UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 2001.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ______ to ______.
Separate
Commission File Number: 000-30577
-----------
TEQ - 1 Corporation
-------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 87-0569747
--------------------------------- --------------------------
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
8542 South Coachman Way, West Jordan, Utah 84088
-------------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number: (801) 280-6984
-----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 [ ]
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 the latest practicable date:
As of August 3, 2001, there were 1,168,000 shares of common stock
issued and outstanding.
Total of Sequentially Numbered Pages: 21
Index to Exhibits on Page: 21
FORWARD-LOOKING STATEMENTS
Various forward-looking statements have been made in this Form 10-QSB.
Forward-looking statements may also be in the Company's other reports filed
under the Securities Exchange Act of 1934, in its press releases and in other
documents. In addition, from time to time, the Company, through its
management, may make oral forward-looking statements.
Forward-looking statements are only expectations, and involve known and
unknown risks and uncertainties, which may cause actual results in future
periods and other future events to differ materially from what is currently
anticipated. Certain statements in this Form 10-QSB, including those relating
to the Company's expected results, the accuracy of data relating to, and
anticipated levels of, its future inventory and gross margins, its anticipated
cash requirements and sources, are forward-looking statements. Such
statements involve risks and uncertainties, which may cause results to differ
materially from those set forth in these statements. Factors which may cause
actual results in future periods to differ from its current expectations
include, among other things, the continued availability of sufficient working
capital, the availability of adequate sources of capital, the successful
integration of new employees into existing operations, the continued
desirability and customer acceptance of existing and future services, possible
cancellations of orders, the success of competitive services, the success of
the Company's programs to strengthen its operational and accounting controls
and procedures. In addition to these factors, the economic and other factors
identified in this Form 10-QSB, including but not limited to the risk factors
discussed herein and in the Company's previously filed public documents could
affect the forward-looking statements contained in herein and therein.
Forward-looking statements generally refer to future plans and
performance, and are identified by the words "believe", "expect",
"anticipate", "optimistic", "intend", "aim", "will" or the negative thereof
and similar expressions. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of which
they are made. The Company undertakes no obligation to update publicly or
revise any forward-looking statements.
2
FORM 10-QSB
TEQ - 1 CORPORATION
TABLE OF CONTENTS
---------------------
PAGE
------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION . . .15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . .19
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS . . . . . . . . . . .19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . .19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . .19
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . .19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . .19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
3
PART I - FINANCIAL INFORMATION
- ---------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year.
[THIS SPACE INTENTIONALLY LEFT BLANK]
4
TEQ-1 CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2001
5
TEQ-1 CORPORATION
[A Development Stage Company]
CONTENTS
PAGE
____
- Unaudited Condensed Balance Sheets,
June 30, 2001 and December 31, 2000 2
- Unaudited Condensed Statements of Operations,
for the three and six months ended June 30,
2001 and 2000 and from inception on
November 19, 1997 through June 30, 2001 3
- Unaudited Condensed Statements of Cash Flows,
for the six months ended June 30, 2001 and
2000 and from inception on November 19, 1997
through June 30, 2001 4
- Notes to Unaudited Condensed Financial Statements 5 - 9
6
TEQ-1 CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2001 2000
___________ ___________
CURRENT ASSETS:
Cash in bank $ 600 $ 565
Accounts receivable 5,361 334
___________ ___________
Total Current Assets 5,961 899
___________ ___________
$ 5,961 $ 899
___________ ___________
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,600 $ -
Accrued expenses - related party 7,660 274
Notes payable - related party 3,715 3,715
___________ ___________
Total Current Liabilities 12,975 3,989
___________ ___________
STOCKHOLDERS' (DEFICIT):
Preferred stock $.001 par value, 5,000,000 shares
authorized, 10 shares issued and outstanding - -
Common stock, $.001 par value, 20,000,000
shares authorized, 1,100,000 shares issued
and outstanding 1,100 1,100
Capital in excess at par value - -
Deficit accumulated during the development stage (8,114) (4,190)
___________ ___________
Total Stockholders' (Deficit) (7,014) (3,090)
___________ ___________
$ 5,961 $ 899
___________ ___________
Note: The balance sheet at December 31, 2000 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 2 -
7
TEQ-1 CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Six From Inception
Months Ended Months Ended on November 19
June 30, June 30, 1997 through
________________________ _________________________ June 30,
2001 2000 2001 2000 2001
_________ __________ __________ __________ __________
REVENUE:
Sales $ 5,361 $ - $ 5,697 $ - $ 6,031
_________ __________ __________ __________ __________
EXPENSES:
General and administrative 4,580 1,135 9,435 1,240 13,605
_________ __________ __________ __________ __________
INCOME (LOSS) FROM
OPERATIONS 781 (1,135) (3,738) (1,240) (7,574)
_________ __________ __________ __________ __________
OTHER INCOME (EXPENSE):
Interest expense (93) (60) (186) (88) (540)
_________ __________ __________ __________ __________
INCOME (LOSS) BEFORE
INCOME TAXES 688 (1,195) (3,924) (1,328) (8,114)
CURRENT INCOME TAXES - - - - -
DEFERRED INCOME TAX - - - - -
_________ __________ __________ __________ __________
NET INCOME (LOSS) $ 688 $ (1,195) $ (3,924) $ (1,328) $ (8,114)
_________ __________ __________ __________ __________
INCOME (LOSS) PER SHARE $ .00 $ (.00) $ (.00) $ (.00) $ (.01)
_________ __________ __________ __________ __________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 3 -
8
TEQ-1 CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six From Inception
Months Ended on November 19,
June 30, 1997 through,
__________________ June 30,
2001 2000 2001
________ ________ ___________
Cash Flows From Operating Activities:
Net loss $ (3,924) $ (1,328) $ (8,114)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Stock issued for services rendered - - 1,100
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (5,027) - (5,361)
Increase (decrease) in accounts payable 1,600 - 1,600
Increase (decrease) in accrued expenses-
related party 7,386 8 7,740
________ ________ ___________
Net Cash Provided (Used) by Operating Activities 35 (1,320) (3,035)
________ ________ ___________
Cash Flows From Investing Activities - - -
________ ________ ___________
Net Cash Provided (Used) by Investing Activities - - -
________ ________ ___________
Cash Flows From Financing Activities:
Proceeds from notes payable - related party - 3,080 3,635
________ ________ ___________
Net Cash Provided (Used) by Financing Activities - 3,080 3,635
________ ________ ___________
Net Increase in Cash 35 1,760 600
Cash at Beginning of the Period 565 - -
________ ________ ___________
Cash at End of the Period $ 600 $ 1,760 $ 600
________ ________ ___________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period from inception on November 19, 1997 through June 30, 2001:
On November 19, 1997 the Company issued 1,100,000 shares of its common
stock for services valued at $1,100.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 4 -
9
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - TEQ-1 Corporation (the Company) was organized under the laws of
the State of Nevada on November 19, 1997. The Company has recently changed
its business plan. The primary plan of operations of the Company is providing
electronic filing services for entities/individuals that need to
electronically file reports, registration statements, and other documents
with the Securities and Exchange Commission ("SEC") through the SEC's
electronic system - "Electronic Data Gathering Analysis and Retrieval" or
"EDGAR". The Company has not generated significant revenues from its planned
principal operations and is considered a development stage company as defined
in SFAS No.7. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
June 30, 2001 and 2000 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 2000
audited financial statements. The results of operations for the periods ended
June 30, 2001 are not necessarily indicative of the operating results for the
full year.
Income (Loss) Per Share - The computation of income (loss) per share is based
on the weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting Standards No.
128, "Earnings Per Share". [See Note 7]
Cash and Cash Equivalents - For purposes of the financial statements, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Accounting Estimates - 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, the disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - deferral of the effective date of FASB Statement No. 133 (an
amendment of FASB Statement No. 133)", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and Amendment of SFAS
No. 133", SFAS No. 139, "Recission of SFAS No. 53 and Amendment to SFAS No.
63, 89 and 21", and SFAS No. 140, "Accounting to Transfer and Servicing of
Financial Assets and Extinguishment of Liabilities", were recently issued.
SFAS No. 136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the financial statements would not have been
significant.
- 5 -
10
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Revenue Recognition - The Company recognizes revenue in the period when the
services are performed.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable consist of receivables from the sale of services.
Management believes the receivables are fully collectible and has not provided
any allowance for doubtful accounts.
NOTE 3 - CAPITAL STOCK
Common Stock - During November 1997, in connection with its organization, the
Company issued 1,100,000 shares of its previously authorized, but unissued
common stock. The shares were issued for services rendered valued at $1,100
(or $.001 per share).
Preferred stock - The Company has authorized 5,000,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and to
be issued in such series as determined by the Board of Directors. No shares
were issued and outstanding at June 30, 2001 and December 31, 2000.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards.
The Company has available at June 30, 2001, unused operating loss
carryforwards of approximately $8,100 which may be applied against future
taxable income and which expire in various years from 2017 through 2021. The
amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established a
valuation allowance equal to the amount of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $2,700 and
$1,400 as of June 30, 2001 and December 31, 2000, respectively, with an
offsetting valuation allowance at each year end of the same amount resulting
in a change in the valuation allowance of approximately $1,300 during the six
months ended June 30, 2001.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - For the years ended December 31, 2000 and 1999 the
Company did not pay any compensation to any officer/director of the Company.
On January 1, 2001, the Company entered into an employment agreement with an
officer/director/employee of the Company to pay $1,000 per month. As of June
30, 2001, the Company has accrued $6,000 in unpaid salary expense.
- 6 -
11
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - RELATED PARTY TRANSACTIONS [Continued]
Office Space/Utilities - During the years ended December 31, 2000 and 1999,
the Company did not have a need to rent office space. On January 1, 2001, the
Company entered into a rental/utilities agreement with an
officer/director/employee of the Company allowing the Company to use office
space in her home for the operations of the Company at a base rent of $100 per
month. The Company also agreed to pay the officer/director/employee of the
Company a base utilities/miscellaneous expense of $100 per month designated
for, but not limited to, heat, power, water, sewer, garbage collection,
recycling, phone, fax, Internet, computer, printer and any other office items
needed for the operations of the Company, not currently being paid by the
Company. As of June 30, 2001, the Company had accrued $600 in rent expense
and $600 in utilities/miscellaneous expense.
Notes Payable - As of June 30, 2001, the Company has two notes payable due to
an officer/shareholder of the Company. One note for $2,000 was due June 1,
2001. This note has been extended but is now due on demand. The other note,
for $1,715, was due February 1, 2001 but was extended until February 1, 2002.
Both notes accrue interest at 10% per annum. Accrued interest on the notes
payable amounted to $460 at June 30, 2001.
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has just recently
commenced operations and has current liabilities in excess of current assets.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. In this regard, management is proposing to raise
any necessary additional funds not provided by operations through loans or
through additional sales of its common stock. There is no assurance that the
Company will be successful in raising this additional capital. The financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
- 7 -
12
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 - INCOME (LOSS) PER SHARE
The following data shows the amounts used in computing income (loss) per
share:
For the Three For the Six From Inception
Months Ended Months Ended on November 19
June 30, June 30, 1997 through
________________________ _________________________ June 30,
2001 2000 2001 2000 2001
_________ __________ __________ __________ ___________
Income (Loss) from
continuing operations
available to common
shareholders (numerator) $ 688 $ (1,195) $ (3,924) $ (1,328) $ (8,114)
_________ __________ __________ __________ ___________
Weighted average number
of common shares
outstanding used in
loss per share for the
period (denominator) 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000
_________ __________ __________ __________ ___________
Dilutive loss per share was not presented, as the Company had no common stock
equivalent shares for all periods presented that would affect the computation
of diluted loss per share.
NOTE 8 - COMMITMENTS AND AGREEMENTS
Employment Agreement - The Company has entered into an employment agreement
with its sole officer and director ("employee"). The agreement provides for a
$1,000 per month salary for a period of three years commencing January 1,
2001. The salary shall accrue until the Company has achieved net income of
$50,000 at which time the Company will pay 50% of its net income before tax
towards reducing the accrued salary liability.
Rental/Utilities Agreement - The Company has entered into a rental/utilities
agreement with its sole officer and director ("landlord"). The agreement
provides for payment of $100 per month for rent and $100 per month for
utilities and other incidentals on a month-to-month basis starting January 1,
2001. The rent shall accrue until the Company has achieved net income of
$50,000 at which time the Company will pay 10% of its net income before tax
towards reducing the accrued rent liability. The utilities portion shall
accrue until the Company elects to make payment.
NOTE 9 - SIGNIFICANT CUSTOMERS
The Company has just recently commenced operations and all of the revenues
received by the Company are from a limited number of clients, the loss of
which could have a material impact on the operations of the Company.
- 8 -
13
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 10 - SUBSEQUENT EVENTS
Proposed Private Offering of Common Stock - The Company is proposing to make
a private offering of 300,000 shares of its previously authorized but
unissued common stock. This offering is proposed to be exempt from
registration with the Securities and Exchange Commission under Rule 506 of
Regulation D as promulgated under the Securities Act of 1933, as amended. An
offering price of $.10 per share has arbitrarily been determined by the
Company. The offering will be managed by the Company without any underwriter.
The shares will be offered and sold by an officer of the Company, who will
receive no sales commissions or other compensation in connection with the
offering, except for reimbursement of expenses actually incurred on behalf of
the Company in connection with the offering. The Company has not incurred any
stock offering costs as of June 30, 2001, but any such costs will be netted
against the proceeds of the proposed private stock offering.
- 9 -
14
- ---------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ---------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
The Company remains in the development stage and, since inception, has
had $6,031 in revenues. At June 30, 2001, the Company had working capital of
($7,014) and cash in the amount of $600. All other cash held by the Company
at June 30, 2001 has come from two notes payable to the Company's president,
Tammy Gehring. The first note payable is for $1,715 and the second note
payable is for $2,000. These notes are payable on February 1, 2002 and upon
demand respectively, accrue interest at 10% per annum and were executed to
obtain capital to pay the costs of becoming a reporting company under the
Securities Exchange Act of 1934 and general administrative expenses.
Management believes that the Company has sufficient cash to meet its
anticipated needs through the calendar year ending 2001. In the event the
Company requires additional funds, the Company will have to seek loans or
equity placements to cover such cash needs. There is no assurance additional
capital will be available to the Company on acceptable terms.
Further, the Company believes that by positioning itself as a publicly
traded and listed entity, it will secure a more appealing position in the view
of the investing public because of the theoretical increase in the liquidity
of an investment in the Company's securities.
Additionally, management believes that the Company will be able to obtain
capital from investors through private placements of the Company's equity
securities. On June 22, 2001, the Board of Directors of the Company
authorized a private offering under Rule 506 of Regulation D (the "Offering")
to raise additional working capital for the Company. The Company is offering
three hundred thousand (300,000) shares of its $0.001 par value common stock
at a price of $0.10 per share in the Offering (the "Shares"). The terms of
the Offering are as follows:
The Shares are offered by the Company on a "best efforts" basis,
through its officers and directors, who will not receive any
commissions for such sales. A maximum of 300,000 Shares are
offered. No underwriter or broker-dealer is expected to
participate in the Offering. There is no minimum number of Shares
which must be sold, and all proceeds received from investors will
be made immediately available to the Company (after clearance and
acceptance of the subscription by the Company) for application.
The Offering Period will commence on July 1, 2001, the date of the
Private Placement Memorandum, and shall continue until September
30, 2001. The Company reserves the right, however, in its
absolute discretion, to extend the closing date of this Offering
or close the Offering prior to the closing date or prior to sale
of all of the Shares offered. Any extension shall be for no more
than ninety (90) days. The Company may reject any subscription,
in whole or in part and in such cases will refund the amount of
the subscription or portion thereof which has not been accepted to
the subscriber without interest.
15
PLAN OF OPERATIONS
In December 2000, the Company turned to its new business plan of
providing electronic filing services. The Company will provide electronic
filing services for clients that need to electronically file reports,
prospectuses, registration statements, and other documents with the Securities
and Exchange Commission ("SEC") through the SEC's electronic system -
Electronic Data Gathering Analysis and Retrieval ("EDGAR").
During the calendar year ended December 31, 2000, the Company's only
employee did not receive any type of compensation. On January 1, 2001, the
Company entered into an Employment Agreement with Tammy Gehring, the Company's
sole officer/director/employee ("Employment Agreement"). Ms. Gehring shall
receive a salary in the amount of $1,000 per month for services related to the
electronic filings she prepares for the Company's clients and files through
the SEC's electronic filing system, EDGAR. As of the date of this report, the
Company did not have enough funds available to pay this salary. The Company
and Ms. Gehring have agreed to accrue the monthly salary until the Company has
sufficient net income to pay the expense. At June 30, 2001, the Company had
accrued $6,000 in salary expense.
Additionally, on January 1, 2001 the Company entered into a
Rental/Utilities Agreement with Tammy Gehring ("Rental/Utilities Agreement").
The Rental/Utilities Agreement allows the Company to use office space in the
home of Ms. Gehring for the operations of the Company at a base rent of $100
per month. The Company also agreed to pay a base utilities/miscellaneous
expense of $100 per month designated for but not limited to heat, power,
water, sewer, garbage collection, recycling, phone, fax, Internet, computer
use, printer use, and any other office items needed for the operations of the
Company, not currently being paid by the Company. The Company and Ms.
Gehring have agreed to accrue the monthly rent and utilities/miscellaneous
expenses until the Company has sufficient net income to pay the expenses. At
June 30, 2001, the Company had accrued $600 in rent expense and $600 in
utilities/miscellaneous expense. The Company will continue to maintain
operations at this location until management believes that the Company's
revenues and financial resources justify a move to an alternative location.
If such a move is required, the Company believes that there is an adequate
supply of office/warehouse/retail space in Salt Lake County, Utah meeting the
Company's anticipated needs for the foreseeable future. Initially, the
Company expects that it will lease rather than purchase such property in order
to allocate its resources specifically to its operations. The Company does
not own any property.
The Company is currently spending approximately $100 or less each month
on general operating expenses including but not limiting to office supplies,
postage and marketing. Management intends to keep costs to a minimum until
such time in its discretion it believes expansion would be reasonable.
The Company may attempt to employ additional personnel if it is able to
generate sufficient revenues. However, there is no assurance that the
services of such persons will be available or that they can be obtained upon
terms favorable to the Company. If and when the Company is successful in
achieving a positive cash flow, it is likely that the Company will consider
expanding, which will also increase costs.
16
Management expects that the Company will continue generating small
amounts of revenue during the next two calendar quarters of 2001 from the
Company's current clients. As the Company attracts more clientele, revenues
are expected to increase.
On June 22, 2001, the Board of Directors of the Company authorized a
private offering under Rule 506 of Regulation D (the "Offering") to raise
additional working capital for the Company. The Company is offering three
hundred thousand (300,000) shares of its $0.001 par value common stock at a
price of $0.10 per share in the Offering (the "Shares"). This Offering
commenced July 1, 2001 and shall continue until September 30, 2001. As of
August 3, 2001, the Company sold 68,000 Shares under the Offering.
No commitments to provide additional funds have been made by management.
Accordingly, there can be no assurance that any additional funds will be
available to the Company to allow it to cover its expenses as they may be
incurred.
Irrespective of whether the Company's cash assets prove to be adequate
to meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
RESULTS OF OPERATIONS
********************************************************************
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
AND FROM INCEPTION ON NOVEMBER 19, 1997 THROUGH JUNE 30, 2001
(UNAUDITED)
********************************************************************
The Company had $5,361 revenues from operations for the three month
period ended June 30, 2001, $5,697 revenues from operations for the six month
period ended June 30, 2001, $0 revenues from operations for the three month
period ended June 30, 2000, $0 revenues from operations for the six month
period ended June 30, 2000 and $6,031 revenues from operations from inception
on November 19, 1997 through June 30, 2001.
General and administrative expenses for all periods ended consisted of
general corporate administration, legal and professional expenses, accounting
and auditing costs, rent and utilities/miscellaneous expenses, and salaries
and wages expense. These expenses were $4,580 for the three month period
ended June 30, 2001, $9,435 for the six month period ended June 30, 2001,
$1,135 for the three month period ended June 30, 2000, $1,240 for the six
month period ended June 30, 2000 and $13,605 from inception on November 19,
1997 through June 30, 2001. Rent and utilities/miscellaneous expenses are
being accrued on a monthly basis until such time the Company has sufficient
net income to pay the expenses. Salaries and wages expense is also being
accrued on a monthly basis until such time the Company has sufficient net
income to pay the expense. During June 2001, the Company produced expenses
associated with the Company's July 1, 2001 Rule 506 of Regulation D offering,
such as printing and postage expenses.
17
Interest expense for the three and six month periods ended June 30, 2001
and 2000 and from inception on November 19, 1997 through June 30, 2001 was
$93, $60, $186, $88 and $540 respectively. The Company's president has
advanced $3,715 to the Company through the date of this report. This amount
is made up of two notes payable, one for $1,715 and the other for $2,000.
These notes are payable February 1, 2002 and upon demand respectively, and
accrue interest at 10% per annum.
As a result of the foregoing factors, the Company realized a net income
of $688 for the three month period ended June 30, 2001, a net loss of $3,924
for the six month period ended June 30, 2001, a net loss of $1,195 for the
three month period ended June 30, 2000, a net loss of $1,328 for the six month
period ended June 30, 2000, and a net loss of $8,114 from inception on
November 19, 1997 through June 30, 2001.
********************************************************************
CALENDAR YEARS ENDED DECEMBER 31, 2000 AND 1999
AND FROM INCEPTION ON NOVEMBER 19, 1997 THROUGH DECEMBER 31, 2000
(AUDITED)
********************************************************************
The Company had $334 in revenues for the calendar year ended December
31, 2000, $0 revenues for the calendar year ended December 31, 1999 and $334
in revenues from inception on November 19, 1997 through December 31, 2000.
The Company incurred $2,375 in net operating losses for the calendar year
ended December 31, 2000 as compared to $257 in net operating losses for the
calendar year ended December 31, 1999 and $4,190 from inception on November
19, 1997 through December 31, 2000.
The net operating loss for all periods resulted primarily from general
and administrative expenses and interest expense. The net loss per share for
each period was $0.00 per share.
General and administrative expenses for all periods ended consisted of
general corporate administration, legal and professional expenses, and
accounting and auditing costs. These expenses were $2,435 for the calendar
year ended December 31, 2000, $210 for the calendar year ended December 31,
1999 and $4,170 from inception on November 19, 1997 through December 31,
2000.
Interest expense for the calendar year ended December 31, 2000 and 1999
and from inception on November 19, 1997 through December 31, 2000 was $274,
$47, and $354 respectively. As mentioned above, the Company's president has
advanced $3,715 to the Company. Unpaid accrued interest on the two notes
amounted to $274 at December 31, 2000.
For the current fiscal year, the Company anticipates incurring a loss as
a result of legal and accounting expenses, expenses associated with
registration under the Securities Exchange Act of 1934, as amended, and
expenses associated with its new business plan, as described herein.
18
PART II - OTHER INFORMATION
- ---------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
- ---------------------------------------------------------------------------
The Company is not a party to any material pending legal proceedings,
and to the best of its knowledge, no such proceedings by or against the
Company have been threatened.
- ---------------------------------------------------------------------------
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- ---------------------------------------------------------------------------
Not Applicable.
- ---------------------------------------------------------------------------
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------------------------------------------
Not Applicable.
- ---------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------------------------
Not Applicable.
- ---------------------------------------------------------------------------
ITEM 5. OTHER INFORMATION
- ---------------------------------------------------------------------------
On June 22, 2001, the Board of Directors of the Company authorized a
private offering under Rule 506 of Regulation D (the "Offering") to raise
additional working capital for the Company. The Company is offering three
hundred thousand (300,000) shares of its $0.001 par value common stock at a
price of $0.10 per share in the Offering (the "Shares"). This Offering
commenced July 1, 2001 and shall continue until September 30, 2001. As of
August 3, 2001, the Company sold 68,000 Shares under the Offering.
- ---------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ---------------------------------------------------------------------------
(a) Exhibits: Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits of this Form 10-QSB, which is
incorporated herein by reference.
(b) Reports on Form 8-K: No reports on Form 8-K have been filed during the
last quarter of the period covered by this report.
19
- ---------------------------------------------------------------------------
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.
TEQ - 1 Corporation
/S/ TAMMY GEHRING
----------------------------------------
Date: August 13, 2001 By: Tammy Gehring, President, Secretary
Treasurer, Director
20
INDEX TO EXHIBITS
---------------------
SEC Ref Page
No. No. Description
- ------- ---- -----------
Ex-3(i) *1* Articles of Incorporation of the Company, filed with
the State of Nevada on November 19, 1997.
Ex-3(ii) *1* Bylaws of the Company.
Ex-10(i) *2* Promissory Note dated February 1, 2000 executed by the
Company.
Ex-10(ii) *2* Promissory Note dated June 1, 2000 executed by the
Company.
Ex-10(iii) *3* Employment Agreement by and between the Company and
Tammy Gehring dated January 1, 2001.
Ex-10(iv) *3* Rental/Utilities Agreement by and between the Company
and Tammy Gehring dated January 1, 2001.
*1* The listed exhibits are incorporated herein by this reference to
the Registration Statement on Form 10-SB, filed by the Company
with the Securities and Exchange Commission on May 9, 2000.
*2* The listed exhibits are incorporated herein by this reference to
the Quarterly Report on Form 10-QSB for the quarter ended June 30,
2000, filed by the Company with the Securities and Exchange
Commission on August 11, 2000.
*3* The listed exhibits are incorporated herein by this reference to
the Quarterly Report on Form 10-QSB for the quarter ended March
31, 2001, filed by the Company with the Securities and Exchange
Commission on May 14, 2001.
21