UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2002
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
Commission File Number 000-32747
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FIRST CYPRESS TECHNOLOGIES, INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0218688
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1281 West Georgia Street, Suite No. 501
Vancouver, British Columbia V6E 3J7
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-817-1441
None
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(Former name, former address and former fiscal year,
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 Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [ X ] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 7,057,500 Shares of $.001 par value
Common Stock outstanding as of June 30, 2002.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Because the accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and Item 310(b) of Regulation
S-B, they do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles. Although these financials are presented in this condensed format,
we believe that the disclosures are adequate to make the information presented
not misleading.
First Cypress Technologies, Inc.
(A Development Stage Company)
Interim Financial Statements
For the six-month periods ended
June 30, 2002 and 2001
(Unaudited - Expressed in US Dollars)
Contents
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Interim Financial Statements
Balance Sheets
Statements of Changes in Capital Deficit
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
- --------------------------------------------------------------------------------
First Cypress Technologies, Inc.
(A Development Stage Company)
Interim Balance Sheets
(Expressed in US Dollars)
June 30 December 31
2002 2001
- --------------------------------------------------------------------------------
(Unaudited)
Assets
Current
Cash $ 244 $ 313
===================================================================
Liabilities and Capital Deficit
Current
Accounts payable and accrued liabilities $ 43,026 $ 55,503
Due to stockholder (Note 2) 135,759 107,552
----------------------
Total liabilities 178,785 163,055
----------------------
Capital deficit
Share capital
Authorized:
25,000,000 common shares with
par value $0.001
Issued:
7,057,500 common shares 7,058 7,058
Additional paid-in capital 24,592 24,592
Deficit accumulated in the development
stage (210,191) (194,392)
----------------------
Total capital deficit (178,541) (162,742)
----------------------
Total Liabilities and Capital Deficit $ 244 $ 313
===================================================================
The accompanying notes are an integral part of these interim financial
statements.
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First Cypress Technologies, Inc.
(A Development Stage Company)
Interim Statements of Changes in Capital Deficit
(Unaudited - Expressed in US Dollars)
From the period September 14, 1999 (inception) to June 30, 2002
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional in the Total
Paid-in Development Capital
Shares Amount Capital Stage Deficit
- --------------------------------------------------------------------------------------
Issuance of shares on
incorporation in September 1999
for cash at $0.001 per share 5,000,000 $ 5,000 $ - $ - $ 5,000
Issuance of shares for cash in
November 1999 at $0.01 per
share 1,990,000 1,990 17,910 - 19,900
Issuance of shares for cash in
December 1999 at $0.10 per
share 67,500 68 6,682 - 6,750
Net loss and comprehensive loss - - - (33,298) (33,298)
----------------------------------------------------
Balance, December 31, 1999 7,057,500 7,058 24,592 (33,298) (1,648)
Net loss and comprehensive loss - - - (108,996) (108,996)
----------------------------------------------------
Balance, December 31, 2000 7,057,500 7,058 24,592 (142,294) (110,644)
Net loss and comprehensive loss - - - (52,098) (52,098)
----------------------------------------------------
Balance, December 31, 2001 7,057,500 7,058 24,592 (194,392) (162,742)
Net loss and comprehensive loss - - - (15,799) (15,799)
----------------------------------------------------
Balance, June 30, 2002 7,057,500 $ 7,058 $ 24,592 $(210,191) $(178,541)
====================================================
The accompanying notes are an integral part of these interim financial
statements.
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First Cypress Technologies, Inc.
(A Development Stage Company)
Interim Statements of Operations
(Unaudited - Expressed in US Dollars)
Period from
For the three-month For the six-month September 14
periods ended periods ended 1999
June 30 June 30 (inception) to
-------------------------------------------------- June 30
2002 2001 2002 2001 2002
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Expenses
Interest and bank charges $ 2,473 $ 1,730 $ 4,707 $ 3,182 $ 15,704
Management fees (Note 3) 3,000 3,000 6,000 6,000 19,000
Other 438 - 438 - 1,679
Professional fees 5,131 7,745 1,654 8,328 143,808
Rent and office services (Note 3) 1,500 1,500 3,000 3,000 15,000
Software development - - - - 15,000
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Net loss for the period $ (12,542) $ (13,975) $ (15,799) $ (20,510) $ (210,191)
=====================================================================================================
Loss per share $ (0.002) $ (0.002) $ (0.002) $ (0.003) $ (0.03)
=====================================================================================================
Weighted average shares outstanding 7,057,500 7,057,500 7,057,500 7,057,500 6,747,478
=====================================================================================================
The accompanying notes are an integral part of these interim financial
statements.
- --------------------------------------------------------------------------------
First Cypress Technologies, Inc.
(A Development Stage Company)
Interim Statements of Cash Flows
(Unaudited - Expressed in US Dollars)
Period from
For the six-month September 14
periods ended 1999
June 30 (inception) to
-------------------- June 30
2002 2001 2002
- --------------------------------------------------------------------------------
Cash flows from operating activities
Net loss for the period $(15,799) $(20,510) $(210,191)
Increase (decrease) in liabilities
Accounts payable and accrued liabilities (12,477) 4,108 43,026
--------------------------------
Cash used in operating activities (28,276) (16,402) (167,165)
--------------------------------
Cash flows from financing activities
Loans from stockholder 28,207 16,348 135,759
Proceeds from issuance of share capital - - 31,650
--------------------------------
Cash provided by financing activities 28,207 16,348 167,409
--------------------------------
Increase (decrease) in cash during the period (69) (54) 244
Cash, beginning of period 313 427 -
--------------------------------
Cash, end of period $ 244 $ 373 $ 244
================================================================================
Supplemental information
Interest and taxes paid $ - $ - $ -
================================================================================
The accompanying notes are an integral part of these interim financial
statements.
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First Cypress Technologies, Inc.
(A Development Stage Company)
Notes to Interim Financial Statements
(Unaudited - Expressed in US Dollars)
June 30, 2002 and 2001
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1. Nature of Business and Ability to Continue Operations
First Cypress Technologies, Inc. was incorporated on September 14, 1999 under
the laws of the State of Nevada. The Company is in the process of developing an
Internet computer software program known as EngineMax. The EngineMax computer
software program will be designed to automate the process of submission of
Internet web page information to major Internet search engines.
The interim financial statements included herein, presented in accordance with
United States generally accepted accounting principles and stated in US dollars,
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
interim financial statements be read in conjunction with the audited financial
statements of the Company for the years ended December 31, 2001 and 2000
included in the Company's 10-KSB Annual Report. The Company follows the same
accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
These accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As at June 30,
2002, the Company has recognized no revenue and has accumulated operating losses
of $210,191 since its inception, has a working capital deficiency of $178,541
and has been relatively inactive through the period ended June 30, 2002. The
continuation of the Company is dependent upon the continuing financial support
of creditors and stockholders and obtaining long-term financing as well as
achieving a profitable level of operations. Management plans to raise equity
capital to finance the operations and capital requirements of the Company. It
is management's intention to raise new equity financing of approximately
$850,000 within the upcoming year. Amounts raised will be used to complete the
development of the EngineMax software, commence development of the Company's web
site, undertake an advertising and marketing campaign and purchase necessary
equipment and supplies for the operation of the business. While the Company is
expending its best efforts to achieve the above plans, there is no assurance
that any such activity will generate funds that will be available for
operations.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might arise from this
uncertainty.
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First Cypress Technologies, Inc.
(A Development Stage Company)
Notes to Interim Financial Statements
(Unaudited - Expressed in US Dollars)
June 30, 2002 and 2001
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2. Due to Stockholder
Amounts due to a stockholder are unsecured and repayable on demand with interest
at 8% per annum. Interest expense accrued in respect of these advances totalled
$4,638 for the six months ended June 30, 2002 (2001 - $3,140).
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3. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial statements
are as follows:
For six-month
periods ended
June 30
2002 2001
------------------
Rent and office services paid to
the President of the Company $ 3,000 $ 3,000
Management fees paid to the President
of the Company $ 6,000 $ 6,000
Related party transactions are recorded at the exchange amount, being the amount
established and agreed to by the related parties.
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4. New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") finalized
Statement of Financial Accounting Standards ("SFAS") Statements No. 141,
"Business Combinations" (SFAS 141), and No 142, "Goodwill and Other Intangible
Assets" (SFAS 142). SFAS 141 requires the use of the purchase method of
accounting and prohibits the use of the pooling of interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.
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First Cypress Technologies, Inc.
(A Development Stage Company)
Notes to Interim Financial Statements
(Unaudited - Expressed in US Dollars)
June 30, 2002 and 2001
- --------------------------------------------------------------------------------
4. New Accounting Pronouncements - Continued
SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.
The Company adopted these standards effective for its fiscal year commencing
January 1, 2002. Such adoption did not affect the Company's financial
statements in respect of historical transactions. Future acquisitions are
required to adhere to these new standards.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 requires that those long-lived
assets be measured at the lower of carrying amount or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred. SFAS
No. 144 is effective for financial statements issued for fiscal years beginning
after December 15, 2001 and, generally, is to be applied prospectively. The
implementation of this new standard did not have a material effect on the
Company's financial statements.
Item 2. Management's Discussion and Analysis or Plan of Operations
Forward Looking Statements
This report on Form 10-QSB contains certain forward-looking statements within
the meaning of section 21(e) of the Securities Exchange Act of 1934, as amended,
and other applicable securities laws. All statements other than statements of
historical fact are "forward-looking statements" for purposes of these
provisions, including any projections of earnings, revenues, or other financial
items; any statements of the plans, strategies, and objectives of management for
future operation; any statements concerning proposed new products, services, or
developments, any statements regarding future economic conditions or
performance, statements of belief, and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are subject to inherent
risks and uncertainties, and actual results could differ materially from those
anticipated by the forward-looking statements.
Plan of Operations
First Cypress Technologies, Inc. was incorporated on September 14, 1999 under
the laws of the State of Nevada. Our company's business plan is to develop an
Internet computer software program known as EngineMax. The EngineMax computer
software program will be designed to automate the process of submission of
Internet web page information to major Internet search engines.
As of June 30, 2002, we have been unsuccessful in our efforts to raise
additional capital to meet our plan of operations. As a result, our operations
have been inactive. Our cash position as of June 30, 2002 was $244. Since
inception, we have recognized no revenue. We have accumulated operating losses
of $210,191 and we have a working capital deficiency of $178,541. In order to
satisfy our ongoing expenses, Robert Rosner, President and CEO, has loaned us a
total of $135,759 since our inception, repayable on demand with interest at a
rate of 8% per annum.
Over the past twelve months, we have experienced difficulties in obtaining
financing for our business for the purposes of developing the EngineMax
software. Because of these difficulties, during this past quarter we have
shifted some of our focus to investigating other business opportunities. These
opportunities include possible acquisitions or joint venture arrangements in
software technology and financial services industries. We can provide no
assurance that these efforts in exploring possible acquisitions or joint venture
arrangements will come to fruition. Additionally, if any new ventures are
successfully negotiated, we can provide no assurance that such new venture will
achieve commercialization or that we will have enough financial resources to
fully develop the new venture. Although we will continue to explore financing
options based upon our existing business plan, which includes the EngineMax
software, our plan of operations for the next 12 months will also include
further investigation of forming partnerships with other entities and
researching other business opportunities.
In the event we are not successful in raising additional financing, we
anticipate that we will not be able to proceed with our business plan for the
development and marketing of the EngineMax software and that our business may
fail if another business opportunity does not present itself. Accordingly, our
financial statements contain note disclosures describing the circumstances that
lead there to be doubt
over our ability to continue as a going concern.
In order to explore other business opportunities and pursue our existing
business plan, we are dependent upon the continuing financial support of
creditors and stockholders until such time when we are successful in raising
equity capital to finance the operations and capital requirements of the
Company. We anticipate that if we are successful in raising additional capital,
the financing would be an equity financing through the sale of our common stock.
This financing would cause existing shareholders to experience dilution of their
interest in our company.
In order to pursue the following plan of operations, we will need to raise
approximately $850,000 over the next twelve months. If we are unable to raise
such capital, we will need to explore other alternatives as mentioned above.
Our plan of operations for the next twelve months, subject to our obtaining
financing, is as follows:
- - Build an internal administrative and managerial organization to oversee all
areas of development and long-term operations
- - Develop a functional and marketable piece of software
- - Create a cost-effective and internet-based marketing campaign
- - Develop a web site to market the software
In building our internal administrative and managerial organization, we will
seek to minimize the hiring of full-time employees. If we raise additional
capital, our full-time positions will be limited to the president/CEO, CFO, a
software development project manger, an office manager, and a marketing manager.
We also may hire other part-time and contract people to provide assistance to
these roles. We project that the cost of these employees will not exceed
$400,000 over a twelve month period.
If we are successful in obtaining additional funds, we will need to build an
internal enhancement, support and marketing infrastructure for the business. We
anticipate spending approximately $50,000 on the purchase of necessary equipment
and supplies.
The most important and difficult goal is to complete the development of the
EngineMax software. We plan to hire an external software development firm to
build the software rather than handle this process ourselves.
We anticipate that we will hire the external software development firm upon
receipt of additional financing. We anticipate that the development costs will
be approximately $250,000 and will consist primarily of payments to consultants
for programming and software development services. Therefore the independent
third party consultants will conduct all research and development.
We plan to commence development of our web site slightly before completion of
the EngineMax software. We anticipate that the development expenses for this
web site will be approximately $50,000.
We plan to undertake an advertising and marketing campaign once the development
of our
EngineMax software is complete. We anticipate that initial marketing expenses
for the twelve months following receipt of financing will be approximately
$100,000. A third party marketing consulting firm will design this campaign and
conduct the majority of the work. We anticipate that this will minimize start up
expenses and optimize results in the ever-changing world of Internet marketing.
In summary, we anticipate the following steps will be necessary to make us
operational:
1. Hire support staff, including a software development project manager, an
office manager and a marketing manager. This is expected to cost
approximately $33,333 per month once we are fully staffed.
2. Create the EngineMax software. This is expected to cost approximately
$250,000.
3. Create the web site. This is expected to cost approximately $50,000.
4. Launch our advertising and marketing campaign. This is expected to cost
approximately $100,000 initially.
5. Purchase of equipment and supplies. This is expected to cost approximately
$50,000.
We thus anticipate that we will be spending approximately $850,000 over the
twelve-month period following an infusion of additional capital. We anticipate
incurring continuing operating losses for the foreseeable future. We base this
expectation, in part, on the fact that we will incur substantial operating
expenses in completing the development of our software and web site and do not
anticipate earning any revenues until sometime next year. As mentioned above, we
will require additional financing in order to pursue this business plan.
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.
EXHIBITS
None
REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST CYPRESS TECHNOLOGIES, INC.
Date: August 13, 2002
By: /s/ Robert Rosner
------------------------------------
Robert Rosner
President, CEO and Director
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Rosner, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report on Form 10-QSB of First Cypress Technologies, Inc. for the quarterly
period ended June 30, 2002 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that the information
contained in the Quarterly Report on Form 10-QSB fairly presents in all material
respects the financial condition and results of operations of First Cypress
Technologies, Inc.
By: /s/ Robert Rosner
----------------------------
Name: Robert Rosner
Title: Chief Executive Officer
Date: August 13, 2002
I, Carl Chow, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on
Form 10-QSB of First Cypress Technologies, Inc. for the quarterly period ended
June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that the information contained in the
Quarterly Report on Form 10-QSB fairly presents in all material respects the
financial condition and results of operations of First Cypress Technologies,
Inc.
By: /s/ Carl Chow
----------------------------
Name: Carl Chow
Title: Chief Financial Officer
Date: August 13, 2002