UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter report ended September 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 September 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 - September 30, 2002
And December 31, 2001 3-4
Consolidated Statements of Operations - nine months
Ended September 30, 2002 and
September 30, 2001 5-6
Consolidated Statement of Comprehensive
(Loss) Income 7
Consolidated Statements of Stockholder Equity 8-10
Consolidated Statements of Cash Flows - nine months
Ended September 30, 2002 and
September 30, 2001 11-12
Notes to Consolidated Financial Statements 13-19
Item 2. Managements Discussion and Analysis and
Result of Operations 20-22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matter to be a Vote of 23
Securities Holders
Item 5. Other Information on Form 8-K 23
Item 6. Exhibits and Reports on 8K 23
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 September 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 nine months ended September 30, 2002 and
September 30, 2001 and the statement of stockholders equity for the period of
January 1, 1998 to September 30, 2002 are
attached hereto and incorporated herein by this reference.
Operating results for the quarters ended September 30, 2002 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2002.
1
296 H Street, 2nd Floor, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
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 September 30, 2002
and December 31, 2001, and the related statements of operations, changes in
stockholders equity, and cash flows for the nine and three months ended
September 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
November 8, 2002
Chula Vista, California
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001
ASSETS
2002 2001
CURRENT ASSETS
Cash $ 28,529 $ 15,643
Accounts receivable 229,306 444,461
Accounts receivable -
medical clinic (see note 2g) - 1,633,083
Advance expenses - 5,815
Marketable securities 96,805 561,159
Impound account 13,740 10,824
Assets held for sale - 716,514
Deferred tax benefit 806,533 574,553
Total Current Assets 1,174,913 3,962,052
NET PROPERTY & EQUIPMENT 1,082,568 1,077,363
OTHER ASSETS
Investments in nonmarketable equities 130,838 388,832
Net loan fees 1,392 7,324
Total Other Assets 132,230 396,156
TOTAL ASSETS $2,389,711 $5,435,571
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
2002 2001
CURRENT LIABILITIES
Accounts payable $ 33,072 $ 73,726
Loans payable 78,380 278,102
Salaries payable 27,050 -
Line of credit 7,360 30,078
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 172,370 551,109
LONG-TERM LIABILITIES
Trust deeds and mortgages
long-term portion 721,365 1,394,159
Total Long-Term Liabilities 721,365 1,394,159
TOTAL LIABILITIES 893,735 1,945,268
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par
value, 10,000,000 shares
authorized 850,000 shares
issued and outstanding for
for September 2002 and
December 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
September 2002 and December
2001, respectively.) 8,675 10,138
Paid-in capital 3,764,955 3,792,758
Stock subscription receivable (62,500) (62,500)
Retained earnings (2,435,115) (999,124)
Comprehensive income (loss) (630,039) (100,970)
Total Stockholders' Equity 1,495,976 3,490,302
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $ 2,389,711 $ 5,435,571
Consolidated Statements of Operations
For the Nine and Three Months Ended September 30, 2002 and 2001
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
REVENUES
Consulting income $ 405,752 $ 560,782
Medical fee income - 793,377
Rental income 104,518 325,252
Management income 800 -
Costs of revenues (32,442) (94,035)
GROSS PROFIT 478,628 1,585,375
OPERATING COSTS
Bad debt expense 9,895 216,159
Depreciation & amortization 33,022 61,759
Administrative expenses 258,811 1,383,956
Total Operating Costs 301,728 1,661,874
NET OPERATING (LOSS) 176,900 (76,499)
OTHER INCOME & (EXPENSES)
Interest income 2,692 2,099
Other income 2,885 4,484
Other expenses (45,073) (4,536)
Net realized gain (loss) on
sale of marketable securities (20,654) 38,047
Net gain / (loss) on
disposable assets 93,283 (4,083)
Vending - 10
Sale of assets - net - 618,455
Interest expense (63,060) (202,290)
Total Other Income & Expenses (29,927) 452,188
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAX 146,973 375,689
INCOME TAX (PROVISION)
BENEFIT (40,570) (127,734)
INCOME (LOSS) FROM
CONTINUING OPERATIONS AFTER TAX $ 106,403 $ 247,955
DISCONTINUED OPERATIONS
Loss on sale of Northwest
Medical Clinic, Inc. $ (1,542,394)$ -
NET INCOME / (LOSS) $ (1,435,991)$ 247,955
Three Months Three Months
Ended Ended
September 30, September 30,
2002 2001
REVENUES
Consulting income $ 100,019 $ 116,771
Medical fee income - 266,117
Rental income 38,051 48,227
Management income 800 -
Costs of revenues (2,615) (20,307)
GROSS PROFIT 136,255 410,807
OPERATING COSTS
Bad debt expense - 66,348
Depreciation & amortization 12,164 12,933
Administrative expenses 68,122 297,928
Total Operating Costs 80,286 377,209
NET OPERATING (LOSS) 55,969 33,598
OTHER INCOME & (EXPENSES)
Interest income 1 265
Other income - 4,436
Other expenses - (4,536)
Net realized gain (loss) on
sale of marketable securities (10,524) 21,063
Net gain / (loss) on
disposable assets - (4,083)
Vending - -
Sale of assets - net - -
Interest expense (14,644) (31,946)
Total Other Income & Expenses (25,167) (14,800)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAX 30,802 18,799
INCOME TAX (PROVISION)
BENEFIT (4,620) (2,820)
INCOME (LOSS) FROM CONTINUING
OPERATIONS AFTER TAX $ 26,182 $ 15,979
DISCONTINUED OPERATIONS
Loss on sale of Northwest
Medical Clinic, Inc. $ - $ -
NET INCOME / (LOSS) $ 26,182 $ 15,979
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Comprehensive Income (Loss)
For the Nine and Three Months Ended September 30, 2002 and 2001
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
Net Income (Loss) - Net of Tax $(1,435,991) $ 247,955
Other Comprehensive (Loss) :
Unrealized gain (loss) on securities (801,619) (157,460)
Total Other Comprehensive (Loss) (801,619) (157,460)
Comprehensive Income (Loss) Before Income Taxes $ (801,619) $ (157,460)
Income Taxes (Provision) / Benefit
Related to Items of Comprehensive Income 272,550 59,374
Comprehensive Income (Loss) $ (529,069) $ (98,086)
Three Months Three Months
Ended Ended
September 30, September 30,
2002 2001
Net Income (Loss) - Net of Tax $ 26,182 $ 15,979
Other Comprehensive (Loss) :
Unrealized gain (loss) on securities (228,234) (46,772)
Total Other Comprehensive (Loss) (228,234) (46,772)
Comprehensive Income (Loss) Before Income Taxes $(228,234) $ (46,772)
Income Taxes (Provision) / Benefit
Related to Items of Comprehensive Income 72,261 7,016
Comprehensive Income (Loss) $(155,973) $ (39,756)
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Stockholders' Equity
From December 31, 1997 to September 30, 2002
Preferred Preferred Common Common
Shares Stock Shares Stock
Balance, December 31, 1997 $2,339,529 $ 2,340
Common stock issued June 17,1998
for securities valued @ $1.07 per share 13,200 13
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share 60,000 60
Common stock issued June 17, 1998
for securities valued @ $.084 per share 15,000 15
Common stock issued June 17, 1998
for note payable @ $.334 per share 30,480 30
Common stock issued June 17, 1998
for securities valued @ $.334 per share 135,000 135
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share 300,000 300
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share 375,000 375
Common stock issued December 31, 1998
for note payable @ $.3234 per share 18,750 19
Common stock issued December 31, 1998
for management fees @ $.334 per share 60,759 61
Common stock issued December 31, 1998
for note payable @ $.334 per share 60,486 60
Common stock issued December 31,1998
for securities valued @ $.206 per share 225,000 225
Contributed capital
Net loss for the year ended
December 31,1998
Balance, December 31, 1998 3,633,204 3,633
Additional Stock
Paid-in Subscription Retained
Capital Receivable Earnings
Balance, December 31, 1997 $ 633,096 $ - $ 95,266
Common stock issued June 17,1998
for securities valued @ $1.07 per share 14,096
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share 53,940
Common stock issued June 17, 1998
for securities valued @ $.084 per share 1,235
Common stock issued June 17, 1998
for note payable @ $.334 per share 10,131
Common stock issued June 17, 1998
for securities valued @ $.334 per share 44,865
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share 99,700
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share 62,125 (62,500)
Common stock issued December 31, 1998
for note payable @ $.3234 per share 6,031
Common stock issued December 31, 1998
for management fees @ $.334 per share 20,192
Common stock issued December 31, 1998
for note payable @ $.334 per share 20,102
Common stock issued December 31,1998
for securities valued @ $.206 per share 46,025
Contributed capital 4,139
Net loss for the year ended
December 31,1998 (62,126)
Balance, December 31, 1998 1,015,677 (62,500) 33,140
Comprehensive
Income Total
(Loss)
Balance, December 31, 1997 $ - $ 730,702
Common stock issued June 17,1998
for securities valued @ $1.07 per share - 14,109
Common stock issued June 17, 1998 for
securities valued @ $.90066 per share - 54,000
Common stock issued June 17, 1998
for securities valued @ $.084 per share - 1,250
Common stock issued June 17, 1998
for note payable @ $.334 per share - 10,161
Common stock issued June 17, 1998
for securities valued @ $.334 per share - 45,000
Common stock issued June 17, 1998
for services (officers) valued @ $.334
per share - 100,000
Common stock issued November 4,
1998 for subscription receivable
@ $.166 per share - -
Common stock issued December 31, 1998
for note payable @ $.3234 per share - 6,050
Common stock issued December 31, 1998
for management fees @ $.334 per share - 20,253
Common stock issued December 31, 1998
for note payable @ $.334 per share - 20,162
Common stock issued December 31,1998
for securities valued @ $.206 per share - 46,250
Contributed capital - 4,139
Net loss for the year ended
December 31,1998 - (62,126)
Balance, December 31, 1998 - 989,950
Preferred Preferred Common Common
Shares Stock Shares Stock
Balance, December 31, 1998 3,633,204 3,633
Recapitalization (Note 1) 526,672 527
Common stock issued March 15, 1999
for services valued @ $0.63 per share 313,942 314
Common stock issued on March 15,
1999 for the purchase of Gam
Properties, Inc. @ $0.63 per share 1,120,000 1,120
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 320,000 320
Common stock issued December 1999
for management fees @ $0.06 per share 489,600 489
Net loss for the year ended
December 31, 1999
Balance, December 31, 1999 850,000 850,000 6,403,418 6,403
Stock issued on January 5, 2000
to Directors @ $0.06 a share 72,000 72
Stock issued on March 1, 2000 for
services rendered @ $0.15 a share 123,000 123
Stock issued on June 15, 2000
to Directors @ $0.50 a share 72,000 72
Stock issued on June 30, 2000 for
the Purchase of Northwest, LLC.
@ $0.96 a share 1,463,302 1,463
Stock issued on June 30, 2000 to Donner
Investment Corp. @ $0.96 a share 36,583 37
Stock issued on October 1, 2000 to
Novak Capital @ $0.20 a share 200,000 200
Stock issued on December 12, 2000
to Directors @ $0.24 a share 288,000 288
Net loss for the year ended
December 31, 2000
Balance, December 31, 2000 850,000 850,000 8,658,303 8,658
Additional Stock
Paid In Subscription Retained
Capital Receivable Earnings
Balance, December 31, 1998 1,015,677 (62,500) 33,140
Recapitalization (Note 1) 33,396 (20,000)
Common stock issued March 15, 1999
for services valued @ $0.63 per share 196,527
Common stock issued on March 15,
1999 for the purchase of Gam
Properties, Inc. @ $0.63 per share 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 71,625
Common stock issued December 1999
for management fees @ $0.06 per share 28,886
Net loss for the year ended
December 31, 1999 (712,680)
Balance, December 31, 1999 2,044,991 (62,500) (679,540)
Stock issued on January 5, 2000
to Directors @ $0.06 a share 4,248
Stock issued on March 1, 2000 for
services rendered @ $0.15 a share 17,877
Stock issued on June 15, 2000
to Directors @ $0.50 a share 35,928
Stock issued on June 30, 2000 for
the Purchase of Northwest, LLC.
@ $0.96 a share 1,399,555
Stock issued on June 30, 2000 to Donner
Investment Corp. @ $0.96 a share 35,083
Stock issued on October 1, 2000 to
Novak Capital @ $0.20 a share 39,800
Stock issued on December 12, 2000
to Directors @ $0.24 a share 67,392
Net loss for the year ended
December 31, 2000 (392,811)
Balance, December 31, 2000 3,644,874 (62,500) (1,072,352)
Comprehensive
Income Total
(loss)
Balance, December 31, 1998 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)
Balance, December 31, 1999 - 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)
Balance, December 31, 2000 - 3,368,680
Preferred Preferred Common Common
Shares Stock Shares Stock
Balance, December 31, 2000 850,000 850,000 8,658,303 8,658
Stock issued on January 15, 2001
for consulting fees @ $0.17 a share 50,000 50
Stock issued on January 18, 2001 for
management fees @ $0.21 a share 144,762 145
Stock issued on February 21, 2001
for consulting fees @ $0.15 a share 25,100 25
Stock issued on March 1, 2001 to
management fees @ $0.17 a share 700,000 700
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $0.11 per share 900,000 900
Stock issued on June 22, 2001
to Directors @ $0.03 a share 360,000 360
October 1, 2001 cancellation of
stock subscription (700,000) (700)
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 10,138
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share (1,463,302) (1,463)
Comprehensive (loss) September 30, 2002
Net loss for the nine months ended
September 30, 2002
Balance, September 30, 2002 $ 850,000 $ 850,000 $8,674,863 $ 8,675
Additional Stock
Paid In Subscription Retained
Capital Receivable Earnings
Balance, December 31, 2000 3,644,874 (62,500) (1,072,352)
Stock issued on January 15, 2001
for consulting fees @ $0.17 a share 8,450
Stock issued on January 18, 2001 for
management fees @ $0.21 a share 30,179
Stock issued on February 21, 2001
for consulting fees @ $0.15 a share 3,715
Stock issued on March 1, 2001 to
management fees @ $0.17 a share 118,300 (119,000)
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $0.11 per share 95,100
Stock issued on June 22, 2001
to Directors @ $0.03 a share 10,440
October 1, 2001 cancellation of
stock subscription (118,300) 119,000
Comprehensive (loss) December 31, 2001
Net loss for the year ended
December 31, 2001 73,228
Balance, December 31, 2001 3,792,758 (62,500) (999,124)
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share (27,803)
Comprehensive (loss) September 30, 2002
Net loss for the nine months ended
September 30, 2002 (1,435,991)
Balance, September 30, 2002 $ 3,764,955 $ (62,500) $(2,435,115)
Comprehensive
Income Total
(Loss)
Balance, December 31, 2000 - 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) (100,970)
Net loss for the year ended
December 31, 2001 - 73,228
Balance, December 31, 2001 (100,970) 3,490,302
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $ 0.02 a share - (29,266)
Comprehensive (loss) September 30, 2002 (529,069) (529,069)
Net loss for the nine months ended
September 30, 2002 - (1,435,991)
Balance, September 30, 2002 $ (630,039) $ 1,495,976
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Cash Flows
For the Nine and Three Months Ended September 30, 2002 and 2001
Nine Months Nine Months
Ended Ended
September 30, September 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $ (1,435,991)$ 247,955
Depreciation & amortization expense 33,022 61,759
(Increase) decrease in accounts receivable 1,848,238 (335,664)
(Increase) decrease in advances 5,815 (4,840)
(Increase) decrease in impound account (2,916) 3,565
(Increase) decrease income tax benefit (231,980) 127,734
Increase (decrease) in accounts payable (40,654) 20,694
Increase (decrease) in assets held for sale - 355,344
Increase (decrease) in security deposits (3,182) (36,727)
Increase (decrease) in salaries payable 27,050 -
Increase (decrease) in taxes payable (3,774) -
Valuation of marketable securities 28,944 (170,896)
Purchase of marketable securities - (1,211)
Sale of marketable securities - (52,216)
Loan fees 5,932 81,538
Common stock issued for services - 268,364
Net cash provided (used) by
operating activities 230,504 565,399
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in fixed assets (38,227) 2,207,794
Net cash provided (used) by
investing activities (38,227) 2,207,794
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (22,718) 882
Change in investment property mortgage - (4,203)
Change in investment in securities
available for sale 164,335 (393,832)
Change in additional paid-in capital (27,803)
Change in common stock (1,463) (119,000)
Change in lease payable - (224)
Change in assets held for sale 167,514 -
Change in notes and mortgages payable (459,256) (2,307,891)
Net cash provided (used) by
financing activities (179,391) (2,824,268)
Net increase (decrease) in cash 12,886 (51,073)
Cash at beginning of period 15,643 54,384
Cash at end of period $ 28,529 $ 3,310
Supplemental Cash Flow Disclosures:
Cash paid during year for interest $ 63,060 $ 202,290
Schedule of Non-Cash Activities
Loss on sale of Northwest
Medical Clinic, Inc. $ 1,542,394 $ -
Common stock issued for services $ - $ 268,364
Common stock received for services $ 150,000 $ 365,916
Common stock retired on the sale
of Northwest Medical Clinic, Inc. $ 29,266 $ -
Three Months Three Months
Ended Ended
September 30, September 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $ 26,182 $ 15,979
Depreciation & amortization expense 12,164 12,933
(Increase) decrease in accounts receivable 207,738 (33,006)
(Increase) decrease in advances 4,800 (3,390)
(Increase) decrease in impound account (3,343) -
(Increase) decrease income tax benefit (67,641) 2,820
Increase (decrease) in accounts payable 3,142 38,703
Increase (decrease) in assets held for sale - -
Increase (decrease) in security deposits - 1,863
Increase (decrease) in salaries payable 900 -
Increase (decrease) in taxes payable - (2,437)
Valuation of marketable securities 69,085 350,473
Purchase of marketable securities - -
Sale of marketable securities - -
Loan fees 5,807 (2,500)
Common stock issued for services - -
Net cash provided (used) by
operating activities 258,834 381,438
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in fixed assets 6,356 (44,409)
Net cash provided (used) by
investing activities 6,356 (44,409)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (1,289) 3,327
Change in investment property mortgage - -
Change in investment in securities
available for sale - (393,832)
Change in additional paid-in capital - -
Change in common stock - -
Change in lease payable - -
Change in assets held for sale - -
Change in notes and mortgages payable (249,438) (30,676)
Net cash provided (used) by
financing activities (250,727) (421,181)
Net increase (decrease) in cash 14,463 (84,152)
Cash at beginning of period 14,066 87,462
Cash at end of period $ 28,529 $ 3,310
Supplemental Cash Flow Disclosures:
Cash paid during year for interest $ 14,644 $ 31,946
Schedule of Non-Cash Activities
Loss on sale of Northwest
Medical Clinic, Inc. $ - $ -
Common stock issued for services $ - $ -
Common stock received for services $ - $ 49,500
Common stock retired on the sale
of Northwest Medical Clinic, Inc. $ - $ -
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 September
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 September 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 $7,360 as of September 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 % $ 736,535 12/08/26
$ 736,535
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 $736,535 was recorded as follows: current portion (less than
one year) of $30,000 and long-term portion (more than one year) of $706,535.
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.
September 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 (60,486) (107,417)
-----------------------------------
Net Property and Equipment $ 1,082,568 $ 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.
September 30, September 30,
2002 2001
Numerator income / (loss) $(1,453,991) $ 247,955
Denominator weighed average
number of shares outstanding 8,674,863 9,463,684
----------------------------------------
Basic gain / (loss) per share $ (0.15) $ 0.06
September 30, September 30,
2002 2001
----------------------------------------
Numerator income / (loss) $ (1,453,991) $ 247,955
Denominator weighed average
number of shares outstanding 10,374,863 11,163,684
----------------------------------------
----------------------------------------
Diluted gain / (loss) per share $ (0.13) $ 0.04
========================================
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 September 30, 2002 the Company has significant operating and capital losses
carryfoward. The tax benefits resulting for the purposes have been estimated as
follows:
September 30, 2002
Net tax Losses :
Net tax loss carryforwards 3,003,339
--------------------------
Income Tax Benefit $ 774,689
==========================
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. Net operating loss
expires twenty years from the date the loss was incurred. In accordance with
SFAS 109 paragraph 24 the Company has deemed that a valuation allowance is not
needed.
NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other
Unrealized gain (loss) on comprehensive income
securities (loss)
Beginning balance $ (0( $(100,970)
Current-period change (707,960) (467,254)
----------------------------------------
----------------------------------------
Ending Balance $(707,960) $(568,224)
========================================
Accumulated other comprehensive income (loss) has been reported in accordance
with FASB 130 paragraph 26.
NOTE 8. MARKETABLE SECURITIES
At September 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
First Genx.com otc 100,750 0.25 25,188
Merchant Park comm. otc 411,000 0.01 4,110
Mezzanine Capital otc 107,000 0.03 3,210
Millennium Plastics otc 30,000 0.01 300
Nicholas Inv. otc 919,853 0.03 25,996
One Stop Sales otc 5,000 2.00 10,000
Pro Glass Technologies, Inc. otc 104,446 0.25 26,111
VOIP Telecom otc 7,000 0.27 1,890
Total $ 96,805
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 September
30, 2002.
NOTE 9. INVESTMENTS IN NONMARKETABLE EQUITIES
At September 30, 2002, the Company held investments in the following companies:
Number of Value Price FMV
Shares At Period End At September 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 1,030,290 0.01 9,370
Resume Junction 20,000 0.10 2,000
Sterling Electronic Commerce 300,000 0.05 15,000
The Shops Network 5,000 0.10 500
Trans Pacific Group 100,000 0.01 1,000
Thunder Mountain 100,000 0.01 1,000
--------------------------
Total $ 130,838
The Company owns less than 5% in each of these companies with the exception of
Quantum Companies. Quantum Companies is recorded on the equity method. 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 September 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 interest in Miramar Road Associates, LLC. was
valued at $700,000. In September 2000, the Company absorbed a contingent
liability on behalf of the old owner of Miramar for the remaining 1%. All shares
issued for the acquisition of Gam Properties and Miramar Road Associates were
valued at market price.
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. All shares issued for the acquisition of Corporate Capital Formation, Inc.
was valued at market price.
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 employeees 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.
NOTE 11. STOCK TRANSACTIONS (CONTINUED)
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.
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 September 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.
As of September 30, 2002 there were no stock options issued or outstanding.
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 September 30,
2002 2001
REVENUES $ 0 $ 266,117
OPERATING EXPENSES
Costs of sales 0 88,739
General & administrative 0 138,276
-------------------------------------------
-------------------------------------------
Total Operating Expenses
Income from Operations 0 39,102
Other Income & (Expenses)
Interests expense 0 965
-------------------------------------------
-------------------------------------------
Total Income & (Expenses) 0 965
-------------------------------------------
-------------------------------------------
NET INCOME BEFORE TAXES $ 0 $ 38,137
INCOME TAXES 0 0
-------------------------------------------
----------------------------
Loss from Discontinued Operations $(1,542,394) $ 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 September 30, 2002, the Company has $1,174,913in total current assets
compared to total current assets of $3,962,052 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.
Also contributing to the asset decrease, the Company sold the remaining
residential properties it held that were on the balance sheet as of December 31,
2001 in the amount of $716,514. Also contributing to this decrease was a sharp
decline in the value of the marketable securities the Company holds. As of
September 30, 2002 the Company holds $96,805 in marketable securities compared
to $561,159 as of December 31, 2002. As of September 30, 2002 the current assets
were comprised of $28,529 in cash, $229,306 in accounts receivable, $96,805 in
marketable securities, $13,740 in tax impound accounts, and $806,533 in deferred
tax benefits.
As of September 30, 2002 the Company has $172,370 in total current
liabilities compared to $551,109 as of December 31, 2001. Accounts payable
decreased $39,651 mostly due to the sale of Northwest Medical Clinic. Loans
payable decreased by $199,722 predominately for the same reason. Salaries
payable increased by $27,050 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 both decreased 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 September 30, 2002, the Company had income from
continuing operations after tax in the amount of $26,182 compared to income from
continuing operations after tax in the amount of $15,979 for the same period of
2001. This includes $12,164 in depreciation and amortization expense compared to
$12,933 for the same period of 2001. Administrative expenses also decreased
$229,806 for the third quarter of 2002 compared to the same period of 2001. This
decrease is mostly caused by the sale of the Northwest Medical Clinic. There was
a sharp drop in interest expense in the third quarter of 2002. Interest expense
dropped from $31,946 for the three months ended September 30, 2001 to $14,644
for the three months ended September 30, 2002. This is due to the Company
divesting of all of the residential real properties it held. The Company also
had a net loss on the sale of marketable securities of $10,524 for the three
months ended September 30, 2002 compared to a net gain of $21,063 for the same
period the year before. This can be attributed to the overall performance of the
stock market. For the three months ended September 30, 2002 the Company had net
income of $26,182.
The Company had revenues of $138,870 for the three months ended September
30, 2002, compared with $431,114 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 sale of the last two residential real estate properties also
contributed to the decrease in revenues. The Companys commercial real property
is 100% occupied.
For the nine months ending September 30, 2002, the Company had net income
from continuing operations after tax effects in the amount of $106,403, compared
to net income from continuing operations after tax effects of $247,955, for the
same period of 2001. This includes $9,895 in bad debt expense, compared to
$216,159 for the same period of 2001. Bad Debt expense decreased significantly
due to the sale of Northwest Medical Clinic, Inc. Administrative expenses also
decreased $1,125,145 for the nine months ended September 30, 2002, compared to
the same period of 2001.This decrease is also predominately caused by the sale
of the Northwest Medical Clinic. Depreciation and Amortization was almost cut in
half for the nine months ended September 30, 2002 to $33,022. This is due to the
Company divesting of most of its real properties. The Company had a net gain on
the sale of disposable assets in the amount of $93,283 for the nine months ended
September 30, 2002, compared to a net gain on the sale of disposable assets of
$614,372 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. For the nine months ended September 30, 2002
the Company had a net loss of $1,435,991.
The Company had revenues of $511,070 for the nine months ended September
30, 2002, compared to $1,679,410 for the same period last year. The major factor
contributing to the sharp decline in revenues is the sale of the Northwest
Medical Clinic. The sale of the last two residential real estate properties also
contributed to the decrease in revenues. 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.
Nine Months Ending
September 30, September 30,
2002 2001
Financial Services $ 405,752 $ 560,782
Real Estate 105,318 325,252
Medical Services* - 793,377
Total $ 511,070 $1,679,410
*Northwest Medical Clinic was sold on January 1, 2002.
For the three months ended September 30, 2002 the Financial Services sector
was slightly off when compared to the same period of 2001. Financial Services
revenue decreased approximately $16,500 when comparing the third quarter of 2002
to the same period of 2001. In the opinion of management this was due to further
deteriorating financial markets. These deteriorating financial markets made
liquidity very difficult on small companies who are the primary clients of the
financial services sector. Operating costs in this sector remained fairly
constant except for an approximate decrease of $30,000 in salaries and wages due
to the downsizing of the office of Corporate Capital Formation, Inc.
For the three months ended September 30, 2002 the real estate sector
remained strong. The commercial building owned by the real estate sector is 100%
occupied. Rental revenue for the three months ended September 30, 2002 were
$38,050 compared to $48,226 for the same period the year before. The reason for
the decrease in rental revenues stems from the Company selling the final
remaining properties from the Gam Properties, Inc. division. Last year at this
time the Company held residential and commercial property. Currently, the
Company is only holding one commercial building. Other than the decrease in
operating costs due to the sale of the final units in the Gam Properties, Inc.
division operational costs remained fairly constant.
For the nine months ended September 30, 2002 the Financial Services sector
was off approximately 20%. In the opinion of management this was due to further
deteriorating financial markets. These deteriorating financial markets made
liquidity very difficult on small companies who are the primary clients of the
financial services sector. Once again operating costs remained fairly constant.
The Financial Services sector did experience a net loss on the sale of
marketable securities in the amount of $20,654 compared to a gain on the sale of
marketable securities of $38,407 for the same period of 2001.
For the nine months ended September 30, 2002 rental revenues for the
properties that were still held by the Company when compared to the same period
the year before were increased. This is due to the fact that when the commercial
property was purchased there were several vacancies. The commercial property is
currently 100% occupied. As stated prior the last remaining Gam Properties, Inc.
properties were disposed of this year. Those properties were also 100% occupied
at the time of sale. Operational costs related to the real estate division of
the Company remained fairly constant.
Net Operating Loss
The Company has accumulated approximately $3,065,154 of net operating loss
carryforwards as of September 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. Also, $630,039 of the
net operating loss carryforwards was from comprehensive losses.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 nine months ended September 30, 2002 in the
amount of $806,533.
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 SECURITIES
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.
b. Reports on Form 8K
None.
b. Form 10QSB filed by reference on August 21, 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.
INDUSTRIES, INC.
Dated: September 15, 2002
By:/S/ Linda Bryson
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: September 15, 2002