U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-26027
DATIGEN.COM, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
UTAH
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
87-0626333
(IRS EMPLOYER IDENTIFICATION NO.)
3191 NORTH CANYON ROAD, PROVO, UTAH 84604
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(801) 373-3990
(ISSUER'S TELEPHONE NUMBER)
NOT APPLICABLE
(FORMER NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PRECEDING 12 MONTHS (OR FOR
SUCH SHORTER PERIOD THAT THE ISSUER WAS REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [
]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
CHECK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTS
REQUIRED TO BE FILED BY SECTIONS 12, 13, OR 15(D) OF THE EXCHANGE ACT SUBSEQUENT
TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT. YES [ ] NO
[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
EQUITY, AS OF JUNE 30, 2002: 850,000 SHARES OF COMMON STOCK.
TRANSITIONAL SMALL BUSINESS FORMAT: YES [ ] NO [ X ]
DOCUMENTS INCORPORATED BY REFERENCE: NONE
1
FORM 10-QSB
DATIGEN.COM, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
BALANCE SHEET 3
JUNE 30, 2002 (UNAUDITED)
STATEMENT OF OPERATIONS FOR THE THREE 4
AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001.
STATEMENT OF CASH FLOWS FOR THE SIX 5
MONTHS ENDED JUNE 30, 2002 AND 2001.
NOTES TO FINANCIAL STATEMENTS 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF 7
FINANCIAL CONDITION
PART II. CERTIFICATION OF FINANCIAL STATEMENTS 8
SIGNATURES 8
2
PART I.
FINANCIAL INFORMATION
DATIGEN.COM, INC.
BALANCE SHEET
JUNE 30, 2002
(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH $70,975
MARKETABLE SECURITIES 100
INVENTORY 9,818
RELATED PARTY NOTES RECEIVABLE 351,000
ACCOUNTS RECEIVABLE 61,394
----------
TOTAL CURRENT ASSETS 493,287
PROPERTY AND EQUIPMENT, NET 23,065
GOODWILL 344,805
PATENT COSTS, NET 7,250
OTHER ASSETS 9,200
----------
TOTAL ASSETS $877,607
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE 4,400
CUSTOMER DEPOSITS 10,000
----------
TOTAL CURRENT LIABILITIES 14,400
STOCKHOLDERS' EQUITY:
COMMON STOCK, NO PAR VALUE, 50,000,000 SHARES
AUTHORIZED; 850,000 SHARES ISSUED AND OUTSTANDING 1,222,600
UNREALIZED LOSS/GAIN ON SECURITIES (49,900)
ACCUMULATED DEFICIT (309,493)
----------
TOTAL STOCKHOLDERS' EQUITY 863,207
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $877,607
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
DATIGEN.COM, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED JUNE ENDED JUNE ENDED JUNE ENDED JUNE
30, 2002 30, 2001 30, 2002 30, 2001
REVENUES $ 126,990 $ - $ 212,267 -
DIRECT COSTS 76,177 - 126,910 -
GENERAL AND
ADMINISTRATIVE
EXPENSES 27,715 6,533 55,616 15,295
------------- -------------- ----------- -----------
INCOME (LOSS)
FROM OPERATIONS 23,098 (6,533) 26,741 (15,295)
------------- -------------- ----------- -----------
OTHER INCOME
INTEREST INCOME
FROM RELATED PARTY
NOTES RECEIVABLE 8,775 - 14,751 15,733
INTEREST ON CASH 279 4,414 279 4,414
GAIN ON DISPOSAL
OF ASSETS - - 1,249 -
GAIN ON SALE OF
SECURITIES - 3,399 - 3,399
------------- -------------- ----------- -----------
TOTAL OTHER INCOME 9,054 7,813 16,279 23,546
------------- -------------- ----------- -----------
INCOME BEFORE TAXES 32,152 1,280 43,020 8,251
INCOME TAX EXPENSE - - - -
------------- -------------- ----------- -----------
NET INCOME $ 32,152 $ 1,280 43,020 8,251
============= ============== =========== ===========
NET INCOME PER SHARE
BASIC AND DILUTED $ .04 $ .00 .05 .01
============= ============== =========== ===========
WEIGHTED AVERAGE
SHARES - BASIC
AND DILUTED 851,111 675,000 849,880 675,000
------------- -------------- ----------- -----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
DATIGEN.COM, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED JUNE ENDED JUNE
30, 2002 30, 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 43,020 $ 8,251
DEPRECIATION EXPENSE 3,601 -
GAIN ON SALE OF MARKETABLE
SECURITIES - (3,399)
GAIN ON DISPOSAL OF ASSET (1,249) -
INCREASE IN ACCOUNTS RECEIVABLE (61,394) -
INCREASE IN INVENTORY (9,818) -
INCREASE IN OTHER ASSETS (9,200) -
INCREASE IN ACCOUNTS PAYABLE 1,869 -
INCREASE IN CUSTOMER DEPOSITS 10,000 -
------------ ------------
TOTAL ADJUSTMENTS (66,191) 4,852
------------ ------------
NET CASH (USED IN) PROVIDED BY (23,171) 13,103
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
(INCREASE) DECREASE IN NOTES RECEIVABLE (140,000) 580,400
INCREASE IN MARKETABLE SECURITIES - (4,500)
PURCHASE OF EQUIPMENT AND GOODWILL (214,920) -
PROCEEDS FROM DISPOSAL OF EQUIPMENT 2,449 -
PATENT COSTS (7,500) 7,889
------------ ------------
NET CASH(USED IN) PROVIDED BY
INVESTING ACTIVITIES (359,971) 583,799
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES - -
------------ ------------
NET (DECREASE) INCREASE IN CASH (383,143) 588,651
CASH, BEGINNING OF PERIOD 454,118 72,907
------------ ------------
CASH, END OF PERIOD $ 70,975 $ 661,558
------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
DATIGEN.COM, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN PREPARED BY THE COMPANY,
WITHOUT AUDIT, PURSUANT TO THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION. CERTAIN INFORMATION AND FOOTNOTE DISCLOSURES NORMALLY
INCLUDED IN FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES HAVE BEEN CONDENSED OR OMITTED. HOWEVER, IN THE OPINION
OF MANAGEMENT, ALL ADJUSTMENTS (WHICH INCLUDE ONLY NORMAL RECURRING ACCRUALS)
NECESSARY TO PRESENT FAIRLY THE FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR
THE PERIODS PRESENTED HAVE BEEN MADE. THE INTERIM FINANCIAL RESULTS ARE NOT
NECESSARILY INDICATIVE OF RESULTS EXPECTED FOR THE ENTIRE YEAR. THESE FINANCIAL
STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE ACCOMPANYING NOTES.
NOTE 2. PATENT COSTS
PATENT COSTS CONSIST OF LEGAL FEES TO SECURE A PATENT AND ARE BEING
AMORTIZED OVER AN ESTIMATED USEFUL LIFE OF FIVE YEARS ON A STRAIGHT-LINE BASIS.
ACCUMULATED AMORTIZATION WAS $250 AS OF JUNE 30, 2002.
NOTE 3. EARNINGS PER SHARE
THE COMPUTATION OF BASIC EARNINGS PER SHARE IS BASED ON THE WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. THE COMPUTATION OF
DILUTED EARNINGS PER COMMON SHARE IS BASED ON THE WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING DURING THE PERIOD PLUS THE COMMON STOCK EQUIVALENTS WHICH
WOULD ARISE FROM THE EXERCISE OF STOCK OPTIONS AND WARRANTS OUTSTANDING USING
THE TREASURY STOCK METHOD AND THE AVERAGE MARKET PRICE PER SHARE DURING THE
PERIOD. COMMON STOCK EQUIVALENTS ARE NOT INCLUDED IN THE DILUTED EARNINGS PER
SHARE CALCULATION WHEN THEIR EFFECT IS ANTI-DILUTIVE.
NOTE 4. EQUITY TRANSACTIONS
DURING THE SIX MONTHS ENDED JUNE 30, 2002, THE COMPANY PURCHASED THE ASSETS
OF AMEREX, A SOLE PROPRIETORSHIP. THE COMPANY PAID $200,000 AND ISSUED 175,000
OF ITS COMMON SHARES FOR PROPERTY AND EQUIPMENT VALUED AT $12,695 AND GOODWILL
OF $344,805.
ALSO DURING THE SIX MONTHS ENDED JUNE 30, 2002, THE COMPANY GRANTED THREE
OFFICERS OF THE COMPANY OPTIONS TO PURCHASE 10,000 SHARES OF COMMON STOCK. THE
OPTIONS EXERCISE PRICE WAS HIGHER THAN THE COMMON STOCK FAIR VALUE AT THE DATE
OF GRANT, AND, THUS, NO COMPENSATION COSTS HAVE BEEN RECORDED. SUBSEQUENT TO
JUNE 30, 2002, ONE OF THE OFFICERS EXERCISED HIS OPTIONS INTO 10,000 SHARES OF
COMMON STOCK.
NOTE 5. IMPACT OF RECENTLY ISSUED ACCOUNTING GUIDANCE
IN JULY 2001, THE FASB ISSUED SFAS NO. 142, "GOODWILL AND OTHER INTANGIBLE
ASSETS" (SFAS 142). THE COMPANY ADOPTED THE PROVISIONS OF SFAS 142, AS REQUIRED
ON JANUARY 1, 2002. SFAS 142 REQUIRES THAT GOODWILL AND INTANGIBLE ASSETS
DEEMED TO HAVE AN INDEFINITE USEFUL LIFE BE REVIEWED FOR IMPAIRMENT UPON
ADOPTION OF FAS 142 (JANUARY 1, 2002) AND ANNUALLY THEREAFTER. AS OF JUNE 30,
2002, THE COMPANY HAD NOT PERFORMED ITS ANNUAL IMPAIRMENT REVIEW.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
THIS FORM 10-QSB INCLUDES, WITHOUT LIMITATION, CERTAIN STATEMENTS
CONTAINING THE WORDS "BELIEVES", "ANTICIPATES", "ESTIMATES", AND WORDS OF A
SIMILAR NATURE, CONSTITUTE "FORWARD- LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THIS ACT PROVIDES A "SAFE
HARBOR" FOR FORWARD-LOOKING STATEMENTS TO ENCOURAGE COMPANIES TO PROVIDE
PROSPECTIVE INFORMATION ABOUT THEMSELVES SO LONG AS THEY IDENTIFY THESE
STATEMENTS AS FORWARD LOOKING AND PROVIDE MEANINGFUL, CAUTIONARY STATEMENTS
IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THE
PROJECTED RESULTS. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT MADE
IN THIS FORM 10-QSB ARE FORWARD-LOOKING. IN PARTICULAR, THE STATEMENTS HEREIN
REGARDING INDUSTRY PROSPECTS AND FUTURE RESULTS OF OPERATIONS OR FINANCIAL
POSITION ARE FORWARD- LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS REFLECT
MANAGEMENT'S CURRENT EXPECTATIONS AND ARE INHERENTLY UNCERTAIN. THE COMPANY'S
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM MANAGEMENT'S EXPECTATIONS.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
ON JANUARY 2, 2002, DATIGEN PAID $200,000 IN CASH AND ISSUED 175,000 SHARES
OF RESTRICTED COMMON STOCK TO M. BALLARD GARDNER OF OREM, UTAH, IN EXCHANGE FOR
SUBSTANTIALLY ALL THE ASSETS MR. GARDNER USED IN THE BUSINESS OF TRIP HAZARD
REMOVAL AND CONCRETE CUTTING. NO RECEIVABLES OR LIABILITIES WERE ACQUIRED. THERE
WAS NO RELATIONSHIP OR AFFILIATION BETWEEN DATIGEN AND MR. GARDNER PRIOR TO THE
TRANSACTION. AS A RESULT OF THE TRANSACTION, MR. GARDNER NOW HOLDS 175,000
SHARES OF DATIGEN COMMON STOCK, OR 20.59 PERCENT OF THE OUTSTANDING SHARES.
THE COMPANY'S OPERATIONS CONSIST OF BUILDING ITS TRIP HAZARD REMOVAL AND
CONCRETE CUTTING BUSINESS AND IS INVESTING IN TRUST DEED NOTES SECURED BY REAL
PROPERTY. UNTIL CAPITAL IS REQUIRED TO FUND DEVELOPMENT OF ITS TRIP HAZARD
REMOVAL BUSINESS, THE COMPANY INTENDS TO CONTINUE INVESTING IN TRUST DEED NOTES.
DURING THE SIX MONTHS ENDED JUNE 30, 2002, DATIGEN GENERATED INTEREST INCOME
FROM RELATED PARTY NOTES RECEIVABLE OF $14,751 AS COMPARED TO $15,733 FOR THE
SIX MONTHS ENDED JUNE 30, 2001.
THE COMPANY HAD GENERAL AND ADMINISTRATIVE EXPENSES RELATED TO CONTINUING
OPERATIONS OF $58,616 AND $15,295 FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND
2001, RESPECTIVELY. THESE EXPENSES CONSISTED OF GENERAL CORPORATE
ADMINISTRATION, LEGAL AND PROFESSIONAL EXPENSES, AND ACCOUNTING AND AUDITING
COSTS. THIS SIGNIFICANT INCREASE IS DUE TO THE COMPANY'S ACQUISITION OF ITS
TRIP HAZARD REMOVAL BUSINESS AND THE ASSOCIATED COSTS OF THE OPERATING BUSINESS.
REVENUE PROVIDED BY NEW OPERATIONS THROUGH THE REMOVAL OF TRIP HAZARDS RESULTED
IN $126,990 FOR THE SIX MONTHS ENDED JUNE 30, 2002. AS A RESULT OF THE
FOREGOING FACTORS, THE COMPANY RECOGNIZED NET INCOME OF $32,152 FOR THE SIX
MONTHS ENDED JUNE 30, 2002, AS COMPARED TO $1,280 FOR THE SAME PERIOD IN 2001.
THE COMPANY HAD DIRECT COSTS RELATED TO TRIP HAZARD REMOVAL OF $126,910 THAT
PRIMARILY CONSISTS OF DIRECT LABOR FOR THE SIX MONTHS ENDED JUNE 30, 2002.
AS OF JUNE 30, 2002 DATIGEN HAD RECEIVABLES OF $61,394 FROM THE REMOVAL OF TRIP
HAZARDS, REPRESENTING WORK PREFORMED FOR VARIOUS PUBLIC AND PRIVATE ENTITIES, OF
WHICH NO AMOUNT IS OVER 90 DAYS OLD.
LIQUIDITY AND CAPITAL RESOURCES
AT JUNE 30, 2002, THE COMPANY HAD WORKING CAPITAL OF $478,887, CONSISTING
PRIMARILY OF CASH IN THE AMOUNT OF $70,975, RELATED PARTY NOTES RECEIVABLE OF
$351,000, AND ACCOUNTS RECEIVABLE OF $61,394. MANAGEMENT BELIEVES THAT THE
COMPANY HAS SUFFICIENT CASH AND SHORT-TERM INVESTMENTS TO MEET THE ANTICIPATED
NEEDS OF THE COMPANY'S OPERATIONS THROUGH AT LEAST THE NEXT 12 MONTHS.
OTHER INFORMATION
ON MAY 16, 2002, DATIGEN.COM, INC., A UTAH CORPORATION ("DATIGEN"),
APPROVED RESOLUTIONS APPOINTING M. BALLARD GARDNER AND MATTHEW HANEY TO SERVE AS
DIRECTORS OF DATIGEN EFFECTIVE FOLLOWING THE CLOSE OF BUSINESS ON JUNE 10, 2002,
TO FILL VACANCIES RESULTING FROM THE RESIGNATIONS OF TRACY LIVINGSTON AND JOSH
JAMES.
ON JUNE 10, 2002, THE BOARD OF DIRECTORS OF DATIGEN.COM, INC. (THE
"COMPANY"), DECIDED TO DISMISS TANNER + COMPANY AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS, AND AUTHORIZED THE ENGAGEMENT OF SQUIRE & COMPANY, PC TO
SERVE AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2002. THE DECISION TO CHANGE ACCOUNTANTS WAS APPROVED BY THE BOARD
OF DIRECTORS.
THE COMPANY INTENDS TO PURSUE FRANCHISING ITS PATENT PENDING TRIP-HAZARD
REMOVAL CONCRETE CUTTING PROCESS AS ITS PRIMARY ACTIVITY IN ADDITION TO
OPERATING THE UTAH PRECISION CONCRETE CUTTING OPERATION. THE ASKING PRICE FOR A
FRANCHISE IS $75,000 AND WOULD COVER A GEOGRAPHIC AREA CONTAINING ROUGHLY
2,000,000 PEOPLE. OUR UNIFORM FRANCHISE OFFERING CIRCULAR HAS BEEN ACCEPTED IN
THE STATE OF WASHINGTON AND IS PENDING IN THE STATE OF CALIFORNIA.
7
PART II. CERTIFICATION OF FINANCIAL STATEMENTS
THE COMPANY'S CEO / CFO, JOSEPH OLLIVIER HEREBY CERTIFIES THE FINANCIAL
STATEMENTS ENCLOSED. MR. OLLIVIER ALSO CERTIFIES THAT THE ENCLOSED FINANCIAL
STATEMENTS COMPLY WITH THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934
AND THAT THE INFORMATION CONTAINED IN THE REPORT FAIRLY PRESENTS, IN ALL
MATERIAL RESPECTS, THE FINANCIAL CONDITION AND RESULTS OF THE COMPANY. THE
SIGNING OFFICER, JOSEPH OLLIVIER, CERTIFIES THAT HE HAS REVIEWED THE REPORT AND
TO HIS KNOWLEDGE DOES NOT CONTAIN ANY MATERIAL MISSTATEMENTS OR OMISSIONS. MR.
OLLIVIER FURTHER CERTIFIES THAT THE SIGNING OFFICERS ARE RESPONSIBLE FOR
ESTABLISHING AND MAINTAINING INTERNAL CONTROLS, HAVE DESIGNED SUCH INTERNAL
CONTROLS TO ENSURE THAT MATERIAL INFORMATION RELATING TO THE ISSUER AND ITS
SUBSIDIARIES IS MADE KNOWN TO THE OFFICERS BY THOSE WITHIN THIS ENTITY. MR.
OLLIVIER CERTIFIES THAT THERE HAVE BEEN NO INSTANCES OF FRAUD, WHETHER OR NOT
MATERIAL, THAT INVOLVES MANAGEMENT OR EMPLOYEES WHO HAVE A SIGNIFICANT ROLE IN
THE ISSUER'S INTERNAL CONTROLS. MR. OLLIVIER FURTHER CERTIFIES THAT HE WILL
EVALUATE THE EFFECTIVENESS OF THE ISSUER'S INTERNAL CONTROLS WITHIN 90 DAYS OF
THIS REPORT AND REPORT WHETHER ANY DEFICIENCIES IN THE DESIGN OR OPERATION OF
INTERNAL CONTROLS COULD ADVERSELY AFFECT THE ISSUER'S ABILITY TO REPORT
FINANCIAL DATA.
SIGNATURES
IN ACCORDANCE WITH THE EXCHANGE ACT, THE REGISTRANT CAUSED THIS REPORT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DATIGEN.COM, INC.
DATE: AUGUST 10, 2002 BY: /S/ JOSEPH OLLIVIER, PRESIDENT
8