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 September 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
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TEQ - 1 Corporation
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(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
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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 November 9, 2001, there were 1,298,500 shares of common stock
issued and outstanding.
Total of Sequentially Numbered Pages: 25
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
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PAGE
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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 . . . . . . . . . . . . . . . . . . . . . . .20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . .20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
INDEX TO EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . .21
3
PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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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
SEPTEMBER 30, 2001
5
TEQ-1 CORPORATION
[A Development Stage Company]
CONTENTS
PAGE
____
-- Unaudited Condensed Balance Sheets,
September 30, 2001 and December 31, 2000 2
-- Unaudited Condensed Statements of Operations,
for the three and nine months ended September 30,
2001 and 2000 and from inception on
November 19, 1997 through September 30, 2001 3
-- Unaudited Condensed Statements of Cash Flows,
for the nine months ended September 30, 2001 and
2000 and from inception on November 19, 1997
through September 30, 2001 4
-- Notes to Unaudited Condensed Financial Statements 5 - 9
6
TEQ-1 CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
2001 2000
___________ ___________
CURRENT ASSETS:
Cash in bank $ 22,257 $ 565
Accounts receivable 4,460 334
___________ ___________
Total Current Assets 26,717 899
___________ ___________
$ 26,717 $ 899
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accrued expenses - related party $ 11,353 $ 274
Notes payable - related party 3,715 3,715
___________ ___________
Total Current Liabilities 15,068 3,989
___________ ___________
STOCKHOLDERS' EQUITY (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, 1,288,500 and 1,100,000 shares
issued and outstanding, respectively 1,289 1,100
Capital in excess of par value 17,856 -
(Deficit) accumulated during the development stage (7,496) (4,190)
___________ ___________
Total Stockholders' Equity (Deficit) 11,649 (3,090)
___________ ___________
$ 26,717 $ 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 Nine From Inception
Months Ended Months Ended on November 19,
September 30, September 30, 1997 through
______________________ _______________________ September 30,
2001 2000 2001 2000 2001
_________ __________ __________ __________ ___________
REVENUE:
Sales $ 5,181 $ - $ 10,878 $ - $ 11,212
_________ __________ __________ __________ ___________
EXPENSES:
General and administrative 4,470 675 13,905 1,915 18,075
_________ __________ __________ __________ ___________
INCOME (LOSS) FROM
OPERATIONS 711 (675) (3,027) (1,915) (6,863)
_________ __________ __________ __________ ___________
OTHER EXPENSE:
Interest expense (93) (93) (279) (181) (633)
_________ __________ __________ __________ ___________
INCOME (LOSS) BEFORE
INCOME TAXES 618 (768) (3,306) (2,096) (7,496)
CURRENT INCOME TAXES - - - - -
DEFERRED INCOME TAXES - - - - -
_________ __________ __________ __________ ___________
NET INCOME (LOSS) $ 618 $ (768) $ (3,306) $ (2,096) $ (7,496)
_________ __________ __________ __________ ___________
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 Nine From Inception
Months Ended on November 19,
September 30, 1997 through,
_____________________ September 30,
2001 2000 2001
_________ _________ ____________
Cash Flows From Operating Activities:
Net loss $ (3,306) $ (2,096) $ (7,496)
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:
(Increase) in accounts receivable (4,126) - (4,460)
Increase in accrued expenses - related party 11,079 181 11,433
_________ _________ ____________
Net Cash Provided (Used) by Operating Activities 3,647 (1,915) 577
_________ _________ ____________
Cash Flows From Investing Activities - - -
_________ _________ ____________
Net Cash Provided (Used) by Investing Activities - - -
_________ _________ ____________
Cash Flows From Financing Activities:
Proceeds from notes payable - related party - 3,000 3,635
Proceeds from issuance of common stock 18,850 - 18,850
Stock issuance costs (805) - (805)
_________ _________ ____________
Net Cash Provided by Financing Activities 18,045 3,000 21,680
_________ _________ ____________
Net Increase in Cash 21,692 1,085 22,257
Cash at Beginning of the Period 565 - -
_________ _________ ____________
Cash at End of the Period $ 22,257 $ 1,085 $ 22,257
_________ _________ ____________
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 September 30,
2001:
On February 1, 2000, the Company extended $80 of unpaid accrued interest
owed a related party into a new note payable to the related party.
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 September 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 September 30, 2001 are not necessarily indicative of the operating
results for the full year.
Revenue Recognition - The Company recognizes revenue in the period when the
services are performed.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes".
Loss Per Share - The computation of 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".
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.
-5-
10
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a replacement of FASB
Statement No. 125", SFAS No. 141, "Business Combinations", SFAS No. 142,
"Goodwill and Other Intangible Assets", and SFAS No. 143, "Accounting for
Asset Retirement Obligations", were recently issued. SFAS No. 140, 141,
142 and 143 have no current applicability to the Company or their effect on
the financial statements would not have been significant.
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
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 September 30, 2001 and December 31,
2000.
Common Stock - The Company has authorized 20,000,000 shares of common
stock. On November 19, 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).
Private Offering - The Company is currently making a private offering of
300,000 shares of its previously authorized but unissued common stock.
This offering is 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 is being
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. As of September 30, 2001, the Company had
sold 188,500 shares of common stock for proceeds of $18,850. Stock
offering costs of $805 have been incurred through September 30, 2001 and
were offset against the proceeds of the offering in capital in excess of
par value. The offering has been extended through November 30, 2001.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
No. 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.
-6-
11
TEQ-1 CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES [Continued]
The Company has available at September 30, 2001, unused operating loss
carryforwards of approximately $7,500 which may be applied against future
taxable income and which expire in various years 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 tax effect of
the loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax assets are
approximately $2,500 and $1,400 as of September 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 $1,100 during the nine months ended September 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 September 30, 2001, the Company has accrued $9,000 in
unpaid salary expense.
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 September 30, 2001, the Company had
accrued $900 in rent expense and $900 in utilities/miscellaneous expense.
Notes Payable - As of September 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 $553 at September 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 incurred losses since its inception. 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 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
For the Three For the Nine From Inception
Months Ended Months Ended on November 19,
September 30, September 30, 1997 through
_______________________ _______________________ September 30,
2001 2000 2001 2000 2001
__________ __________ __________ __________ ___________
Income (Loss) from continuing
operations available to
common shareholders
(numerator) $ 618 $ (768) $ (3,306) $ (2,096) $ (7,496)
__________ __________ __________ __________ ___________
Weighted average number
of common shares
outstanding
(denominator) 1,189,935 1,100,000 1,130,308 1,100,000 1,105,864
__________ __________ __________ __________ ___________
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.
Subsequently, this agreement has been renegotiated [See Note 10].
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
On October 1, 2001, the Company renegotiated its rental/utilities agreement
with its sole officer and director ("landlord"). The new agreement
requires the Company to pay $100 per month for rent and $100 per month for
utilities and other incidentals payments on the last day of the month. On
October 10, 2001, the Company paid $1,800 to the landlord to bring the rent
and utilities current.
-9-
14
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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 $11,212 in revenues. At September 30, 2001, the Company had working
capital of $11,649 and cash in the amount of $22,257. All cash held by the
Company at September 30, 2001 has come from two notes payable to the Company's
president Tammy Gehring, income from electronic filing services and the
Company's July 1, 2001 offering under Rule 506 of Regulation D.
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.
Revenue from filing services amounted to $11,212 at September 30, 2001.
The Company currently charges fees based upon the number of pages being filed,
the number of pages in a document with text and with tables, the deadlines
imposed by the filer and the amount of editing required.
In addition, the Company obtained capital in the amount of $18,850 from
investors through private placements of the Company's equity securities
through September 30, 2001. 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.
On September 30, 2001, the Board of Directors of the Company authorized
to extend the Offering through November 30, 2001, an additional sixty (60)
days.
15
Management believes that between the Company's current cash reserves
proceeds from its equity offering and through a limited amount of revenues,
the Company will have adequate cash to remain operating on a limited basis
through the remainder of the calendar year 2001 and through the first two
calendar quarters of 2002. 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.
PLAN OF OPERATIONS
In December 2000, the Company turned to its new business plan of
providing electronic filing services. The Company provides 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
receives 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 September 30, 2001, the Company
had accrued $9,000 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 agreed to accrue the monthly rent and utilities/miscellaneous expenses
until the Company has sufficient net income to pay the expenses. At September
30, 2001, the Company had accrued $900 in rent expense and $900 in
utilities/miscellaneous expense.
Subsequently, on October 1, 2001, the Board of Directors authorized the
Company to pay for all accrued rental expenses and further all accrued
utilities/miscellaneous expenses through September 30, 2001. In addition, the
Board of Directors authorized the Company to terminate the January 1, 2001
Rental/Utilities Agreement and enter into a new Rental/Utilities Agreement
with Tammy Gehring effective October 1, 2001 ("New Rental/Utilities
Agreement"). The New Rental/Utilities Agreement allows the Company to
continue 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
16
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 New Rental/Utilities Agreement is on a month-to-month basis
beginning October 1, 2001, with the first payment due October 31, 2001 and
each payment thereafter being due on the last day of each month. A copy of
the New Rental/Utilities Agreement is attached as an exhibit and is
incorporated herein by this reference.
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.
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 was to continue through September 30, 2001. As
of September 30, 2001, the Company sold 188,500 Shares under the Offering.
On September 30, 2001, the Board of Directors of the Company authorized
to extend the Offering through November 30, 2001, an additional sixty (60)
days.
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 significant positive cash flow, it is likely that the Company
will consider expanding, which will also increase costs.
Management expects that the Company will continue generating small
amounts of revenue during the next calendar quarter of 2001 from the
Company's current clients. As the Company attracts more clientele, revenues
are expected to increase.
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.
17
RESULTS OF OPERATIONS
********************************************************************
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000
AND FROM INCEPTION ON NOVEMBER 19, 1997 THROUGH SEPTEMBER 30, 2001
(UNAUDITED)
********************************************************************
The Company had $5,181 revenues from operations for the three month
period ended September 30, 2001, $10,878 revenues from operations for the nine
month period ended September 30, 2001, $0 revenues from operations for the
three month period ended September 30, 2000, $0 revenues from operations for
the nine month period ended September 30, 2000 and $11,212 revenues from
operations from inception on November 19, 1997 through September 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 $4,470 for the three month period
ended September 30, 2001, $13,905 for the nine month period ended September
30, 2001, $675 for the three month period ended September 30, 2000, $1,915 for
the nine month period ended September 30, 2000 and $18,075 from inception on
November 19, 1997 through September 30, 2001. Salaries and wages expense is
being accrued on a monthly basis until such time the Company has sufficient
net income to pay the expense. Rent and utilities/miscellaneous expenses were
also being accrued on a monthly basis until such time the Company has
sufficient net income to pay the expenses. Subsequently, on October 10, 2001,
the Company paid all accrued rental expenses and further paid all accrued
utilities/miscellaneous expenses through September 30, 2001.
Interest expense for the three and nine month periods ended September 30,
2001 and 2000 and from inception on November 19, 1997 through September 30,
2001 was $93, $279, $93, $181 and $633 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 net income
of $618 for the three month period ended September 30, 2001, a net loss of
$3,306 for the nine month period ended September 30, 2001, a net loss of
$768 for the three month period ended September 30, 2000, a net loss of
$2,096 for the nine month period ended September 30, 2000, and a net loss of
$7,496 from inception on November 19, 1997 through September 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.
18
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.
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.
19
- ---------------------------------------------------------------------------
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 was to continue through September 30, 2001. At
September 30, 2001, the Company sold 188,500 Shares under the Offering. On
September 30, 2001, the Board of Directors of the Company authorized to extend
the Offering through November 30, 2001, an additional sixty (60) days.
Subsequently, on October 1, 2001 the Board of Directors authorized the
Company to pay for all accrued rental expenses and further all accrued
utilities/miscellaneous expenses through September 30, 2001. In addition, the
Board of Directors authorized the Company to terminate the January 1, 2001
Rental/Utilities Agreement and enter into a new Rental/Utilities Agreement
with Tammy Gehring effective October 1, 2001 ("New Rental/Utilities
Agreement"). The New Rental/Utilities Agreement allows the Company to
continue 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 New Rental/Utilities Agreement is on a month-to-month basis
beginning October 1, 2001, with the first payment due October 31, 2001 and
each payment thereafter being due on the last day of each month.
- ---------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------
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: November 12, 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-10.1 *2* Promissory Note dated February 1, 2000 executed by the
Company.
Ex-10.2 *2* Promissory Note dated June 1, 2000 executed by the
Company.
Ex-10.3 *3* Employment Agreement by and between the Company and
Tammy Gehring dated January 1, 2001.
Ex-10.4 *3* Rental/Utilities Agreement by and between the Company
and Tammy Gehring dated January 1, 2001.
Ex-10.5 22 Rental/Utilities Agreement by and between the Company
and Tammy Gehring dated October 1, 2001.
Ex-99.1 24 Board of Directors resolution dated October 1, 2001,
authorizing to terminate the Rental/Utilities
Agreement effective 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