Microsoft Word 10.0.3416;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 June 30, 2003
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 #204, 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, 2003
Common Stock, $0.001 532,300
i
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1-2
Consolidated Balance Sheets - June 30, 2003
And December 31, 2002 3-4
Consolidated Statements of Operations - six months
Ended June 30, 2003 and June 30, 2002 5-7
Consolidated Statements of Stockholders Equity 8
Consolidated Statements of Cash Flows - six months
Ended June 30, 2003 and June 30, 2002 9-10
Notes to Consolidated Financial Statements 11-23
Item 2. Managements Discussion and Analysis and
Result of Operations 24-26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Submission of Matter to be a Vote of 26
Securities Holders
Item 5. Other Information on Form 8-K 26
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, 2003, and the related
balance sheet of the Company as of December 31, 2002, which is derived from the
Companys audited financial statements, the unaudited statement of operations
and cash flows for the six months ended June 30, 2003 and June 30, 2002 and the
statement of stockholders equity for the period of December 31, 2000 to June 30,
2003 are included in this document.
Operating results for the quarters ended June 30, 2003 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2003.
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Notes to the Consolidated Financial Statements
As of June 30, 2003
371 E Street, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
Armando C. Ibarra, C.P.A.
Certified Public Accountants
Armando Ibarra, Jr., C.P.A., JD
Public Accountants
Members of the Better Business Bureau since 1997
To the Board of Directors
Triad Industries, Inc.
(Formerly RB Capital & Equities, Inc.)
350 West 9th Avenue., Suite A
Escondido, CA 92025
INDEPENDENT AUDITORS REPORT
We have reviewed the accompanying consolidated balance sheets of Triad
Industries, Inc. (Formerly RB Capital & Equities, Inc.) as of June 30, 2003, and
the related statements of operations, changes in stockholders equity, and cash
flows for the six and three months ended June 30, 2003 and 2002, 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 5, 2003
Chula Vista, California
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
ASSETS
As of Year Ended
June 30, December 31,
2003 2002
CURRENT ASSETS
Cash $ 903 $ 19,832
Accounts receivable 83,279 82,312
Marketable securities 14,194 57,001
Escrow account - property taxes 7,705 10,102
Total Current Assets 106,081 169,247
NET PROPERTY & EQUIPMENT 1,053,821 1,074,900
OTHER ASSETS
Investment in securities available for sale 170,246 171,389
Net loan fees 6,750 6,902
Deferred tax benefit 853,003 834,691
Total Other Assets 1,029,999 1,012,982
TOTAL ASSETS $2,189,901 $2,257,129
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
As of Year Ended
June 30, December 31,
2003 2002
CURRENT LIABILITIES
Accounts payable $ 37,134 $ 25,087
Loans payable 112,082 105,800
Line of credit 6,227 7,038
Taxes payable 6,251 6,251
Security deposits 6,826 5,087
Trust deeds and mortgages
- - Short-term portion 150,910 150,910
Total Current Liabilities 319,430 300,173
LONG-TERM LIABILITIES
Trust deeds and mortgages
- - Long-term portion 578,401 583,898
Total Long-Term Liabilities 578,401 583,898
TOTAL LIABILITIES 897,831 884,071
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par
value, 10,000,000 shares
authorized 7,500 shares
issued and outstanding for
June 30, 2003 and December
31, 2002, respectively) 7,500 7,500
Common stock ($0.001 par value,
50,000,000 shares authorized
532,300 and 504,800 shares
issued and outstanding
as of June 30, 2003 and
December 31, 2002, respectively)
respectively) 532 504
Additional paid-in capital 4,621,098 4,615,626
Stock subscription receivable (62,500) (62,500)
Accumulated other comprehensive loss (818,813) (794,290)
Retained earnings (deficit) (2,455,747) (2,393,782)
Total Stockholders' Equity 1,292,070 1,373,058
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $ 2,189,901 $ 2,257,129
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Operations
Six Months Six Months Three Months Three Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
REVENUES
Consulting income $ 85,205 $ 305,733 $ 47,695 $ 36,675
Rental income 74,319 66,467 36,110 33,918
Total Revenues 159,524 372,200 83,805 70,593
Costs of revenues (31,143) (29,827) (27,135) (13,899)
GROSS PROFIT 128,381 342,373 56,670 56,694
OPERATING COSTS
Bad debt expense - 9,895 - 5,895
Depreciation expense 21,579 20,858 11,574 10,429
Administrative expense 147,499 190,689 66,809 90,846
Total Operating Costs 169,078 221,442 78,383 107,170
OPERATING INCOME (LOSS) (40,697) 120,931 (21,713) (50,476)
OTHER INCOME & (EXPENSES)
Interest income 3 2,691 2 2,690
Other income - 2,885 - 2,860
Other expenses (1,250) (45,073) (1,250) -
Net realized gain (loss) on sale
of marketable securities (4,597) (10,130) 2,435 (14,936)
Loss In investment (5,721) - (5,721) -
Net gain (loss) on
disposable assets - 93,283 - (1,725)
Interest expense (23,692) (48,416) (9,032) (19,410)
Total Other Income & (Expenses) (35,257) (4,760) (13,566) (30,521)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAX (75,954) 116,171 (35,279) (80,997)
INCOME TAX (PROVISION) BENEFIT 13,989 (27,748) 5,291 15,925
INCOME (LOSS) FROM CONTINUING
OPERATIONS AFTER TAX $ (61,965)$ 88,423 $ (29,988)$ (65,072)
DISCONTINUED OPERATIONS
Loss on sale of Northwest
Medical Clinic, Inc. - (1,542,394) - -
NET INCOME (LOSS) $ (61,965) $ (1,453,971) $ (29,988) $ 65,072)
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Comprehensive Income (Loss)
Six Months Six Months Three Months Three Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Net Income (Loss)-
Net of Tax $ (61,965) $ (1,453,971) $(29,988) $ (65,072)
Other Comprehensive
Income (Loss) :
Unrealized gain (loss)
on securities (28,846) (573,385) 6,012 (492,940)
Total Other Comprehensive
Income (Loss) (28,846) (573,385) 6,012 (492,940)
Comprehensive Income (Loss)
Before Income Taxes (28,846) (573,385) 6,012 (492,940)
Income Tax (Provision)
Benefit
related to Items of
Comprehensive Income (Loss) 4,323 194,951 (902) 167,260
Comprehensive Income (Loss) $ (24,523) $ (378,434) $ 5,110 $(325,680)
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statement of Stockholders' Equity
From December 31, 1997 to June 30, 2003
Preferred Preferred Common Common
Shares Stock Shares Stock
Balance, December 31, 2000 42,500 42,500 433,972 433
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share 2,500 3
Stock issued on January 18, 2001 for
management fees @ $4.19 a share 7,238 7
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share 1,255 1
Stock issued on March 1, 2001 to
management fees @ $3.40 a share 35,000 35
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share 45,000 45
Stock issued on June 22, 2001
to Directors @ $0.60 a share 18,000 18
October 1, 2001 cancellation of
stock subscription (35,000) (35)
Comprehensive loss December 31, 2001
Net income for the year ended
December 31, 2001
Balance, December 31, 2001 42,500 42,500 507,965 507
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share (73,165) (73)
On October 15, 2002 preferred stock
converted to common stock at 1 for 2 (35,000) (35,000) 70,000 70
Comprehensive loss December 31, 2002
Net loss for the year ended
December 31, 2002
Balance, December 31, 2002 7,500 7,500 504,800 504
Stock issued on January 24, 2003
for services rendered @ $0.20 a share 27,500 28
Comprehensive loss June 30, 2003
Net loss for the six months ended
June 30, 2003
Balance, June 30, 2003 7,500 $ 7,500 532,300 $ 532
Additional Stock Retained
Paid in Subscription Earnings
Capital Receivable
Balance, December 31, 2000 4,460,599 (62,500) (1,045,230)
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share 8,497
Stock issued on January 18, 2001 for
management fees @ $4.19 a share 30,317
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share 3,739
Stock issued on March 1, 2001 to
management fees @ $3.40 a share 118,965 (119,000)
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share 95,955
Stock issued on June 22, 2001
to Directors @ $0.60 a share 10,782
October 1, 2001 cancellation of
stock subscription (118,965) 119,000
Comprehensive loss December 31, 2001
Net income for the year ended
December 31, 2001 56,249
Balance, December 31, 2001 4,609,889 (62,500) (988,981)
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share (29,193)
On October 15, 2002 preferred stock
converted to common stock at 1 for 2 34,930
Comprehensive loss December 31, 2002
Net loss for the year ended
December 31, 2002 (1,404,801)
Balance, December 31, 2002 4,615,626 (62,500) (988,981)
Stock issued on January 24, 2003
for services rendered @ $0.20 a share 5,472
Comprehensive loss June 30, 2003
Net loss for the six months ended
June 30, 2003 (61,965)
Balance, June 30, 2003 $ 4,621,098 $ (62,500) $(2,455,747)
Accumulated other
Comprehensive Total
Income
(Loss)
Balance, December 31, 2000 (27,122) 3,760,152
Stock issued on January 15, 2001
for consulting fees @ $3.40 a share - 8,500
Stock issued on January 18, 2001 for
management fees @ $4.19 a share - 30,324
Stock issued on February 21, 2001
for consulting fees @ $2.98 a share - 3,740
Stock issued on March 1, 2001 to
management fees @ $3.40 a share - -
Stock issued on June 6, 2001
for the purchase of Corporate Capital
Formation, Inc. @ $2.13 per share - 96,000
Stock issued on June 22, 2001
to Directors @ $0.60 a share - 10,800
October 1, 2001 cancellation of
stock subscription - -
Comprehensive loss December 31, 2001 (83,991) (83,991)
Net income for the year ended
December 31, 2001 - 56,249
Balance, December 31, 2001 (111,113) 3,490,302
January 1, 2002 sale of Northwest
Medical Clinic, Inc. @ $0.40 a share -
On October 15, 2002 preferred stock
converted to common stock at 1 for 2 (35,000) - -
Comprehensive loss December 31, 2002 (683,177) (683,177)
Net loss for the year ended
December 31, 2002 - (1,404,801)
Balance, December 31, 2002 (794,290) 1,373,058
Stock issued on January 24, 2003
for services rendered @ $0.20 a share - 5,500
Comprehensive loss June 30, 2003 (24,523) (24,523)
Net loss for the six months ended
June 30, 2003 - (61,965)
Balance, June 30, 2003 $ (818,813) $ 1,292,070
TRIAD INDUSTRIES, INC.
(Formerly RB Capital & Equities, Inc.)
Consolidated Statements of Cash Flows
Six Months Six Months
Ended Ended
June 30, June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (61,965)$ (1,453,971)
Depreciation expense 21,579 20,858
(Increase) decrease in accounts receivable (967) 1,640,500
(Increase) decrease in advances - 1,015
(Increase) decrease in escrow account 2,397 427
(Increase) decrease in income tax benefit (18,312) 167,203
Increase (decrease) in accounts payable 12,047 (43,796)
Increase (decrease) in security deposits 1,739 (3,182)
Increase (decrease) in salaries payable - 26,150
Increase (decrease) in taxes payable - (3,774)
Unrealized (gain) loss on valuation
of marketable securities 19,427 (378,434)
Purchase of marketable securities - -
Sale of marketable securities - (10,130)
Common stock issued for services 5,500 -
Net Cash Provided by (Used in)
Operating Activities (18,555) (37,134)
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in securities available for sale - 164,335
Net sale (purchase) of fixed assets (500) (45,875)
Net Cash Provided by (Used in)
Investing Activities (500) 118,460
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (811) (21,429)
Change in loan fees 152 -
Change in loan payable 6,282 -
Change in notes and mortgages payable (5,497) (199,722)
Change in common stock - (1,463)
Change in paid in capital - (27,803)
Change in assets hels for sale - 167,514
Net Cash Provided by (Used in)
Financing Activities 126 (82,903)
Net Increase (Decrease) in Cash (18,929) (1,577)
Cash at Beginning of Period 19,832 15,643
Cash at End of Period $ 903 $ 14,066
Supplemental Cash Flow Disclosures:
Cash paid during year for interest $ 23,692 $ 48,416
Cash paid during year for taxes $ - $ -
Schedule of Non-Cash Activities:
Common stock issued for accrued services $ 5,500 $ -
Common stock received for services $ - $ 150,000
Common stock retired on the
sale of Northwest Medical Clinic, Inc. $ - $ 29,266
Loss on sale of Northwest Medical Clinic, Inc. $ - $ 1,542,394
Three Months Three Months
Ended Ended
June 30, June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (27,391)$ (65,072)
Depreciation expense 11,574 10,429
(Increase) decrease in accounts receivable (682) 62,781
(Increase) decrease in advances - -
(Increase) decrease in escrow account (127) 427
(Increase) decrease in income tax benefit (7,840) 183,185
Increase (decrease) in accounts payable 9,057 (8,666)
Increase (decrease) in security deposits (561) 1,227
Increase (decrease) in salaries payable - 4,000
Increase (decrease) in taxes payable - -
Unrealized (gain) loss on valuation
of marketable securities 8,491 172,149
Purchase of marketable securities - (325,680)
Sale of marketable securities - (14,936)
Common stock issued for services - -
Net Cash Provided by (Used in)
Operating Activities (7,479) 19,844
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in securities available for sale - (30)
Net sale (purchase) of fixed assets (500) 22,257
Net Cash Provided by (Used in)
Investing Activities (500) 22,227
CASH FLOWS FROM FINANCING ACTIVITIES
Change in line of credit (297) (21,255)
Change in loan fees 75 -
Change in loan payable 6,282 -
Change in notes and mortgages payable (2,796) (16,859)
Change in common stock - -
Change in paid in capital - -
Change in assets hels for sale -
Net Cash Provided by (Used in)
Financing Activities 3,264 (38,114)
Net Increase (Decrease) in Cash (4,715) 3,957
Cash at Beginning of Period 5,618 10,109
Cash at End of Period $ 903 $ 14,066
Supplemental Cash Flow Disclosures:
Cash paid during year for interest $ 9,032 $ 19,410
Cash paid during year for taxes $ - $ -
Schedule of Non-Cash Activities:
Common stock issued for accrued services $ - $ -
Common stock received for services $ - $ -
Common stock retired on the sale
of Northwest Medical Clinic, Inc. $ - $ -
Loss on 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. All stock transactions have been retroactively restated
to reflect a 20 for one stock split.
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 262,836
to 26,334 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 23,408 shares of HRM post split common stock and
35,000 shares of $1.00 preferred stock. The only significant shareholder was
American Health Systems, Inc. who owned 18,667 of common shares before the
merger and 56,000 of common stock after the merger. The 35,000 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.
56,000 shares of common stock of the 253,408 shares issued to RB Capital &
Equities, Inc. went to American Health Systems, Inc. in exchange for the 18,667
originally received from RB Capital & Equities, Inc. as consideration for 100%
of Gam Properties. This 56,000 represents a 3 for 1 forward split of the 18,667
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 30, 2000, Triad Industries, Inc. acquired certain assets subject to
certain liabilities of Northwest Medical Clinic, Inc., acquired certain assets
of Amerimed of Georgia, Inc. (a Georgia Corporation) and acquired certain assets
of Florimed of Tampa, Inc. (a Florida Corporation). These certain assets subject
to the certain liabilities were combined and put into a newly formed and
capitalize corporation operating under the name Northwest Medical Clinic, Inc.
The acquisition was recorded as a purchase in accordance with Accounting
Principles Board Opinions No. 16 (APB No. 16). Northwest Medical Clinic, Inc.
operates in the personal injury area and also performs sleep apnea procedures.
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)
On June 6, 2001 the Company issued 45,000 shares where by Triad Industries would
acquire 100% 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.
In October 2001, Gam Properties and Triad Industries combined operations. Gam
Properties Corporation is to be dissolved.
Triad Industries, Inc. (the parent company) is the only company involved in any
real estate functions. As of June 30, 2003 the Companys lone property is the
commercial property located in Escondido, Ca.
On January 1, 2002 the Company sold Northwest Medical Clinic, Inc. for a net
loss of $1,542,394.
The Company has authorized 50,000,000 shares of $0.001 par value common stock.
The Company operates through its three 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.
2. HRM, Inc. is presently inactive in the healthcare industry.
3. 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 Company's policy is to use the accrual method of accounting to prepare and
present financial statements, which conforms to generally accepted accounting
principles ("GAAP'). 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 & Equities Inc., Healthcare Resource Management Inc., 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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 2j
regarding the Companies revenue recognition policy.
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 is
made.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 sheet at June 30, 2003
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 the
mortgage payable in accordance with paragraph 11, 12, and 13 of SFAS 107.
i. Investments in Securities
The Companys marketable securities and investments in securities available for
sale are classified as available for sale securities in the accordance with SFAS
115. They are classified as available for sale due to the fact that they are not
bought or held principally for the purpose of selling them in the near term,
they are not actively and frequently bought and sold, nor are they generally
used with the objective of generating profits on short-term differences in
price. Unrealized gains on available for sale securities are being classified
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 or valuation of securities are reflected in the
statement of comprehensive income or (loss) in accordance with SFAS 130.
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 consists of consulting
income and rental income. Triad Industries recognizes revenue when services on
contracts are provided and recognizes rental income at each beginning of the
month 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. Line of Credit
As of June 30, 2003 there is an outstanding balance of $6,227. The Company does
not have access to the revolving line of credit, but the account will remain
open until the balance is paid in full.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
l. 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, 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.
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.
NEW ACCOUNTING PRONOUNCEMENTS:
In April 2002, the Financial Accounting Standards Board issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections ("SFAS 145"). Among other things, SFAS 145
eliminates the requirement that gains and losses from the extinguishments of
debt be classified as extraordinary items. SFAS 145 is effective for fiscal
years beginning after May 15, 2002, with early adoption permitted. The adoption
of SFAS 145 did not have a material effect on the Companies consolidated
financial statements.
In June 2002, the Financial Accounting Standards Board issued SFAS No. 146. The
standard requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. The adoption of SFAS 146 did not have a material effect
on the Companies consolidated financial statements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS:
In October 2002, the Financial Accounting Standards Board issued SFAS No. 147,
Acquisitions of Certain Financial Institutions an amendment of FASB
Statements No. 72 and 144 and FASB interpretation No. 9. SFAS 147 removes
acquisitions of financial institutions from the scope of both Statement 72 and
interpretation 9 and requires that those transactions be accounted for in
accordance with FASB Statements No. 141, Business Combinations, and No. 142
Goodwill and Other Intangible Assets. Thus, the requirement in paragraph 5 of
Statement 72 to recognize (and subsequently amortize) any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset no longer
applies to acquisitions within the scope of this Statement. In addition, this
Statement amends FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor and borrower relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that Statement 144 requires for other long-lived assets
that are held and used. SFAS 147 is effective October 1, 2002. The adoption of
SFAS 147 did not have a material effect on the Companies consolidated financial
statements.
In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
Accounting for Stock-Based Compensation Transition and Disclosure (SFAS 148).
SFAS 148 amends SFAS No. 123 Accounting for Stock-Based compensation (SFAS 123),
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. SFAS 148 is effective for fiscal years
beginning after December 15, 2002. The interim disclosure provisions are
effective for financial reports containing financial statements for interim
periods beginning after December 15, 2002. The Company is currently evaluating
the effect that the adoption of SFAS 148 will have on its results of operations
and financial condition.
NOTE 3. MORTGAGE PAYABLE
Interest Rate Debt Maturity Date
350 W. 9th Avenue 7.820 % $ 729,311 12/08/26
$ 729,311
The office building collateralize the above loans. The loan agreement provides
for monthly payments of interest and principle. In June 2001 the Company
purchased a 12,500 square foot commercial building located at 350 W. 9th Avenue
in Escondido, California. The Company incurred loan fees of $7,490 that are
being amortized over the length of the loan. Amortization expense for the six
months was $152.
The total debt of $729,311 was recorded as follows: current portion (less than
one year) of $150,910 and long-term portion (more than one year) of $578,401.
On January 31, 2002 the Company sold the Balboa property for $391,500. The
total cost of the asset sold was $386,350 leaving a net gain of $5,150. On March
31, 2002 the Company also sold the Grand property for $350,000. The total cost
of the asset sold was $261,867 leaving a net gain of $88,133.
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,
2003 2002
Land $ 300,000 $ 300,000
Buildings
770,000 770,000
Equipment 1,900 1,900
Computer 20,438 20,438
Furniture 16,688 16,188
Tenant Improvements 34,597 34,597
---------------------------------------
---------------------------------------
$ 1,143,623 $ 1,143,123
Less Accumulated Depreciation (89,802) (68,223)
---------------------------------------
Net Property and Equipment $ 1,053,821 $ 1,074,900
=======================================
NOTE 5. BASIC & DILUTED INCOME / (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,
2003 2002
---------- --------------------
Net income (loss) from operations $ (61,965)$ 88,423
Net income (loss) from discontinued operations 0 1,542,394
Basic Income (Loss) Per Share
From continuing operations $ (0.12) $ 0.20
From discontinued operations 0.00 (3.54)
---------------------------------
Basic income / (loss) per share - combined $ (0.12) $ (3.34)
=================================
=================================
Weighed average number of shares outstanding 528,806 435,204
=================================
June 30, June 30,
2003 2002
---------------- --------------------
Net income (loss)
from operations $ (61,965) $ 88,423
Net income (loss) from
discontinued operations 0 1,542,394
Diluted Income (Loss) Per Share
From continuing operations $ (0.11)$ 0.17
From discontinued operations 0.00 (2.96)
------------------------------------------
Diluted income / (loss)
per share - combined $ (0.11)$ (2.80)
==========================================
==========================================
Diluted weighed average
number of shares outstanding 543,806 520,204
==========================================
As of June 30, 2003 there have not been any preferred dividends issued that
would reduce earning available to common shareholders.
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, 2003 the Company has significant operating and capital
losses carryfoward. The tax benefits resulting for the purposes have been
estimated as follows:
June 30, 2003
------------------------
Beg. Retained Earnings $(3,188,072)
Net Income (Loss) for Period ended 6/30/03
(86,488)
--------------------------
--------------------------
Ending Retained Earnings $(3,274,560)
==========================
==========================
Gross income tax benefit $ 1,111,911
Valuation allowance (258,908)
--------------------------
--------------------------
Net income tax benefit $ 853,003
==========================
Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. Accordingly, the net deferred
tax assets have been offset by a valuation allowance. The Company has recorded a
tax benefit under other assets on their balance sheet because there is positive
evidence that the Companys operating segments will be profitable. Net operating
losses expires twenty years from the date the loss was incurred. Retained
earning balance includes accumulated comprehensive income (loss). There was an
increase in income tax benefit of $18,312 for the six months ended June 30,
2003.
Utilization of the net operating losses and credit carryforwards may be
subject to a substantial annual limitation due to the change in ownership
provisions of the Internal Revenue Code of 1986. The annual limitation may
result in the expiration of net operating losses and credits before utilization.
NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated comprehensive
Unrealized gain (loss) on income (loss)
securities
Beg. Balance 01/01/2003 0 $ $(794,290)
2nd. quarter 2003 income (loss) (24,475) (24,475)
----------------------------------------
----------------------------------------
Ending Balance 06/30/2003 $ (24,475) $(818,765)
========================================
Accumulated other comprehensive income (loss) has been reported in accordance
with FASB 130 paragraph 26.
NOTE 8. MARKETABLE SECURITIES
At June 30, 2003, the Company held available for sale securities of the
following companies:
Trading Trading Number of Mkt. Price FMV
Symbol Market Shares At Period End At Period End
Atlantic Syndication asni otc 11,000 0.05 550
Diversified Thermal dvts otc 7,500 0.25 1,875
Komodo, Inc. kmdo otc 668 0.19 127
Merchantpark Comm mpkc pink 413,500 0.00 413
Nicholas Inv. nivi otc 1,939,853 0.00 9,849
Millenium Plastics mpco pink 30,000 0.00 30
Global Energy, Inc. geng otc 5,000 0.27 1,350
- -------------------------------------------------------------------------------
Total $ 14,194
===============================================================================
The Company is in accordance with SFAS 130 when reporting the unrealized gains
or losses of available for sale securities. All gains and losses are reported in
the statement of comprehensive income (loss) as unrealized gains or (losses).
Available for sale securities are reported at market value as of June 30, 2003
in accordance with SFAS 115.
NOTE 9. INVESTMENTS IN SECURITIES AVAILABLE FOR SALE
At June 30, 2003, the Company held investments in the following companies:
Number of Value Price FMV
Shares At Period End At Period End
Advanced Interactive Inc. 5,125 0.97 4,972
American Eagle Financial 55,000 0.10 5,500
Atlantic & Pacific Guarantee 1,000,000 0.01 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
Escondido Capital 629,810 0.06 41,041
Heritage National Corporation 0 0.00 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 Onie 25,000 0.10 2,500
Oasis Information Systems 763,117 0.01 4,578
Quantum Companies 1,110,000 0.00 3,159
Resume Junction 20,000 0.10 2,000
Spa International 245,146 0.00 0
Sterling Electronic Commerce 300,000 0.05 15,000
The Shops Network 5,000 0.10 500
Thunder Mountain 100,000 0.01 1,000
Trans Pacific Group 100,000 0.01 1,000
- ----------------------------------------------------------------------
Total $ 170,246
=======================================================================
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 26 of SFAS 130 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. Heritage National Corporation is a privately
owned Company. All unrealizaed gains and losses will be recorded in the
statement of comprehensive income (loss).
NOTE 10. OPERATING SEGMENTS
6 Months Ended June 30, 2003 Triad RB Capital & Corporate Capital
Industries, Inc. Equities, Inc. Formation, Inc.
Total Revenue $ 76,119 $ 77,855 $ 5,550
Costs of Revenues (24,000) (3,135)
(4,008)
---------------------------------------------------------------
---------------------------------------------------------------
Gross Profit 72,111 53,855 2,415
Total Operating Costs (95,582) (65,004) (8,492)
---------------------------------------------------------------
--------------------------------------------------------------
Operating income (loss) (23,471) (11,149) (6,077)
Total other income & (expenses) (29,332) (5,928) 3
---------------------------------------------------------------
---------------------------------------------------------------
Income (loss) before income tax
and extraordinary items $(52,803) $(17,077) $ (6,074)
==============================================================
==============================================================
6 Months Ended June 30, 2002 Triad RB Capital & Corporate Capital
Industries, Inc. Equities, Inc. Formation, Inc.
Total Revenue $ 66,467 $ 247,603 $ 58,130
Costs of Revenues (2,427)
(0) (27,400)
--------------------------------------------------------------
--------------------------------------------------------------
Gross Profit 220,203 55,703
66,467
Total Operating Costs (97,440) (40,545)
(83,457)
--------------------------------------------------------------
-------------------------------------------------------------
Operating income (loss) 122,763 15,158
(16,990)
Total other income & (expenses) (2,325)
3,891 (6,326)
--------------------------------------------------------------
--------------------------------------------------------------
Income (loss) before income tax
and extraordinary items $ (13,099) $ 116,437 $ 12,833
==============================================================
In accordance with FASB 131 paragraph 18 the Company is reporting the
information of their operating segments that meet the quantitative thresholds.
NOTE 11. ACQUISITIONS
All stock transactions have been retroactively restated to reflect a 20 for
one stock split.
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
56,000 shares of common stock, the stocks trading value was $12.50 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 35,000 shares of $20.00 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 whatever was given up or received whichever is more
readily determinable.
On March 15, 1999 Triad Industries acquired HRM for 26,334 shares of common
stock in conjunction with a recapitalization of the Company. HRM is in the
business of healthcare management.
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 45,000 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. There
were no acquisitions that affected the two periods ended June 30, 2003 and 2002.
NOTE 12. STOCK TRANSACTIONS
All stock transactions have been retroactively restated to reflect a 20 for
one stock split.
NOTE 12. STOCK TRANSACTIONS (CONTINUED)
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, 2000 the Company had 433,972 shares of common stock issued
and outstanding.
On January 15, 2001 the Company issued 2,500 shares of common stock for
consulting fees valued at $3.40 per share.
On January 18, 2001 the Company issued 7,238 shares of common stock for
management fees valued at $4.19 per share.
On February 21, 2001 the Company issued 1,255 shares of common stock to its
president for services rendered valued at $2.98 per share.
On March 1, 2001 the Company issued 35,000 shares of common stock under the
employee stock option plan valued at $3.40 per share.
On June 6, 2001 the Company issued 45,000 shares of common stock for the
purchase of Corporate Capital Formation Inc. valued at $2.13 per share.
On June 22, 2001 the Company issued 18,000 shares of common stock to
Directors for services rendered valued at $0.60 per share.
On October 1, 2001 the Company rescinded the March 1, 2001 issuance of
35,000 shares of common stock.
On January 1, 2002 the Company cancelled the stock issuance of 73,165
shares of common stock issued in the purchase of Northwest Medical Clinic, Inc.
On October 15, 2002 the Company converted 35,000 of its preferred stock to
70,000 shares of common stock.
On January 24, 2003 the Company issued 27,500 shares of common stock to
Directors and officers for accrued services valued at $ 0.01 per share.
On February 28, 2003 the Company completed a 1:20 stock split.
As of June 30, 2003 the Company had 532,300 shares of common stock issued
and outstanding.
NOTE 13. STOCKHOLDERS EQUITY
All stock transactions have been retroactively restated to reflect a 20 for
one stock split.
The stockholders equity section of the Company contains the following
classes of capital stock as of June 30, 2003.
(A) Preferred stock, nonvoting, $ 1.00 par value; 10,000,000 shares
authorized; 7,500 shares issued and outstanding.
(B) Common stock, $ 0.001 par value; 50,000,000 shares authorized; 532,300
shares issued and outstanding as of June 30, 2003.
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, 2003.
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 14. 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. 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 is more readily determinable. 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 June 30, 2003 there were no stock options issued or outstanding.
NOTE 15. SUBSEQUENT EVENT
On July 31, 2003 the Company closed escrow on the sale of their commercial
property. The final sales price on the commercial property was $1,680,000
dollars with the Company netting $835,000.
1
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of June 30, 2003 the Company has $106,081in total current assets
compared to total current assets of $169,247 as of December 31, 2002. The major
factor in the reduction of current assets was an $18,929 decrease in cash and a
$42,807 decrease in marketable securities. As of June 30, 2003 the current
assets were comprised of $903 in cash, $83,279 in accounts receivable, $14,194
in marketable securities and $7,705 in tax impound accounts.
As of June 30, 2003 the Company has $319,430 in total current liabilities
compared to $300,173 as of December 31, 2002. Accounts payable increased $12,047
and loans payable increased by $6,282 accounting for most of this increase.
Management realizes that liquidity is impaired. Therefore, the Company
listed its commercial property for sale in February. The Company received an
offer on the property on May 8, 2003, which it has accepted. The property is in
a forty - five day escrow that is #01302625-103-EC2. The Company accepted any
agreement to extend escrow so now the sale is expected to close on or about June
23, 2003.
It should be noted that the propertys final sale price was $1,680,000 and
that the sale closed on July 31, 2003. The Company netted approximately $835,000
from the sale of the property. The Company will use the cash proceeds to
possibly purchase another piece of real estate. No specific terms or parameters
have been set on any new real estate holdings, nor has any property been
identified. The Company will also use the proceeds to sustain their financial
services division during the difficult financial market.
Results of Operations
For the three months ending June 30, 2003 the Company had a net loss from
continuing operations in the amount of ($29,998) compared to a net loss of
($65,072) for the same period of 2002. This includes a $5,895 decrease in bad
debt expense. Depreciation and amortization was comparable to the same period
the year before. Administrative expenses decreased $24,037 for the second
quarter of 2003 compared to the same period of 2002. This decrease is
predominately caused by the Company downsizing in tough economic conditions.
Interest expense decreased approximately $10,300 due to the Company divesting of
its real estate holdings. Contributing to this loss was a $5,721 loss on
investment, which the Company accounts for under the equity method. The Company
had a net gain on the sale of marketable securities in the amount of $2,435 for
the three months ended June 30, 2003, this compares to a net loss on the sale of
marketable securities of ($14,936) for the same period of 2002.
The Company had revenues of $83,805 for the three months ended June 30,
2003 compared with $70,593 for the same period last year. Rental revenue was up
$2,192 due to rent increases in the commercial property. Management has
attributed the $11,020 increase in the financial services sector to the overall
stabilizing financial markets.
For the six months ending June 30, 2003 the Company had a net loss from
continuing operations after tax effects in the amount of ($61,965) compared to
net income of $88,423 for the same period of 2002. This includes $21,579 in
depreciation and amortization expense compared to $20,858 for the same period of
2002. Administrative expenses also decreased $43,190 for the six months ended
June 30, 2003 compared to the same period of 2002. This decrease is
predominately caused by the downsizing of the Company during difficult financial
times. The Company did not have a gain on the sale of disposable assets
24
for the six months ended June 30, 2003 compared to a gain on the sale of
disposable assets in the amount of $93,283 for the six months ended June 30,
2002. Contributing to this loss was a $5,721 loss on investment, which the
Company accounts for under the equity method. Bad debt expense also decreased
$9,895 when you compare the first six months of 2003 to the same period the year
before.
The Company had revenues of $159,524 for the six months ended June 30, 2003
compared with $372,200 for the same period last year. The major factor
contributing to the sharp decline in revenues is the performance of the
financial services sector. The largest factor regarding the decreased revenues
when comparing the first six months of 2003 to the same period of 2002 is that
in 2002 the Company recognized $150,000 in consulting revenue that was from
common stock received for services. In 2003 the Company has not received any
stock for services. The Company functions in two sectors: financial services and
real estate. Six Months Ending June 30, June 30, 2003 2002
Financial Services $ 85,205 $305,733
Real Estate 74,319 66,467
Total $159,524 $372,200
For the six months ended June 30, 2003 Financial Service revenue decreased
by $222,328, when compared to the same period the year before. The largest
factor regarding the decreased revenues when comparing the first six months of
2003 to the same period of 2002 is that in 2002 the Company recognized $150,000
in consulting revenue that was from common stock received for services. In 2003
the Company has not received any stock for services. Operating costs for the six
months ended June 30, 2003 decreased by approximately $64,000. This decrease is
predominately caused by the Company downsizing in tough economic conditions. The
financial services sector had a net loss of ($23,151) for the six months ended
June 30, 2003, compared to net income of $129,270 for the same period the year
before.
For the six months ended June 30, 2003 real estate rental income increased
approximately $9,652. Rental revenues increased when compared to the same period
of 2002. The main factor contributing to this gain was the commercial property
being 100 percent occupied, which it was not for the same period the year
before. Also, some of the tenants leases have increased due to annual rental
increases in their lease. This has contributed also to the increase. Operating
expenses for the six months ended June 30, 2003 increased by $16,133 when
compared to the same period the year before. Management has not attributed this
increase to any one major factor.
There is known event that management is aware of that will have an impact
on liquidity or revenues from continuing operations. It should be noted that
company sold its commercial building for $1,680,000 and that the sale closed on
July 31, 2003. The Company netted approximately $835,000 from the sale of the
property.
There are no material planned expenditures for plant, property or equipment.
There are no seasonal aspects, which had a material impact on the Companys
operations.
Discontinued Operations
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 retired the stock it had issued as
25
consideration for the acquisition of the medical clinic. Due to a sharp decline
in the share price of the Companys stock there was a large loss on the sale.
Net Operating Loss
The Company has accumulated approximately $3,274,560 of net operating loss
carryforwards and other comprehensive losses as of June 30, 2003, 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 2023. 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, 2002 in
the amount of $834,691 and for the six months ended June 30, 2003 in the amount
of $853,003.
Management believes that the Company would have to increase net income by
approximately $300,000 per year to realize the benefit in its entirety.
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. 99.1 & 99.2
B. Form 8K filed by incorporation by reference on August 12, 2003
C. Form 10KSB filed by reference on March 29, 2001.
26
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 14, 2003
By:_____________________
Linda Bryson
President, Director
By:_____________________
Michael Kelleher
Secretary, Treasurer and
Director
S-1
CERTIFICATION OF THE PRESIDENT
I, Linda Bryson, President of Triad Industries, Inc. certify that:
(1) I have reviewed this annual report on Form 10-Q of Triad Industries, Inc;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of the date within 90 days prior to filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/ Linda Bryson
Date: August 14, 2003 ---------------------
Linda Bryson
President
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
I, Michael Kelleher, Chief Financial Officer of Triad Industries, Inc. certify
that:
(1) I have reviewed this annual report on Form 10-Q of Triad Industries, Inc.;
(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of the date within 90 days prior to filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: August 14, 2003 /s/ Michael Kelleher
-----------------
Michael Kelleher
Chief Financial Officer
EXHIBIT 99.1
SECTION 906 CERTIFICATION OF LINDA BRYSON
CERTIFICATION OF PERIODIC REPORT
In connection with the Annual Report of Triad Industries,
Inc. (the "Company") on Form 10-Q for the period ending June 30, 2003 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Linda Bryson, President of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(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 results of operations of the
Company.
Date: August 14, 2003 By: /s/ Linda Bryson
-------------------
Linda Bryson
President
EXHIBIT 99.2
SECTION 906 CERTIFICATION OF MICHAEL KELLEHER
CERTIFICATION OF PERIODIC REPORT
In connection with the Annual Report of Triad Industries,
Inc. (the "Company") on Form 10-Q for the period ending June 30, 2003 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Michael Kelleher, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(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 results of operations of the
Company.
Date: August 14, 2003 By: /s/ Michael Kelleher
-----------------
Michael Kelleher
Chief Financial Officer