UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
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(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2002
[ ] Transition Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-29493
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Tekron, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 51-0395658
- ------------------------ ------------------------
(State of incorporation) (IRS Employer ID Number)
26 Voyager Court, South, Etobicoke, Ontario, Canada M9W 5M7
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(Address of principal executive offices)
(416) 679-0707
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(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 22, 2002: 6,895,000
--------------------------
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
Tekron, Inc.
Form 10-QSB for the Quarter ended June 30, 2002
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 12
Part II - Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Signatures 14
2
Item 1 - Part 1 - Financial Statements
Tekron, Inc.
(a development stage company)
Balance Sheets
June 30, 2002 and 2001
(Unaudited)
June 30, June 30,
2002 2001
--------- ---------
ASSETS
------
Current Assets
Cash on hand and in bank $ -- $ --
--------- ---------
Total Assets $ -- $ --
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable - trade $ 12,264 $ --
Advances from officers 39,874 --
--------- ---------
Total current liabilities 52,138 --
--------- ---------
Commitments and Contingencies
Shareholders' Equity
Common stock - $0.001 par value
50,000,000 shares authorized
6,895,000 and 4,095,000 shares
issued and outstanding, respectively 6,895 4,095
Additional paid-in capital 282,225 5,025
Deficit accumulated during the development stage (341,258) (9,120)
--------- ---------
Total shareholders' equity (52,138) --
--------- ---------
Total Liabilities and Shareholders' Equity $ -- $ --
========= =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
Tekron, Inc.
(a development stage company)
Statements of Operations and Comprehensive Income
Three months ended June 30, 2002 and 2001
Period from May 31, 1994 (date of inception) through June 30, 2002
(Unaudited)
Period from
May 31, 1994
Three months Three months (date of inception)
ended ended through
June 30, June 30, June 30,
2002 2001 2002
------------- ------------- -----------------
Revenues $ -- $ -- $ --
----------- ----------- -----------
Expenses
Executive compensation 280,000 -- 280,000
General and administrative 15,338 370 61,258
----------- ----------- -----------
Total expenses 295,338 370 341,258
----------- ----------- -----------
Loss before Income Taxes (295,338) (370) (341,258)
Provision for Income Taxes -- -- --
----------- ----------- -----------
Net Loss (295,338) (370) (341,258)
Other comprehensive income -- -- --
----------- ----------- -----------
Comprehensive Loss $ (295,338) $ (370) $ (341,258)
=========== =========== ===========
Loss per weighted-average share of common
stock outstanding, computed on Net Loss -
basic and fully diluted $ (0.07) nil $ (0.15)
=========== =========== ===========
Weighted-average number of shares of common
stock outstanding 4,433,462 4,095,000 2,253,848
=========== =========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
Tekron, Inc.
(a development stage company)
Statements of Cash Flows
Three months ended June 30, 2002 and 2001
Period from May 31, 1994 (date of inception) through June 30, 2002
(Unaudited)
Period from
May 31, 1994
Three months Three months (date of inception)
ended ended through
June 30, June 30, June 30,
2002 2001 2002
--------- ------------- ------------------
Cash Flows from Operating Activities
Net Loss $ (295,338) $ (370) $ (341,258)
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation -- -- --
Common stock issued for executive compensation 280,000 -- 280,000
Common stock issued for services -- -- 20
Increase in Accounts Payable - Trade 5,124 -- 12,264
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Net cash used in operating activities (10,214) (370) (48,974)
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Cash Flows from Investing Activities -- -- --
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Cash Flows from Financing Activities
Cash advanced by officer to support operations 10,214 -- 39,874
Proceeds from sale of common stock -- -- 9,100
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Net cash provided by financing activities 10,214 -- 48,974
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Increase (Decrease) in Cash (10,214) (370) --
Cash at beginning of period -- 370 --
---------- ------------- --------------
Cash at end of period $ -- $ -- $ --
========== ============= ==============
Supplemental Disclosures of Interest
and Income Taxes Paid
Interest paid during the period $ -- $ -- $ --
========== ============= ==============
Income taxes paid (refunded) $ -- $ -- $ --
========== ============= ==============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
Tekron, Inc.
(a development stage company)
Notes to Financial Statements
Note A - Organization and Description of Business
Tekron, Inc. (Company) was incorporated on May 31, 1994 in accordance with the
laws of the State of Delaware. The Company was formed for the purpose of
developing a marine service company for boat owners that would offer on-site
preventative maintenance and repair services. The Company has had no substantial
operations or substantial assets since inception.
The Company experienced a change in management control during Fiscal 2002 and,
accordingly, abandoned its initial business plan.
On May 22, 2002, the Company announced that it had entered into a letter of
intent to acquire 100.0% of the issued and outstanding common stock of Reva
Technologies Corp. (Reva). Reva is a designer and manufacturer of reliable
Energy Vehicle Alternatives, focusing on Electric Utility Vehicle solutions for
the Low Speed Vehicle (LSV) markets globally. Reva is based in London, Ontario,
Canada and has developed an electric utility vehicle for adaption to
multi-purpose applications such as airport support vehicles, industrial plant
vehicles and gated community maintenance and security vehicles. This acquisition
has not been completed as of August 22, 2002.
Due to the lack of sustaining operations from inception, the Company is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$341,000.
Note B - Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of March 31.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-KSB/A for the year ended
March 31, 2002. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
6
Tekron, Inc.
(a development stage company)
Notes to Financial Statements - Continued
Note B - Preparation of Financial Statements - Continued
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending March 31, 2003.
Note C - Going Concern Uncertainty
The Company experienced a change in management control during Fiscal 2002 and,
accordingly, abandoned its initial business plan. The Company is currently
seeking to develop either a new viable business plan or to seek a business
combination transaction with another viable business enterprise.
Due to the lack of sustaining operations from inception, the Company is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$341,000.
The Company's current management maintains the corporate status of the Company
and provides all nominal working capital support on the Company's behalf through
March 31, 2002 and subsequent thereto.
Because of the Company's lack of operating assets, the Company's continuance is
fully dependent either future sales of securities or upon its current management
and/or advances or loans from significant stockholders or corporate officers to
provide sufficient working capital to preserve the integrity of the corporate
entity during the development phase.
There is no assurance that the Company will be able to obtain additional funding
through the sales of additional securities or, that such funding, if available,
will be obtained on terms favorable to or affordable by the Company.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, there is no legal obligation for either
management or significant stockholders to provide additional future funding.
On May 22, 2002, the Company announced that it had entered into a letter of
intent to acquire 100.0% of the issued and outstanding common stock of Reva
Technologies Corp. (Reva). Reva is a designer and manufacturer of reliable
Energy Vehicle Alternatives, focusing on Electric Utility Vehicle solutions for
the Low Speed Vehicle (LSV) markets globally. Reva is based in London, Ontario,
Canada and has developed an electric utility vehicle for adaption to
multi-purpose applications such as airport support vehicles, industrial plant
vehicles and gated community maintenance and security vehicles. This acquisition
has not been completed as of August 22, 2002 and its impact on future operations
is unknown at this time.
7
Tekron, Inc.
(a development stage company)
Notes to Financial Statements - Continued
Note D - Summary of Significant Accounting Policies
1. Currency translation
The Company incurs expenses in both US dollar (US$) and Canadian dollar
(CN$) transaction accounts. All transactions reflected in the accompanying
financial statements have been converted into US dollar equivalents, for
each respective quarter at the average of the last day of the month
published exchange rate on the last day of the fiscal quarter or the
published exchange rate on the first day of the month for related party
transactions related to rent and management services for CN$ accounts and
at historical amounts for US$ accounts.
2. Cash and cash equivalents
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
3. Organization costs
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
4. Research and development expenses
Research and development expenses are charged to operations as incurred.
5. Advertising expenses
Advertising and marketing expenses are charged to operations as incurred.
6. Income Taxes
The Company utilizes the asset and liability method of accounting for
income taxes. At June 30, 2002 and 2001, the deferred tax asset and
deferred tax liability accounts, as recorded when material, are entirely
the result of temporary differences. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation and
amortization. As of June 30, 2002 and 2001, respectively, the deferred tax
asset is related solely to the Company's net operating loss carryforward
and is fully reserved.
7. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of June 30, 2002 and 2001, respectively,
the Company had no warrants and/or options outstanding.
8
Tekron, Inc.
(a development stage company)
Notes to Financial Statements - Continued
Note E - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Note F - Related Party Transactions
The Company has an unwritten agreement with an entity controlled by its officers
for management services and office rent. Under this agreement, the Company is
obligated to pay, on a monthly basis, $1,000 CN$ for management and
administrative office services and $500 CN$ for office rent. This agreement
commenced on July 1, 2001, concurrent with a change in management. As of June
30, 2002 and 2001, respectively, approximately $2,886 US$ and $-0- US$ has been
charged to operations on this agreement.
Note G - Income Taxes
The components of income tax (benefit) expense for the three months ended June
30, 2002 and 2001 and for the period from May 31, 1994 (date of inception)
through June 30, 2002, respectively, are as follows:
June 30, June 30,
2002 2001 Cumulative
-------- -------- ----------
Federal:
Current $ -- $ -- $ --
Deferred -- -- --
------- ------ ------
-- -- --
------- ------ ------
State:
Current -- -- --
Deferred -- -- --
------- ------ ------
-- -- --
------- ------ ------
Total $ -- $ -- $ --
======= ====== ======
As of June 30, 2002, the Company has a net operating loss carryforward of
approximately $342,000 to offset future taxable income. Subject to current
regulations, this carryforward will begin to expire in 2015. The amount and
availability of the net operating loss carryforwards may be subject to
limitations set forth by the Internal Revenue Code. Factors such as the number
of shares ultimately issued within a three year look-back period; whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate; continuity of historical business; and subsequent income of
the Company all enter into the annual computation of allowable annual
utilization of the carryforwards.
(Remainder of this page left blank intentionally)
9
Tekron, Inc.
(a development stage company)
Notes to Financial Statements - Continued
Note G - Income Taxes - Continued
The Company's income tax expense for the three months ended June 30, 2002 and
2001 and for the period from May 31, 1994 (date of inception) through June 30,
2002, respectively, are as follows:
Three months Three months
ended ended
June 30, June 30,
2002 2001 Cumulative
------------ ------------ ------------
Statutory rate applied to loss before income taxes $(100,400) $ (100) $ (116,000)
Increase (decrease) in income taxes resulting from:
State income taxes -- -- --
Other, including reserve for deferred tax asset 100,400 100 116,000
--------- -------- ------------
Income tax expense $ -- $ -- $ --
========= ======== ============
Temporary differences, consisting primarily of statutory deferrals of expenses
for organizational costs and statutory differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of June 30, 2002 and 2001, respectively:
June 30, June 30,
2002 2001
---------- ----------
Deferred tax assets
Net operating loss carryforwards $ 116,000 $ 3,100
Less valuation allowance (116,000) (3,100)
---------- ---------
Net Deferred Tax Asset $ -- $ --
========== =========
During the three months ended June 30, 2002 and 2001, respectively, the
valuation allowance increased by approximately $100,000 and $100.
Note H - Common Stock Transactions
On September 16, 1999, the Company amended its Certificate of Incorporation to
allow for the issuance of up to 20,000,000 shares of $0.001 par value common
stock from the originally authorized amount of 20,000,000 shares of $0.00001 par
value common stock. The effect of this change is reflected in the accompanying
financial statements as of the first day of the first period presented.
On December 8, 1999, the Company's Board of Directors approved and implemented a
45 for 1 forward stock split on the issued and outstanding shares of common
stock. This action caused the issued and outstanding shares to increase from
91,200 to 4,104,000. The effect of this action is reflected in the accompanying
financial statements as of the first day of the first period presented.
On March 22, 2001, the Company's officers surrendered and cancelled 9,000 shares
of common stock to the Company for no consideration. The effect of this action
was to reallocate the par value of the surrendered shares to additional paid-in
capital.
10
Tekron, Inc.
(a development stage company)
Notes to Financial Statements - Continued
Note H - Common Stock Transactions - Continued
On June 20, 2002, the Company filed a Registration Statement under The
Securities Act of 1933 on Form S-8 registering an aggregate 2,800,000 shares of
common stock. The registered shares were issued in satisfaction of four (4)
separate compensation agreements with the Company's officers and other
individuals providing management services to the Company. These shares were
valued at $0.10 per share as based on the closing quoted stock price on the
respective date of the transaction. These transactions were valued at an
aggregate approximate $280,000. This amount has been charged to operations in
the accompanying financial statements.
Note I - Commitments
On June 13, 2002, the Company entered into a one-year contract with Daily
Financial.com, Inc., a New York corporation, to provide corporate finance
consulting services to the Company. Daily Financial.com, Inc. is a full service
corporate communications firm that specializes in providing high-tech companies
with professional and cost-effective corporate consulting services including
investor relations, website and newsletter coverage and corporate fact sheets.
(Remainder of this page left blank intentionally)
11
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) Results of Operations, Liquidity and Capital Resources
Tekron, Inc. (Company) experienced a change in the Board of Directors and Senior
Management on June 11, 2001. Accordingly, the Company may or may not elect to
continue on it's initial plan of operation as previously reported in its Form
10-KSB for the year ended March 31, 2001.
The Company has engaged in no significant operations other than organizational
activities and preparation for registration of its securities under the
Securities Exchange Act of 1934, as amended, since it's inception in May 1994.
On May 22, 2002, the Company announced that it had entered into a letter of
intent to acquire 100.0% of the issued and outstanding common stock of Reva
Technologies Corp. (Reva). Reva is a designer and manufacturer of reliable
Energy Vehicle Alternatives, focusing on Electric Utility Vehicle solutions for
the Low Speed Vehicle (LSV) markets globally. Reva is based in London, Ontario,
Canada and has developed an electric utility vehicle for adaption to
multi-purpose applications such as airport support vehicles, industrial plant
vehicles and gated community maintenance and security vehicles. This acquisition
has not been completed as of August 22, 2002 and its impact on future operations
is unknown at this time.
For the three months ended June30, 2002 and 2001, respectively, the Company
incurred net operating losses as a result of expenses principally associated
with compliance with reporting obligations under The Securities Exchange Act of
1934, and other administrative expenses associated with the maintenance of the
Company's issued and outstanding stock records. Additionally, the Company
incurred a non-cash charge to operations for executive compensation related to
the issuance of 2,800,000 shares of common stock issued pursuant to a
Registration Statement on Form S-8 in the amount of $280,000. This amount was
calculated at $0.10 per share which equals the closing quoted price of the
Company's equivalent securities on the NASDAQ Electronic Bulletin Board on the
date of the transaction.
The Company anticipates that until either its previously discussed business plan
or the pending business combination with Reva is completed, it will not generate
revenues. The Company may also continue to operate at a loss after completing a
business combination, depending upon the performance of it's executed business
plan or the performance of any acquired business.
The Company is fully dependent either future sales of securities or upon its
current management and/or advances or loans from significant stockholders or
12
corporate officers to provide sufficient working capital to preserve the
integrity of the corporate entity during the development phase.
There is no assurance that the Company will be able to obtain additional funding
through the sales of additional securities or, that such funding, if available,
will be obtained on terms favorable to or affordable by the Company. It is the
intent of management and significant stockholders to provide sufficient working
capital necessary to support and preserve the integrity of the corporate entity.
However, there is no legal obligation for either management or significant
stockholders to provide additional future funding.
Further, the Company has no plans, proposals, arrangements or understandings
with respect to the sale or issuance of additional securities at the date of
this filing and the Company does not currently contemplate making a Regulation S
offering.
Regardless of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
In such a restricted cash flow scenario, we would be unable to complete our
business plan steps, and would, instead, delay all cash intensive activities.
Without necessary cash flow, we may be dormant during the next twelve months, or
until such time as necessary funds could be raised in the equity securities
market.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
On June 20, 2002, the Company filed a Registration Statement under The
Securities Act of 1933 on Form S-8 registering an aggregate 2,800,000 shares
of common stock. The registered shares were issued in satisfaction of four
(4) separate compensation agreements with the Company's officers and other
individuals providing management services to the Company. These shares,
valued at $0.10 per share as based on the closing quoted stock price on the
respective date of the transaction, were issued as follows: Mario Liberatore
- 1,000,000 shares; Mary Maras - 800,000 shares; Nicholas Plessas - 500,000
shares; and William Kefalas - 500,000 shares. These transactions were valued
at an aggregate $280,000 which was charged to operations in the accompanying
financial statements.
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
99.1 CEO/CFO Certification Pursuant to 18 USC, Section 1330, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Reports on Form 8-K
None
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Tekron, Inc.
Dated: August 22, 2002 /s/ Luigi Brun
--------------- --------------------
Luigi Brun
President, Secretary
and Director
14