of a
single company in a traditional market sector.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None
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. None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this 10-QSB report to be signed on
its behalf by the undersigned thereunto duly authorized.
Precom Technology, Inc.,
a Florida corporation
By: /s/ Nicholas M. Calapa
-------------------------
Nicholas M. Calapa
President
DATED: August 16, 2001