UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter report ended June 30, 2002
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to ___________
Commission File number 000-28581
TRIAD INDUSTRIES, INC.
(Exact name of small business issuer as registrant as specified in charter)
Nevada 88-0422528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 W. Ninth Street, Suite #104, Escondido, CA 92025
(Address of principal executive office)
Registrants telephone no., including area code (760) 291-1710
Check whether the registrant (1) has 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 registrant was required to file
such reports), Yes [X] No [ ] and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the last practicable date.
Class Outstanding as of June 30, 2002
Common Stock, $0.001 8,674,863
i
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1-2
Consolidated Balance Sheets - June 30, 2002
And December 31, 2001 3-4
Consolidated Statements of Operations - six months
Ended June 30, 2002 and June 30, 2001 5
Consolidated Statements of Stockholders Equity 6-8
Consolidated Statements of Cash Flows - six months
Ended June 30, 2002 and June 30, 2001 9
Notes to Consolidated Financial Statements 10-20
Item 2. Managemens Discussion and Analysis and
Result of Operations 23-24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 2. Changes in Securities 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Submission of Matter to be a Vote of 25
Securities Holders
Item 5. Other Information on Form 8-K 25
Item 6. Exhibits and Reports on 8K 26
Signatures S-1
ii
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statement
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of June 30, 2002, and the
related balance sheet of the Company as of December 31, 2001, which is derived
from the Companys audited financial statements, the unaudited statement of
operations and cash flows for the six months ended June 30, 2002 and June 30,
2001 and the statement of stockholders equity for the period of January 1, 1998
to June 30, 2002 are attached hereto and incorporated herein by this reference.
Operating results for the quarters ended June 30, 2002 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2002.
1
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANTS
(A Professional Corporation)
Armando C.Ibarra,C.P.A.
Members of the California Society of
Armando Ibarra, Jr.,
C.P.A.
Certified Public Accountants
To the Board of Directors
Triad Industries, Inc.
(Formerly RB Capital & Equities, Inc.)
350 West 9th Avenue., Suite A
Escondido, CA 92025
INDEPENDENT ACCOUNTANTS REPORT
We have reviewed the accompanying consolidated balance sheets of Triad
Industries, Inc. (Formerly RB Capital & Equities, Inc.) as of June 30, 2002 and
December 31, 2001, and the related statements of operations, changes in
stockholders equity, and cash flows for the six and three months ended June 30,
2002 and 2001, in accordance with Statements on Standards for Accounting 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 Triad Industries, 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 modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with generally accepted accounting principles.
__________________________________
ARMANDO C. IBARRA, C.P.A. APC
August 8, 2002
Chula Vista, California
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
As of June 30, 2002 and December 31, 2001
ASSETS
2002 2001
-------------- ---------------------
CURRENT ASSETS
Cash $ 14,066 $ 15,643
Accounts receivable 437,044 444,461
Accounts receivable
medical clinic (see note 2g) - 1,633,083
Advance expenses 4,800 5,815
Marketable securities 240,368 561,159
Impound account 10,397 10,824
Deferred tax benefit 741,756 574,553
----------------------------------
Total Current Assets 1,448,431 3,245,538
NET PROPERTY & EQUIPMENT 1,088,924 1,793,877
OTHER ASSETS
Investments in nonmarketable equities 224,497 388,832
Net loan fees 7,199 7,324
----------------------------------
Total Other Assets 231,696 396,156
----------------------------------
TOTAL ASSETS $2,769,051 $5,435,571
==================================
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
As of June 30, 2002 and December 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001
------------- ---------------------
CURRENT LIABILITIES
Accounts payable $ 29,930 $ 73,726
Loans payable 78,380 278,102
Salaries payable 26,150 -
Line of credit 8,649 30,078
Payroll taxes payable - -
Taxes payable 6,251 10,025
Security deposits 5,087 8,269
Trust deeds and mortgages
short-term portion 15,170 150,910
-------------------------------------------
Total Current Liabilities 169,617 551,109
LONG-TERM LIABILITIES
Trust deeds and mortgages
long-term portion 970,803 1,394,159
-------------------------------------------
Total Long-Term Liabilities 970,803 1,394,159
-------------------------------------------
TOTAL LIABILITIES 1,140,420 1,945,268
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par
value, 10,000,000 shares
authorized 850,000
shares issued and outstanding for
for 2002 and 2001,
respectively) 850,000 850,000
Common stock ($0.001 par value,
50,000,000 shares
authorized 8,674,863 and
10,138,165 shares issued
and outstanding as of June
30, 2002 and December 31,
2001, respectively.) 8,675 10,138
Paid-in capital 3,764,955 3,792,758
Stock subscription receivable (62,500) (62,500)
Retained earnings (2,453,095) (999,124)
Comprehensive income (loss) (479,404) (100,970)
-------------------------------------------
Total Stockholders' Equity 1,628,631 3,490,302
TOTAL LIABILITIES
-------------------------------------------
& STOCKHOLDERS' EQUITY $ 2,769,051 $ 5,435,571
===========================================
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Operations
For the Six and Three Months Ended June 30, 2002 and 2001
Six Months Six Months Three MonthsThree Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
REVENUES
Consulting income $ 305,733 $444,011 $ 36,675 $ 243,909
Medical fee income - 527,260 - 245,321
Rental income 66,467 277,025 33,918 87,540
Costs of revenues (29,827) (17,930) (13,899) (5,050)
GROSS PROFIT 342,373 1,230,366 56,694 571,720
OPERATING COSTS
Bad debt expense 9,895 149,811 5,895 70,532
Depreciation & amortization 20,858 48,826 10,429 12,647
Administrative expenses 190,689 1,141,826 90,846 779,081
Total Operating Costs 221,442 1,340,463 107,170 862,260
NET OPERATING (LOSS) 120,931 (110,097) (50,476) (290,540)
OTHER INCOME & (EXPENSES)
Interest income 2,691 1,834 2,690 1,744
Other income 2,885 48 2,860 -
Other expenses (45,073) - - -
Realized gain (loss)
on sale of marketable
securities (10,130) 16,984 (14,936) 4,886
Net gain / (loss)
on disposable assets 93,283 618,455 (1,725) 618,455
Vending - 10 - 10
Interest expense (48,416) (170,344) (19,410) (69,036)
-
Total Other Income &
Expenses (4,760) 466,987 (30,521) 556,059
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE TAX 116,171 356,890 (80,997) 265,519
INCOME TAX (PROVISION)
BENEFIT (27,748) (121,343) 15,925 (86,802)
INCOME (LOSS) FROM CONTINUING
OPERATIONS AFTER TAX $ 88,423 $ 235,547 $ (65,072) $ 178,717
DISCONTINUED
OPERATIONS
Loss on sale of Northwest
Medical Clinic, Inc. $(1,542,394) - - -
NET INCOME / (LOSS) $(1,453,971) $ 235,547 $(65,072) $ 178,717
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Comprehensive Income (Loss)
For the Six and Three Months Ended June 30, 2002 and 2001
Six Months Six Months Three Months Three Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Net Income (Loss)
Net of Tax
$ (1,453,971) $ 235,547 $ (65,072) $ 178,717
Other Comprehensive (Loss) :
Unrealized gain
(loss) on securities (573,385) (110,688) (492,940) (49,287)
-------------------------------------------------------------
Total Other Comprehensive
(Loss) (573,385) (110,688) (492,940) (49,287)
-------------------------------------------------------------
Comprehensive Income (Loss)
Before Income Taxes $(573,385) $(110,688) $(492,940) $ (49,287)
Income Taxes (Provision)
Benefit
Related to Items of
Comprehensive Income
194,951 42,074 167,260 19,221
-------------------------------------------------------------
Comprehensive Income (Loss)
$(378,434) $ (68,614) $(325,680) $ (30,066)
=============================================================
- --------------------------------------------------------------------------------
Preferred Preferred Common
Shares Stock Shares
Balance, December 31, 1997
Common stock issued June 17,1998
for securities valued @ $1.07 per share
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share
Common stock issued June 17, 1998
for securities valued @ $.084 per share
Common stock issued June 17, 1998
for note payable @ $.334 per share
Common stock issued June 17, 1998
for securities valued @ $.334 per share
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share
Common stock issued December 31, 1998
for note payable @ $.3234 per share
Common stock issued December 31, 1998
for management fees @ $.334 per share
Common stock issued December 31, 1998
for note payable @ $.334 per share
Common stock issued December 31,1998
for securities valued @ $.206 per share
Contributed capital
Net loss for the year ended
December 31,1998
Balance, December 31, 1998
Additional Stock
Common Paid-in Subscription
Stock Capital Receivable
Balance, December 31, 1997 $ 2,339,529 $ 2,340 $634,656
Common stock issued June 17,1998
for securities valued @ $1.07 per share 13,200 13 14,105
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share 60,000 60 53,980
Common stock issued June 17, 1998
for securities valued @ $.084 per share 15,000 15 1,245
Common stock issued June 17, 1998
for note payable @ $.334 per share 30,480 30 10,150
Common stock issued June 17, 1998
for securities valued @ $.334 per share 135,000 135 44,955
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share 300,000 300 99,900
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share 375,000 375 62,375
Common stock issued December 31, 1998
for note payable @ $.3234 per share 18,750 19 6,044
Common stock issued December 31, 1998
for management fees @ $.334 per share 60,759 61 20,233
Common stock issued December 31, 1998
for note payable @ $.334 per share 60,486 60 20,142
Common stock issued December 31,1998
for securities valued @ $.206 per share 225,000 225 46,175
Contributed capital - - 1,717
Net loss for the year ended
December 31,1998 - - -
Balance, December 31, 1998 3,633,204 3,633 1,015,677
Comprehensive
Retained Income
Earnings (Loss) Total
Balance, December 31, 1997 $ 95,266 $ - $ 732,262
Common stock issued June 17,1998
for securities valued @ $1.07 per share 14,118 - -
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share 54,040 - -
Common stock issued June 17, 1998
for securities valued @ $.084 per share 1,260 - -
Common stock issued June 17, 1998
for note payable @ $.334 per share 10,180 - -
Common stock issued June 17, 1998
for securities valued @ $.334 per share 45,090 - -
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share 250 - -
Common stock issued December 31, 1998
for note payable @ $.3234 per share 6,063 - -
Common stock issued December 31, 1998
for management fees @ $.334 per share 20,294 - -
Common stock issued December 31, 1998
for note payable @ $.334 per share 20,202 - -
Common stock issued December 31,1998
for securities valued @ $.206 per share 46,400 - -
Contributed capital 1,717 - -
Net loss for the year ended
December 31,1998 (62,126) - (62,126)
Balance, December 31, 1998 33,140 - 989,950
Preferred Preferred Common
Shares Stock Shares
Balance, December 31, 1998 - - 3,633,204
Recapitalization (Note 1) - - 526,672
Common stock issued March 15, 1999
for services valued @ $0.63 per share - - 313,942
Common stock issued on March 15,
1999 for the purchase of Gam
Properties, Inc. @ $0.63 per share - - 1,120,000
Preferred stock issued on March 15,
1999 for the purchase of Miramar Road
Associates, LLC @ $1.00 per share 700,000 700,000 -
Preferred stock issued September 1999
in exchange for 1.5 million shares of
Pro Glass Technologies, Inc. common
stock valued @ $1.00 per share 150,000 150,000 -
Stock subscription receivable
Common stock issued December
1999 for cash @ $0.22 per share - - 320,000
Common stock issued December 1999
for management fees @ $0.06 per share - - 489,600
Net loss for the year ended
December 31, 1999 - - -
- --------------------------------------------------------------------------------
Balance, December 31, 1999 850,000 850,000 6,403,418
Stock issued on January 5, 2000
to Directors @ $0.06 a share - 72,000
Stock issued on March 1, 2000 for
services rendered @ $0.15 a share - - 123,000
Stock issued on June 15, 2000
to Directors @ $0.50 a share - - 72,000
Stock issued on June 30, 2000 for
the Purchase of Northwest, LLC.
@ $0.96 a share - - 1,463,302
Stock issued on June 30, 2000 to Donner
Investment Corp. @ $0.96 a share - - 36,583
Stock issued on October 1, 2000 to
Novak Capital @ $0.20 a share - - 200,000
Stock issued on December 12, 2000
to Directors @ $0.24 a share - - 288,000
Net loss for the year ended
December 31, 2000 - - -
Balance, December 31, 2000 850,000 850,000 8,658,303
Additional Stock
Common Paid in Subscription
Stock Capital Receivable
Balance, December 31, 1998 3,633 1,015,677 (62,500)
Recapitalization (Note 1) 527 33,396 (20,000)
Common stock issued March 15, 1999
for services valued @ $0.63 per share 314 196,527 -
Common stock issued on March 15,
1999 for the purchase of Gam
Properties, Inc. @ $0.63 per share 1,120 698,880 -
Preferred stock issued on March 15,
1999 for the purchase of Miramar Road
Associates, LLC @ $1.00 per share - - -
Preferred stock issued September 1999
in exchange for 1.5 million shares of
Pro Glass Technologies, Inc. common
stock valued @ $1.00 per share
Stock subscription receivable - - 20,000
Common stock issued December
1999 for cash @ $0.22 per share 320 71,625 -
Common stock issued December 1999
for management fees @ $0.06 per share 489 28,886 -
Net loss for the year ended
December 31, 1999 - - -
(679,540)
Balance, December 31, 1999 6,403 2,044,991 (62,500)
Stock issued on January 5, 2000
to Directors @ $0.06 a share 72 4,248 -
Stock issued on March 1, 2000 for
services rendered @ $0.15 a share 123 17,877 -
Stock issued on June 15, 2000
to Directors @ $0.50 a share 72 35,928 -
Stock issued on June 30, 2000 for
the Purchase of Northwest, LLC.
@ $0.96 a share 1,463 1,399,555 -
Stock issued on June 30, 2000 to Donner
Investment Corp. @ $0.96 a share 37 35,083 -
Stock issued on October 1, 2000 to
Novak Capital @ $0.20 a share 200 39,800 -
Stock issued on December 12, 2000
to Directors @ $0.24 a share 288 67,392 -
Net loss for the year ended
December 31, 2000 - - -
Balance, December 31, 2000 8,658 3,644,874 (62,500)
Comprehensive
Retained Income
Earnings (loss) Total
Balance, December 31, 1998 33,140 - 989,950
Recapitalization (Note 1) - - 13,923
Common stock issued March 15, 1999
for services valued @ $0.63 per share - - 196,841
Common stock issued on March 15,
1999 for the purchase of Gam
Properties, Inc. @ $0.63 per share - - 700,000
Preferred stock issued on March 15,
1999 for the purchase of Miramar Road
Associates, LLC @ $1.00 per share - - 700,000
Preferred stock issued September 1999
in exchange for 1.5 million shares of
Pro Glass Technologies, Inc. common
stock valued @ $1.00 per share - - 150,000
Stock subscription receivable - - 20,000
Common stock issued December
1999 for cash @ $0.22 per share - - 71,945
Common stock issued December 1999
for management fees @ $0.06 per share - - 29,375
Net loss for the year ended
December 31, 1999 (712,680) - (712.680)
(679,540)
Balance, December 31, 1999 (679,540) - 2,159,354
Stock issued on January 5, 2000
to Directors @ $0.06 a share - - 4,320
Stock issued on March 1, 2000 for
services rendered @ $0.15 a share - - 18,000
Stock issued on June 15, 2000
to Directors @ $0.50 a share - - 36,000
Stock issued on June 30, 2000 for
the Purchase of Northwest, LLC.
@ $0.96 a share - - 1,401,018
Stock issued on June 30, 2000 to Donner
Investment Corp. @ $0.96 a share - - 35,120
Stock issued on October 1, 2000 to
Novak Capital @ $0.20 a share - - 40,000
Stock issued on December 12, 2000
to Directors @ $0.24 a share - - 67,680
Net loss for the year ended
December 31, 2000 (392,811) - (392,811)
Balance, December 31, 2000 (1,072,352) - 3,368,680
Preferred Preferred Common
Shares Stock Shares
Balance, December 31, 2000 850,000 850,000 8,658,303
Stock issued on January 15, 2001 - - 50,000
Stock issued on January 18, 2001 for
management fees @ $0.21 a share - - 144,762
Stock issued on February 21, 2001 - - 25,100
Stock issued on March 1, 2001 to
management fees @ $0.17 a share - - 700,000
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $0.11 per share - - 900,000
Stock issued on June 22, 2001
to Directors @ $0.03 a share - - 360,000
October 1, 2001 cancellation of
stock subscription - - (700,000)
Comprehensive (loss) December 31, 2001 - - -
Net loss for the year ended
December 31, 2001 - - -
Balance, December 31, 2001 850,000 850,000 10,138,165
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share - - (1,463,302)
Comprehensive (loss) June 30, 2002 - - -
Net loss for the six months ended - - -
June 30, 2002
Balance, June 30, 2002 $ 850,000 $ 850,000$ 8,674,863
Additional Stock
Common Paid in Subscription
Stock Capital receivable
Balance, December 31, 2000 8,658 3,644,874 (62,500)
Stock issued on January 15, 2001
for consulting fees @ $0.17 a share 50 8,450 -
Stock issued on January 18, 2001 for
management fees @ $0.21 a share 145 30,179 -
Stock issued on February 21, 2001
for consulting fees @ $0.15 a share 25 3,715 -
Stock issued on March 1, 2001 to
management fees @ $0.17 a share 700 118,300 (119,000)
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $0.11 per share 900 95,100 -
Stock issued on June 22, 2001
to Directors @ $0.03 a share 360 10,440 -
October 1, 2001 cancellation of
stock subscription (700) (118,300) 119,000
Comprehensive (loss) December 31, 2001 - - -
Net loss for the year ended
December 31, 2001 - - -
Balance, December 31, 2001 10,138 3,792,758 (62,500)
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share - - -
Comprehensive (loss) June 30, 2002 - - -
Net loss for the six months ended
June 30, 2002 - - -
Balance, June 30, 2002 $ 8,675 $ 3,764,955 $ (62,500)
Comprehensive
Retained Income
Earnings (loss) total
Balance, December 31, 2000 (1,072,352) - 3,368,680
Stock issued on January 15, 2001
for consulting fees @ $0.17 a share - - 8,500
Stock issued on January 18, 2001 for
management fees @ $0.21 a share - - 30,324
Stock issued on February 21, 2001
for consulting fees @ $0.15 a share - - 3,740
Stock issued on March 1, 2001 to
management fees @ $0.17 a share - - -
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $0.11 per share - - 96,000
Stock issued on June 22, 2001
to Directors @ $0.03 a share - - 10,800
October 1, 2001 cancellation of
stock subscription - - -
Comprehensive (loss) December 31, 2001 - (100,970) -
Net loss for the year ended
December 31, 2001 73,228 - 73,228
Balance, December 31, 2001 (999,124) (100,970) 3,591,272
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share - - (29,266)
Comprehensive (loss) June 30, 2002 - (378,434) (378,434)
Net loss for the six months ended
June 30, 2002 - (1,453,971)(1,453,971)
Balance, June 30, 2002 $(2,453,095) $ (479,404)$ 1,729,601
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Cash Flows
For the Six and Three Months Ended June 30, 2002 and 2001
Six Months Six Months Three Months Three Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from
operations $ (1,453,971)$ 166,933 $ (65,072)$ 148,651
Depreciation & amortization
expense 20,858 48,826 10,429 12,647
(Increase) decrease in
accounts receivable 1,640,500 (302,658) 62,781 (388,775)
(Increase) decrease in
advances 1,015 (1,450) - (1,450)
(Increase) decrease in
impound account 427 3,565 427 3,565
(Increase) decrease income
tax benefit 167,203 79,269 183,185 67,580
Increase (decrease) in
accounts payable (43,796) (18,009) (8,666) 57,878
Increase (decrease) in
assets held for sale - 355,344 - 355,344
Increase (decrease) in
security deposits (3,182) (38,590) 1,227 (37,947)
Increase (decrease) in
loans payable (199,722) 10,435 (6,763) (3,629)
Increase (decrease) in
salaries payable 26,150 - 4,000 -
Increase (decrease) in
taxes payable (3,774) 2,437 - 2,437
Valuation of marketable
securities (378,434) (410,680) 172,149 (314,581)
Purchase of marketable
securities - (1,210) (325,680) -
Sale of marketable
securities (10,130) (52,216) (14,936) (31,164)
Loan fees - 84,038 - 84,038
Common stock issued
for services - 149,364 - 106,800
Net cash provided (used)
by operating activities (236,856) 75,397 13,081 61,395
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in securities
available for sale 164,335 - (30) -
Disposal of fixed
assets 688,485 3,325,203 32,766 3,325,203
Purchase of fixed
assets (7,750) (1,073,000) (7,750) (1,070,000)
Net cash provided (used)
by investing
activities 845,070 2,252,203 24,986 2,255,203
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of
credit (21,429) (2,445) (21,255) (2,201)
Change in investment
property mortgage (4,203) (2,969)
Change in additional
paid-in capital (27,803) - - -
Change in common
stock (1,463) - - -
Change in lease
payable - (224) - (62)
Change in notes and
mortgages payable (559,096) (2,287,650) (10,096) (2,284,606)
Net cash provided (used) by f
inancing activities (609,791) (2,294,522) (31,351) (2,289,838)
Net increase (decrease)
in cash (1,577) 33,078 6,716 26,759
Cash at beginning of
period 15,643 54,384 10,109 60,702
Cash at end of
period $ 14,066 $ 87,462 $ 16,825 $ 87,462
Supplemental Cash
Flow Disclosures:
Cash paid during year
for interest $ 48,416 $ 170,344 $ 19,410 $ 69,036
Schedule of Non-Cash
Activities
Loss on sale of Northwest
Medical Clinic, Inc. $ 1,542,394 $ - $ - $ -
Common stock issued
for services $ - $ 149,364 $ - $ 106,800
Common stock received
for consulting services 150,000 $ - $ - $ -
Common stock retired
on the sale of Northwest
Medical Clinic, Inc. 29,266 $ - $ - $ -
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Triad Industries, Inc. (the Company) was incorporated under the laws of the
State of Utah on November 25, 1985. The Company was originally known as
Investment Marketing, Inc. Investment Marketing, Inc. was originally
incorporated for the purpose of buying, selling, and dealing in real property.
At a special meeting of the shareholders held June 6, 1990 the Company name was
changed to Combined Communication, Corp. On June 7, 1990 the Company completed
the merger and became a Nevada Corporation. On October 17, 1997, the Company met
to amend the Articles of Incorporation and change the name of the Company to RB
Capital & Equities, Inc.
On March 15, 1999, at a special meeting of the shareholders, Healthcare
Resource Management (HRM) reversed its common stock on a one for ten (1:10) from
5,256,716 to 526,672 shares outstanding. Also, at the meeting of shareholders,
HRM ratified a plan of reorganization whereby HRM would acquire 100% of the
outstanding shares of common stock of RB Capital and its subsidiaries (Gam
Properties and Miramar Road Associates) for 5,068,150 shares of HRM post split
common stock and 700,000 shares of $1.00 preferred stock. The only significant
shareholder was American Health Systems, Inc. who owned 373,333 of common shares
before the merger and 1,120,000 of common stock after the merger. The 700,000
shares of preferred stock were issued to American Health Systems, Inc. for the
note payable and the 99% interest RB Capital had acquired in Miramar Road
Associates. 1,120,000 shares of common stock of the 5,068,150 shares issued to
RB Capital & Equities, Inc. went to American Health Systems, Inc. in exchange
for the 373,333 originally received from RB Capital & Equities, Inc. as
consideration for 100% of Gam Properties. This 1,120,000 represents a 3 for 1
forward split of the 373,333 shares of RB Capital & Equities common stock. The
acquisition was accounted for as a recapitalization of RB Capital because the
shareholders of RB Capital & Equities, Inc. controlled HRM after the
acquisition. Therefore, RB Capital & Equities, Inc. was treated as the acquiring
entity for accounting purposes and HRM was the surviving entity for legal
purposes.
On March 15, 1999 the shareholders also approved an amendment to the Articles of
Incorporation changing the corporate name to Triad Industries, Inc. On June 6,
2001 the Company issued 900,000 shares where by Triad Industries would acquire
100% of Corporate Capital Formation, Inc. In October 2001 Gam Properties and
Triad Industries combined operations. Gam Properties Corporation is to be
dissolved.
The Company has authorized 50,000,000 shares of $0.001 par value common stock.
The Company operates through its five subsidiaries:
1. RB Capital and Equities, Inc. is a financial services corporation that
operates a merger and acquisition consulting business. The company does
corporate filing and capital reorganization business for small emerging private
and public corporations.
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)
2. Miramar Road Associates, LLC. is presently inactive in the property
management business.
3. HRM, Inc. is presently inactive in the healthcare industry.
4. Triad Realty is not yet operating as a consolidating real estate
company.
5. Corporate Capital Formation, Inc. is a financial services corporation
that operates a merger and acquisition consulting business.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Companys financial statements are prepared using the accrual method of
accounting. The company has elected a December 31, year end.
b. Basis of Consolidation
The consolidated financial statements of Triad Industries, Inc. include
those accounts of RB Capital & Equity Inc., Healthcare Resource Management Inc.,
Miramar Road Associates, LLC. and Corporate Capital Formation, Inc. Triad
Industries owns title to all of the assets and liabilities of the consolidated
financial statement. All significant intercompany transactions have been
eliminated.
c. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
d. Estimates and Adjustments
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
reporting period. Actual results could differ from those estimates. In
accordance with FASB 16 all adjustments are normal and recurring. See note 2i
regarding the Companies revenue recognition policy.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Basis of Presentation and Considerations Related to Continued Existence
(going concern)
The Companys financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Companys management intends to raise additional operating funds through
operations, and debt or equity offerings. Management has yet to decide what type
of offering the Company will use or how much capital the Company will raise.
There is no guarantee that the Company will be able to raise any capital through
any type of offerings.
There is not substantial doubt about the Companies ability to continue as a
going concern.
f. Intangibles
Intangible assets consist of loan fees. The loan fees are being amortized on a
straight-line basis over the length of the loan.
g. Accounts Receivable
The Company considers accounts receivable to be fully collectible; accordingly,
no allowances for doubtful accounts are required. If amounts become
uncollectable, they will be charged to operations when that determination s
made.
h. Concentration of Credit Risk
The Company maintains credit with various financial institutions. Management
performs periodic evaluations of the relative credit standing of the financial
institutions. The Company has not sustained any material credit losses for the
instruments. The carrying values reflected in the balance sheets at June 30,
2002 reasonable approximate the fair values of cash, accounts payable, and
credit obligations. In making such assessment, the Company, has utilized
discounted cash flow analysis, estimated, and quoted market prices as
appropriate in accordance with paragraph 9 of SFAS 107. Note 3 reflects the fair
value of notes, trusts, and mortgages payable in accordance with paragraph 11,
12, and 13 of SFAS 107.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i. Investments in Securities
Marketable securities at June 30, 2002 are classified and disclosed as trading
securities under the requirements of SFAS No. 130. Under such statement, the
Companys securities are required to be reflected at fair market value. Changes
in the fair value of investments are reflected in the statement of operations
under other income and expenses.
j. Revenue Recognition and Deferred Revenue
Revenue includes the following: RB Capital & Equities, Inc. revenue consists of
consulting income. Corporate Capital Formation Inc. revenue consists of
consulting income. Corporate Capital recognizes revenue when services on
contracts are provided. Triad Industries, Inc. revenue consist of consulting
income and it consists of residential rental income. Triad Industries recognizes
revenue when services on contracts are provided and recognizes rental income at
each beginning of each on a receivable basis.
RB Capital & Equities, Inc. has various consulting contracts outstanding in
which the Company performs a set of various financial services. RB Capital
recognizes revenue when services on contracts are provided.
k. Principles of Consolidation
The consolidated financial statements include the accounts of Triad Industries,
Inc., the parent Company, Healthcare Management Resources, a Nevada corporation,
RB Capital & Equities Inc, a Nevada corporation, Miramar Road Associates Inc., a
California LLC. and Corporate Capital Formation Inc., a Nevada corporation. All
subsidiaries are wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
l. Line of Credit
The Company has a $50,000 line of credit. The line of credit is an adjustable
rate loan. The loan is an open revolving line of credit, and annual interest
terms of prime plus 3.65%. There are no restrictions on the use of this line of
credit. There is an outstanding balance of $8,649 as of June 30, 2002.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
m. Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of temporary differences by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. See note 6 regarding income tax benefit.
NOTE 3. TRUST DEEDS & MORTGAGES
Interest Rate Debt Maturity Date
350 W. 9th Avenue 7.820 % $739,083 12/08/26
4592 Bancroft 7.796 % 246,890 02/20/20
-------------------
-------------------
$ 985,973
===================
The office building and apartment complex collateralize the above loans.
The loan agreements provide for monthly payments of interest and principle.
The office building located at 350 W. 9th Avenue in Escondido, Ca. was
purchased on June 11, 2001.
The total debt of $985,973 was recorded as follows: current portion (less
than one year) of $15,170 and long-term portion (more than one year) of
$970,803.
NOTE 4. PROPERTY & EQUIPMENT
Property is stated at cost. Additions, renovations, and improvements are
capitalized. Maintenance and repairs, which do not extend asset lives, are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment.
June 30, December 31,
2002 2001
Land $ 300,000 $ 485,000
Buildings
770,000 1,268,164
Equipment 1,900 78,695
Computer 20,396 20,438
Furniture 16,188 13,312
Tenant Improvements 34,570 35,685
-----------------------------------
-----------------------------------
$ 1,143,054 $ 1,901,294
Less Accumulated Depreciation (54130) (107,417)
-----------------------------------
Net Property and Equipment $ 1,088,924 $ 1,793,877
===================================
On January 29, 2002 the Company sold the Balboa property for $391,000. The
Company also sold the Grand property on March 29, 2002 for 415,000.
NOTE 5. BASIC & DILUTED GAIN / (LOSS) PER COMMON SHARE
Basic gain / (loss) per common share has been calculated based on the
weighted average number of shares of common stock outstanding during the period.
Diluted gain / (loss) per common share has been calculated based on the weighted
average number of shares of common and preferred stock outstanding during the
period. The variance between basic and diluted weighted average is the addition
of preferred stock in the calculation of diluted weighted average per share.
June 30, June 30,
2002 2001
-------------------- -------------------
----------------------------------------
Numerator income / (loss) $ (1,453,971) $ 166,933
Denominator weighed average
number of shares outstanding 8,682,948 9,463,684
----------------------------------------
----------------------------------------
Basic gain / (loss) per share $ (0.16) $ 0.02
========================================
June 30, June 30,
2002 2001
----------------------------------------
----------------------------------------
Numerator income / (loss) $ (1,453,971) $ 166,933
Denominator weighed average
number of shares outstanding 10,440,267 11,163,684
----------------------------------------
----------------------------------------
Diluted gain / (loss) per share $ (0.13) $ 0.01
========================================
NOTE 6. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryfowards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
At June 30, 2002 the Company has significant operating and capital losses
carryfoward. The tax benefits resulting for the purposes have been estimated as
follows:
June 30, 2002
Net tax Losses :
Net tax loss carryforwards 2,932,499
--------------------------
Income Tax Benefit $ 741,756
==========================
Realization of deferred tax assets is dependent upon sufficient future
taxable income during the period that deductible temporary differences and
carryforward are expected to be available to reduce taxable income.
NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other
Unrealized gain (loss) on comprehensive income
securities (loss)
Beginning balance $ $
(0) (0)
Current-period change (378,434) (378,434)
----------------------------------------
----------------------------------------
Ending Balance $(378,434) $(378,434)
========================================
Accumulated other comprehensive income (loss) has been reported in
accordance with FASB 130 paragraph 26.
NOTE 8. MARKETABLE SECURITIES
At June 30, 2002, the Company held trading securities of the following
companies:
Trading Number of Mkt. Price FMV
Market Shares At Year End At Year End
Atlantic Syndication otc 5,000 0.04 200
First Genx.com otc 100,750 0.30 30,225
Merchantpark comm. otc 491,000 0.12 58,920
Mezzanine Capital otc 107,000 0.05 5,350
Millennium Plastics otc 30,000 0.13 300
Nicholas Inv. otc 980,353 0.12 117,642
Nxtech Wireless otc 141,667 0.01 1,417
One Stop Sales otc 5,000 2.00 1,000
Pro Glass Technologies, Inc. otc 104,446 0.20 20,889
Total Entertainment otc 55,000 0.02 1,100
VOIP Telecom otc 9,500 0.35 3,325
--------------------
Total $240,368
====================
The Company is in accordance with SFAS 130 when reporting trading
securities. All gain and loss are reported in the statement of operations under
other income and expenses. Trading securities are reported at market value as of
June 30, 2002.
NOTE 9. INVESTMENTS IN NONMARKETABLE EQUITIES
At June 30, 2002, the Company held investments in the following companies:
Number of Value Price FMV
Shares At Period End At June 30, 2002
Advanced Interactive Inc. 5,125 0.97 4,971
American Eagle Financial 55,000 0.10 5,500
Atlantic & Pacific Guarantee 1,000,000 0.02 18,000
Beach Brew Beverage Company 625,000 0.02 17,500
Blue Gold 125,000 0.01 125
Carrara 325,000 0.00 371
Heritage National Corporation 250,000 0.10 25,000
International Sports Marketing, Inc. 100,000 0.01 1,000
Love Calendar (Nevada) 100,000 0.01 1,000
Love Calendar (Utah) 25,000 1.00 25,000
Love Concepts 100,000 0.01 1,000
Noble One 25,000 0.10 2,500
Quantum Companies 1,030,000 0.10 103,000
Resume Junction 20,000 0.10 2,000
Sterling Electronic Commerce 300,000 0.05 15,000
The Shops Network 500 0.10 500
Trans Pacific Group 100,000 0.01 1,000
Thunder Mountain 100,000 0.01 1,000
--------------------------
--------------------------
Total $ 224,467
==========================
The Company owns less than 5% in each of these companies. The companies are
nonmarketable equities and are recorded at cost. Unrealized holding gains and
loss will be in accordance with paragraph 13 of SFAS 115 when and if the
Companies begin trading. In 1999, the Company returned 50,000 shares of $5.00
preferred stock of American Health Systems that was earned in 1998 because the
business plan was not approved by the state of California. This was considered a
disposition of stock. All gains and losses will be recorded in the statement of
operations under other income and expenses. As of June 30, 2002 the Company had
an 8.5% share of Pro Glass Technologies, Inc. Heritage National Corporation is a
privately owned Company.
NOTE 10. ACQUISITIONS
Triad Industries acquired Gam Properties and Miramar Road Associates, LLC
on February 26, 1999. Both acquisitions were recorded as a purchase in
accordance with Accounting Principles Board Opinions No. 16 (APB No. 16). Gam
Properties Inc. is in the residential rental business. Triad Industries issued
1,120,000 shares of common stock, the stocks trading value was $.63 per share in
the acquisition of Gam Properties. Gam Properties was valued at $700,000.
Miramar Road Associates, LLC. is in the commercial rental business. Triad
Industries issued 700,000 shares of $1.00 preferred stock in the acquisition of
Miramar Road Associates. Therefore, the 99% interest in Miramar Road Associates,
LLC. was valued at $700,000.
Triad Industries acquired HRM for 526,672 shares of common stock in
conjunction with a recapitalization of the Company.
On May 27, 2001, Triad Industries, Inc. acquired the assets subject to the
liabilities of Corporate Capital Formation, Inc. The acquisition was recorded as
a purchase in accordance with Accounting Principles Board Opinions No. 16 (APB
No. 16). Corporate Capital Formation, Inc. operates in the corporate business
consulting as well as business formation. There were no significant assets or
liabilities acquired from Corporate Capital Formation, Inc. Triad Industries,
Inc. will acquired 100% of the equity interest of from Corporate Capital
Formation, Inc. in return for voting common stock, and that from Corporate
Capital Formation, Inc. will become a wholly owned subsidiary of Triad
Industries, Inc. As per agreement Triad Industries, issued 900,000 shares of
common stock on June 6, 2001 for the purchase of Corporate Capital Formation,
Inc.
The operating results of the acquired entities are included in the
Companys consolidated financial statements from the date of acquisition.
NOTE 11. STOCK TRANSACTIONS
Transactions, other than employees stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever measure is deemed more
realizable.
As of January 1, 1998 there were 2,339,529 shares of common stock
outstanding. On June 1998, the Company issued 13,200 shares of common stock
valued at $1.07 per share for marketable securities. Since there is no market
for the Companys common stock, the shares were valued at the trading price of
the securities that were received.
NOTE 11. STOCK TRANSACTIONS (CONTINUED)
On June 17, 1998, the Company issued 60,000 shares of common stock valued at
$.90066 per share for marketable securities. Since there is no market for the
Companys common stock, the shares were valued at the trading price of the
securities that were received.
On June 17, 1998 the Company issued 30,480 shares of common stock for the
conversion of debt valued at $.334 per share.
On June 17, 1998, the Company issued 135,000 shares of common stock for
marketable securities valued at $.334 per share. Since there is no market for
the Companys common stock, the shares were valued at the trading price of the
securities that were received.
On June 17, 1998, the Company issued 300,000 shares of common stock for services
to officers of the Company valued at $.334 per share.
On November 4, 1998, the Company issued 375,000 shares of common stock for a
subscription receivable valued at $.166 per share.
On December 31, 1998 the Company issued 18,750 shares of common stock for debt
conversion valued at $.3234 per share.
On December 31, 1998, the Company issued 60,759 shares of common stock for
management fees valued at $.334 per share.
On December 31, 1998, the Company issued 60,486 shares of common stock for debt
conversion valued at $.334 per share.
On December 31, 1998, the Company issued 225,000 shares of common stock for
marketable securities valued at $.206 per share. Since there is no market for
the Companys common stock, the shares were valued at the trading price of the
securities that were received.
As of January 1, 1999 there were 3,633,204 shares of common stock outstanding.
On March 15, 1999 the Company issued 314,946 shares of common stock for services
issued valued at $.625 per share.
At the shareholders meeting held March 15, 1999 the stockholders approved the
acquisition of RB Capital and Equities, Inc. a Nevada corporation and its
subsidiaries for 1,120,000 shares of common stock and 700,000 shares of
preferred stock.
NOTE 11. STOCK TRANSACTIONS (CONTINUED)
In September the Company issued 150,000 shares of $1.00 par value preferred
stock (transaction was valued at the most readily determinable price; which was
the value of preferred stock) in exchange for 1.5 million shares of Pro Glass
Technologies, Inc. common stock. The 1.5 million shares represented (at the time
of acquisition) 8.5% of Pro Glass Technologies, Inc. outstanding common stock.
In December 1999, the Company issued 489,600 shares of common stock to
management and key employees for services rendered valued at $ 0.06 per share.
In December 1999 the Company issued 320,000 shares of common stock for cash @ $
0.22 per share. On December 31, 1999 there were 6,403,418 shares of common stock
and 850,000 shares of preferred stock outstanding.
On January 5, 2000 the Company issued 72,000 shares of common stock to Directors
for services rendered valued at $ 0.06 per share.
On March 1, 2000 the Company issued 123,000 shares of common stock to its
President for services rendered valued at $0.15 per share.
On June 15, 2000 the Company issued 72,000 shares of common stock to Directors
for services rendered valued at $ 0.50 per share.
On June 30, 2000 the Company issued 1,463,302 shares of common stock for the
purchase of Northwest LLC. valued at $ 0.96 per share.
On June 30, 2000 the Company issued 36,583 shares of common stock to Donner
Investment Corp. valued at $ 0.96 per share.
On October 1, 2000 the Company issued 200,000 shares of common stock to Novak
Capital valued at $ 0.20 per share.
On December 12, 2000 the Company issued 288,000 shares of common stock to
Directors for services rendered valued at $ 0.24 per share.
On January 15, 2001 the Company issued 50,000 shares of common stock for
consulting fees valued at $ 0.17 per share.
On January 18, 2001 the Company issued 144,762 shares of common stock for
management fees valued at $ 0.21 per share.
On February 21, 2001 the Company issued 25,100 shares of common stock to its
president for services rendered valued at $ 0.15 per share.
NOTE 11. STOCK TRANSACTIONS (CONTINUED)
On March 1, 2001 the Company issued 700,000 shares of common stock under the
employee stock option plan valued at $ 0.17 per share.
On June 6, 2001 the Company issued 900,000 shares of common stock for the
purchase of
Corporate Capital Formation Inc. valued at $ 0.11 per share.
On June 22, 2001 the Company issued 360,000 shares of common stock to Directors
for services rendered valued at $ 0.03 per share.
On October 1, 2001 the Company rescinded the March 1, 2001 issuance of 700,000
shares of common stock.
On January 1, 2002 the Company cancelled the stock issuance of 1,463,302 shares
of common stock issued in the purchase of Northwest Medical Clinic, Inc.
As of June 30, 2002 the Company had 8,674,863 shares of common stock issued and
outstanding.
NOTE 12. STOCKHOLDERS EQUITY
The stockholders equity section of the Company contains the following classes of
capital stock as of March 31, 2002.
(A) Preferred stock, nonvoting, $ 1.00 par value; 10,000,000 shares authorized;
850,000 shares issued and outstanding.
(B) Common stock, $ 0.001 par value; 50,000,000 shares authorized; 8,674,863 and
10,138,165 shares issued and outstanding as of June 30, 2002 and December 31,
2001, respectively.
The holders of preferred stock are entitled to receive dividends calculated
using an Available Cash Flow formula as prescribed by the Certificate of
Designation of Preferred Stock. There have not been any dividends declared as of
June 30, 2002.
The preferred stock is (1) non-voting; (2) convertible at the second anniversary
from issuance on a two for on (2:1) basis to common stock; (3) has a preference
over common stock to be paid $1.00 per share as a preferential liquidation.
NOTE 13. ISSUANCE OF SHARES FOR SERVICES STOCK OPTIONS
The company has a nonqualified stock option plan, which provides for the
granting of options to key employees, consultants, and nonemployees directors of
the Company. The valuations of shares for services are based on the fair market
value of services. The Company has elected to account for the stock option plan
in accordance with paragraph 30 of SFAS 123 were the compensation to employees
should be recognized over the period(s) in which the related employee services
are rendered. In accordance with paragraph 19 of SFAS 123 the fair value of a
stock option granted is estimated using an option-pricing model.
NOTE 14. DISCONTINUED OPERATIONS
Northwest Medical Clinic, Inc.
Effective January 1, 2002, Northwest Medical Clinic, Inc. division was sold. The
following is a summary of the loss from discontinued operation resulting from
the sale of Northwest Medical Clinic, Inc. No tax benefit has been attributed to
the discontinued operation.
For the Three Months Ended June 30,
2002 2001
------- ------- -----------------------
----------------------- -------------------------------------
REVENUES $ 0 $ 245,321
OPERATING EXPENSES
Costs of sales 0 70,532
General & administrative 0 167,335
--------------------------------------
--------------------------------------
Total Operating Expenses
Income from Operations 0 7,454
Other Income & (Expenses)
Interests expense 0 1,239
--------------------------------------
--------------------------------------
Total Income & (Expenses) 0 1,239
--------------------------------------
--------------------------------------
NET INCOME BEFORE TAXES $ 0 $ 6,215
INCOME TAXES 0 0
--------------------------------------
-----------------------
Loss from Discontinued Operations $(1,573,212) $ 0
======================================
The loss was incurred by Triad Industries, Inc. was due to the market value
of the stock price at the time of the sale of Northwest Medical Clinic, Inc. As
of the date of stock issuance for the purchase of Northwest Medical Clinic, Inc.
and the date of the sale the value of the stock had dropped $0.94 per share.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of June 30, 2002 the Company has $1,448,431in total current assets compared
to total current assets of $3,245,538 as of December 31, 2001. The major factor
in the reduction of current assets was the sale of the Northwest Medical Clinic
division, which when comparing the current assets Northwest Medical Clinic had $
1,633,083 in trade receivables as of December 31, 2001. As of June 30, 2002 the
current assets were comprised of $14,066 in cash, $437,044 in accounts
receivable, $4,800 in prepaid expenses, $240,368 in marketable securities,
$10,397 in tax impound accounts, and $741,756 in deferred tax benefits.
As of June 30, 2002 the Company has $169,617 in total current liabilities
compared to $551,109 as of December 31, 2001. Accounts payable decreased $43,796
mostly due to the sale of Northwest Medical Clinic. Loans payable decreased by
$199,722 predominately for the same reason. Salaries payable increased by
$26,150 because the management of Corporate Capital Formation, Inc. chose to
defer part of their salaries while the financial services sector increases
sales. Security deposits payable and the current portion of mortgages payable
were both off sharply due to the Company selling the last two of its
residential real estate holdings in the first quarter of 2002.
Results of Operations
For the three months ending June 30, 2002 the Company had a net loss from
continuing operations after tax effects in the amount of ($65,072) compared to
net income of $178,717 for the same period of 2001. This includes $5,895 in
depreciation and amortization expense compared to $70,352 for the same period of
2001. The sharp decrease is due to the Company divesting most of it's real
estate holdings. Administrative expenses also decreased $674,336 for the second
quarter of 2002 compared to the same period of 2001. This decrease is
predominately caused by the sale of the Northwest Medical Clinic. The Company
had a net loss on the sale of disposable assets in the amount of ($1,725) for
the three months ended June 30, 2002, this compares to a net gain on the sale of
disposable assets of $618,455 for the same period of 2001. The Company had a
loss on the sale of discontinued operations in the amount of $1,542,394. This is
from the sale of the Northwest Medical Clinic, Inc.
The Company had revenues of $70,593 for the three months ended June 30, 2002
compared with $571,720 for the same period last year. The major factor
contributing to the sharp decline in revenues is the sale of the Northwest
Medical Clinic. Also, in the opinion of management declining financial markets
yielded a sharp decline in revenues to the Company's two financial services
subsidiaries.
For the six months ending June 30, 2002 the Company had a net income from
continuing operations after tax effects in the amount of $88,423 compared to net
income of $235,547for the same period of 2001. This includes $9,895 in
depreciation and amortization expense compared to $149,811for the same period of
2001. The sharp decrease is due to the Company divesting most of it's real
estate holdings. Administrative expenses also decreased $937,238 for the six
months ended June 30, 2002 compared to the same period of 2001. This decrease is
predominately caused by the sale of the Northwest Medical Clinic. The Company
had a net gain on the sale of disposable assets in the amount of $93,283 for the
six months ended June 30, 2002 compares to a net gain on the sale of disposable
assets of $618,455 for the same period of 2001. The Company had a loss on the
sale of discontinued operations in the amount of $1,542,394. This is from the
sale of the Northwest Medical Clinic, Inc.
The Company had revenues of $372,200 for the six months ended June 30, 2002
compared with $1,248,296 for the same period last year. The major factor
contributing to the sharp decline in revenues is the sale of the Northwest
Medical Clinic. Also, in the opinion of management declining financial markets
yielded a sharp decline in revenues to the Company's two financial services
subsidiaries.
The Company functions in two sectors: financial services and real estate.
Six Months Ending
June 30, June 30,
2002 2001
Financial Services $ 305,733 $ 444,011
Real Estate 66,467 277,025
Medical Services* - 527,260
Total $ 372,200 $1,248,296
* Northwest Medical Clinic was sold on January 1, 2002.
Net Operating Loss
The Company has accumulated approximately $2,453,095 of net operating loss
carryforwards as of June 30, 2002, which may be offset against taxable income
and incomes taxes in future years. However of this accumulated net operating
loss $1,542,394 was from the sale of a discontinued operation. The loss from the
discontinued operation is not used to compute the Companys future tax benefit
nor can it be used to offset future income. The use of these to losses to reduce
future incomes taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net loss carryforwards. The carryforwards expire
in the year 2022. In the event of certain changes in control of the Company,
there will be an annual limitation on the amount of carryforwards, which can be
used. A tax benefit has been recorded in the Companys financial statements for
the year ended December 31, 2001 in the amount of $574,553 and for the six
months ended March 31, 2002 in the amount of $741,756.
Sale of Common Capital Stock
None.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wished to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve the
risk and uncertainties that could cause actual results to differ materially from
those expressed on or implied by the statements, including, but not limited to,
the following: the ability of the Company to successfully meet its cash and
working capital needs, the ability of the Company to successfully market its
product, and other risks detailed in the Companys periodic report filings with
the Securities and Exchange Commission.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. 10QSB filed by reference on April 15, 2002.
b. 10KSB filed by reference on May 16, 2002.
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.
TRIAD INDUSTRIES, INC.
Dated: August 16, 2002
By:_____________________
Linda Bryson
President, Director
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Triad Industries Inc. (the Company)
on Form 10-Q(SB) for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I Linda
Bryson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to the
best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
Linda Bryson
Chief Executive Officer
Dated: August 16, 2002