UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended - September 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-30769
TRIDENT SYSTEMS INTERNATIONAL INC.
(Name of Small Business Issuer in its charter)
Nevada 87-0419231
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
180 Newport Center Drive, Suite 100, Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 644-2454
N/A
(Former name, former address and former fiscal year if changed
since last report).
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [x] NO [ ]
There were 7,270,867 shares of common stock outstanding having a par value of
$0.001 per share as of September 30, 2001. There were 4,000,000 shares of
preferred stock, having $0.001 par value, issued and outstanding as of September
30, 2001.
Documents Incorporated by Reference
Certain exhibits listed in Item 6 of Part II have been incorporated by
reference. An index to exhibits appears with Item 6.
THIS QUARTERLY REPORT CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS QUARTERLY REPORT AND
INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE
COMPANY, WITH RESPECT TO (I) THE COMPANY'S PRODUCT DEVELOPMENT AND FINANCING
PLANS, (II) TRENDS AFFECTING THE COMPANY'S FINANCIAL CONDITION OR RESULTS OF
OPERATIONS, (III) THE IMPACT OF COMPETITION AND (IV) THE EXPANSION OF CERTAIN
OPERATIONS. ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS
FACTORS.
Trident Systems International, Inc.
Form 10-QSB/A
Quarterly Report, period ended September 30, 2001.
Table of Contents
INDEX PAGE
PART I Financial Information ......................................3
Item 1. Financial Statements:
Consolidated Balance Sheets....................................3
Consolidated Statements of Operations..........................4
Consolidated Statements of Changes
In Stockholders' Equity........................................5
Consolidated Statements of Cash Flows..........................6 & 7
Item 2. Description of Business
and Managements Discussion..........................................8
Description of Business........................................8
Management's Discussion and Analysis of
Financial Conditions and Results of Operations................10
Part II. Other Information........................................11
2
TRIDENT SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
---- ----
ASSETS
Cash $ 2,275 $ --
Marketable Securities 1,199,975 --
Reserve for Purchase
of Futronix, Inc. (1) 800,000 --
Accounts receivable - net 142,440 --
Inventory 243,834 --
----------- -----------
TOTAL CURRENT ASSETS $ 2,388,524 --
Property and Equipment,-
net of accumulated depreciation 85,869 --
Other assets 3,198 --
Investment in SeaHunt, LLC.,
and Telcoenergy, LLC 8,383,208 --
----------- -----------
8,472,275 --
TOTAL ASSETS $10,860,799 --
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 551,047 $ 16,050
Notes payable - related party 389,679 --
Deposits by Customers 57,825 --
----------- -----------
TOTAL CURRENT LIABILITIES $ 998,551 $ 16,050
Long-term debt, less
current maturities 246,905 --
Shareholders' Loan 38,563 --
----------- -----------
TOTAL LONG TERM DEBT $ 285,468 --
TOTAL LIABILITIES 1,284,019 16,050
STOCKHOLDERS' EQUITY
Common Stock - authorized 50,000,000 shares;
par value $.001; issued and outstanding,
7,270,867 and 2,512,296 shares at
September 30, 2001 and
December 31, 2000 respectively $ 7,271 $ 2,512
Preferred Stock - authorized
10,000,000 shares; par value $.001;
issued and outstanding, 4,000,000
and 0 shares at September 30, 2001
and December 31, 2000 respectively 4,000 --
Additional paid-in capital 2,788,537 433,409
Accumulated deficit (1,605,836) (451,971)
Investment in Sea Hunt, LLC.,
and Telcoenergy, LLC 8,382,808
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 9,576,780 $ (16,050)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,860,799 --
3
TRIDENT SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Quarter
ended ended
September 30, September 30,
2001 2000
---- ----
SALES $ 109,809 $ --
COST OF SALES 132,477 --
GROSS PROFIT (22,668) --
EXPENSES
Operating Expenses (162,542) --
NET LOSS (185,210) --
OTHER INCOME 4,201 --
OTHER EXPENSES (12,458) --
INCOME BEFORE INCOME TAXES (193,467) --
INCOME TAXES -- --
NET INCOME (Loss) $(193,467) $ --
NET INCOME (Loss) PER SHARE $ (.027) $ --
DEFICIT AT BEGINNING OF PERIOD $(1,412,369) $(451,971)
NET LOSS (193,467) --
DEFICIT AT END OF PERIOD $(1,605,836) $(451,971)
4
TRIDENT SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period: Quarter Ending September 30, 2001
Capital in
Stock Excess of Accumulated
Shares Amount Par Value Deficit
------ ------ --------- -------
Common Stock:
Balance June 30, 2001 7,472,296 $ 7,472 $ 791,562 $(1,412,369)
Rescission of JBE
and eKomart (201,420) (201)
TOTAL 7,270,876 7,271
Preferred Stock:
Balance at June 30, 2001 7,000,000 7,000 1,996,975
Recission of JBE
and eKomart (3,000,000) (3,000)
TOTAL 4,000,000 4,000
Net Loss (193,467)
TOTAL (1,605,836)
Balance at September 30, 2001
Common Shares 7,270,876 7,271
Preferred Shares 4,000,000 4,000
TOTAL $11,271 $2,788,537 $(1,605,836)
Investment in Sea Hunt, LLC.,
and Telcoenergy, LLC.:
Balance at June 20, 2001 8,382,808
Profit (Loss) --
Balance at September 30, 2001 8,382,808
5
TRIDENT SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended September 30,
2001 2000
---- ----
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (Loss) $ (193,467) $ --
Adjustment to reconcile net income to
net cash provided by operating
activities:
Accounts payable 124,235 --
Depreciation 1,156 --
125,391 --
CASH FLOWS FROM FINANCING ACTIVITIES
Notes Payable to
Related Party 67,500 --
Interest (4,357) --
63,143 --
6
TRIDENT SYSTEMS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30,
2001 2000
---- ----
INCREASE (DECREASE) IN CASH
CASH BALANCE-beginning $7,208 --
CASH BALANCE- 9/30/01 2,275 --
Notes to Financial Statements
1. On March 19, 2001 the Company purchased Futronix, Inc. from Salient
Cybertech, Inc. for 400,000 restricted Common Shares, and $800,000 in
cash. $55,000 have been released to Salient, and the remainder held in
reserve, as the former owners of Futronix, Rande Newberry and Nevin
Jenkins, have asserted that the transaction between Salient and the
Company is void. Salient has commenced an action in the Florida Circuit
Court to confirm Salient's ownership of Futronix, and the validity of
the sale to Trident. Counsel has informed us that the position of
Newberry and Jenkins are without merit. While no effect to the
transaction is given in these Financial statements, the principals of
Futronix and Trident are seeking to resolve this matter.
2. Where the purchase of eKomart and JBE Electronics have been rescinded,
no effect of the operations of eKomart is reflected in these financial
statements. JBE's activities prior to the rescission are reflected as
part of the Company's activities.
3. These interim financial statements have not been reviewed by Trident's
independent accountants.
7
PART I.
Item 2. Description of Business and Management's Discussion
BACKGROUND
History and Organization
Trident Systems International, Inc. (the "Company") was incorporated under the
laws of the State of Utah on August 25, 1980 under the name of Business Ventures
Corporation ("Ventures"), for the primary purpose of developing mining
properties and exploration for oil and gas.
In August, 1983, Ventures merged with Cherry Creek Gold Corporation and changed
its name to Cherry Creek Gold Corporation (Cherry Creek). Cherry Creek owned
various mining claims and did exploration and evaluation work on their claims.
In 1994 Company underwent a name change to Toner Systems International Inc.
(Toner), and attempted to enter the toner cartridge industry, which was
subsequently abandoned.
On August 18, 1997 the shareholders of the Company authorized a change of
domicile of the Company to the State of Nevada by means of merger with and into
a Nevada corporation formed by the Company for this purpose.
In January, 2001, the Company changed its name to Trident Systems International,
Inc.
The Company, from January 24, 2001 to date purchased J.B.E. Electronics, Inc.,
eKomart, Inc., Futronix, Inc., Sea Hunt, LLC., Telcoenergy, LLC., and Satellite
Marine Services, Inc.
It was the intention of the Company to develop by acquisition a high technology
division as well as a division to acquire and grow traditional "brick and
mortar" type operations. The Company intended to use its shares as currency for
both acquisition and funding of the acquired businesses. While certain of the
acquisitions, namely Sea Hunt, LLC., and Telcoenergy, LLC. have, in the opinion
of management, been successful, various problems have arisen as to the other
acquisitions. Because of misrepresentation and omissions of material facts by
management or affiliates of Satellite Marine, the acquisition has been rescinded
and all shares issued in connection therewith have been cancelled.
With respect to the eKomart, Inc. transactions, significant
differences have arisen between the parties and the acquisition has been
rescinded. As to Futronix, Inc., various disputes have arisen between the
parties, the resolution of which has not been determined. With respect to the
financial statements presented herein, no inclusion has been made for Futronix,
Inc., eKomart, Inc., or Satellite Marine. In addition, the JBE acquisition has
also been terminated and the financial statements include the statements of JBE
for the current quarter prior to the termination.
Management has also expressed a concern that the price of its stock has been
adversely affected by significant and possibly unlawful short sales. Management
is seeking to identify the short sellers and will consider appropriate action
against them.
8
COMPANY'S SUBSIDIARIES:
FUTRONIX, INC.
FUTRONIX, INC., a Florida Corporation, was incorporated in March of 1988.
Facilities
FUTRONIX, INC. is located in Suncoast Industrial Park, Homosassa, Florida and
presently occupies two main buildings, and several support and storage buildings
totaling 35,000 sq. ft.
Products and Services
FUTRONIX INC. is a high quality Electronic Contract Manufacturer (ECM) providing
manufacturing, test, prototyping, and product development and support for a
diverse set of market segments. Printed circuit assemblies and box build
products manufactured in medium to high volume supplied to OEM's for commercial,
industrial, medical, and telecommunication applications.
Current Litigation
On March 19, 2001, Futronix, Inc. was sold to Trident by Salient Cybertech,
Inc., subject to Board approval by the Board of Directors of each company. The
transaction was valued at $8,000,000. The terms of the transaction were fully
disclosed in a Report on Form 8-K filed with the Securities and Exchange
Commission on March 21, 2001, and said Report is incorporated herein by
reference.
The former owners of Futronix, Inc. have asserted a claim that the transaction
is void as no transaction involving Futronix may take place without the approval
of the former owners of Futronix, Inc., Rande Newberry and Nevin Jenkins.
Newberry and Jenkins also claim that they have the right to rescind the original
purchase of Futronix by Salient Cybertech, Inc., and that they have exercised
that right.
Salient has advanced over $1.3 million to Futronix. The last $600,000 was
advanced on March 20, 2001, on the explicit understanding that Futronix was to
be sold to Trident Systems International, Inc. The former owners of Futronix
explicitly waived their rights to any rescission in November, 2000.
Management feels that Newberry and Jenkins have no legal basis for their claim
of rescission, and that the sale of Futronix to Trident was valid and legally
enforceable.
Salient has commenced action in Florida Circuit Court for a declaratory Judgment
stating that Salient owned Futronix at all material times, and the sale of
Futronix was a valid sale.
Counsel has informed management that Salient should prevail in its action. This
means that the sale to the Registrant is valid.
9
To date Trident has advanced $55,000 as against the said sale, and the shares
issued to Salient are being held by the Company pending the resolution of this
matter.
SEA HUNT, LLC.
Sea Hunt, LLC, an Oklahoma limited liability company, was formed in September of
2000 for the purpose of owning 50% of Sea Hunt, Inc., which was incorporated in
1996. Sea Hunt, Inc. was granted two permits from the Commonwealth of Virginia
to seek out and salvage sunken shipwrecks within its territorial waters. Sea
Hunt located approximately twelve wrecks within such waters, two of which are
believed to be the Spanish "galleons" named the Juno and the La Galga.
TELCOENERGY LLC.
Telcoenergy, LLC. was formed in 2000 in the state of Oklahoma. The company owns,
maintains and leases gas pipeline easements, primarily in the State of Oklahoma.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS.
The following discussion should be read in conjunction with the information
contained in the Financial Statements of the Company, and the Notes thereto
appearing elsewhere herein, and in conjunction with the Balance Sheet at
December 31, 2000 and Income Statement for the year ended December 31, 2000
contained in the Company's Annual Report 10-KSB.
RESULTS OF OPERATIONS
The Financial Statements reflect the purchase of JBE Electronics in February,
2001, eKomart in late February, 2001, and Futronix, Sea Hunt, and Telcoenergy in
late March 2001.
The purchase of eKomart has been rescinded and no effect
have been given to the its operations. As the purchase of Futronix is
currently a matter in litigation, no effect is given to its operations in the
financial statements. Satellite Marine was purchased prior to the end of the
reported quarter, but was immediately rescinded as that company totally
failed in providing the consideration for the transaction. As a result, no
effect or impact of the purchase is presented in the financial statements.
The JBE Agreement was terminated in the current quarter, and the financial
statements reflect JBE's operations prior to the termination of the
acquisition.
Sales revenues increased by $109,809 for the quarter ended September 30,
2001 as compared to the quarter ended September 30, 2000. The increase in
revenues was totally due to the purchase of subsidiaries. Revenues for Trident
were $109,809 for the quarter ended September 30, 2001 compared to $0 for
quarter months ended September 30, 2000.
Gross profit for the third quarter of 2001 were ($22,668), as compared to $0 for
quarter ended September 30, 2000. The decrease was due to the purchases of
the subsidiaries, and production of samples.
10
General and administrative expenses were $162,542 for the quarter ended
September 30, 2001, compared to $0 for the same period in 2000. This large
increase in general and administrative expenses for the period in 2001 is due
totally to the acquisition of the subsidiaries.
Other expenses increased from $0 in the third quarter of 2000 to $12,458 in the
third quarter of 2001 due to interest expenses.
The operating loss for the quarter ended September 30, 2001 was ($185,210)
as compared to an operating loss for the third quarter of 2000 of $0. The
increase in the loss was due to the activities of the subsidiaries.
The net loss for the quarter ended September 30, 2001 was ($193,467), as
compared to a net loss for the third quarter of 2000 of $0. This was due
to the acquisition of the subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES.
Net cash used in operating activities was $63,143 for the third quarter of
2001 compared to $0 for the same period in 2000. The increased use of cash was
due to the acquisition of the subsidiaries and their overall impact on the
financial statements.
Net cash provided by financing activities was $63,143 for the quarter ended
September 30, 2001 predominantly from shareholder loans. There was no cash
provided by financing activities during the third quarter of 2000.
The current cash and working capital position and future income from operations
will require sufficient additional capital to meet company's cash and working
capital needs for the next year. Management feels that approximately $100,000
will be required based on current expenditures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently not a party to any pending or threatened litigation of
a meritorious or material nature or that could result in a significant financial
impact, except as disclosed herein. From time to time the Company may be
involved in lawsuits in the normal course of its business, that do not have a
material impact upon the Company.
The former owners of Futronix, Inc. have asserted a claim that the sale of
Futronix to the Company is void as no transaction involving Futronix may take
place without the approval of the former owners of Futronix, Inc., Rande
Newberry and Nevin Jenkins. Newberry and Jenkins also claim that they have the
right to rescind the original purchase of Futronix by Salient Cybertech, Inc.,
and that they have excised that right.
Salient has advanced over $1.3 million to Futronix. The last $600,000 was
advanced on March 20, 2001, on the explicit understanding that Futronix, Inc.
11
was to be sold to Trident Systems International, Inc. The former owners of
Futronix explicitly waived their rights to any rescission in November, 2000.
Management feels that Newberry and Jenkins have no legal basis for their claim
of rescission, and that the sale of Futronix was valid and legally enforceable.
Salient has commenced action in Florida Circuit Court for a declaratory Judgment
stating that Salient owned Futronix at all material times, and the sale of
Futronix to Trident was a valid sale.
Counsel has informed management that Salient should prevail in its action. This
means that the sale to Trident is valid.
To date Trident has advanced $55,000 as against the said sale, and the shares
issued to Salient are being held back pending the resolution of this matter.
Item 2. Changes in Securities.
None.
Item 3. Defaults.
None.
Item 4. Submission Of Matters To A Vote Of Security Holders.
NONE.
Item 5. Other Information.
On April 27, 2001, the Company entered into a purchase and sale agreement to
purchase Satellite Marine Services, Inc. The transaction involved Satellite
Marine having $2,000,000 in its accounts. Satellite Marine did not have the
requisite funds, and, despite numerous representations by the management that
the funds were indeed a real asset of Satellite Marine's, no evidence of the
funds were ever forthcoming. As a result, the purchase was rescinded and the
matter has been referred to the U.S. Attorneys office for investigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12
(13) Incorporated by reference: Quarterly and annual Reports on
Form 10-QSB and 10-KSB, respectively, as filed with the
Securities and Exchange Commission pursuant to the Securities
and Exchange Act of 1934.
(b) Reports on Form 8-K
1. Report on Form 8-K, reporting other material events filed on
October 10, 2001.
(c) Other Filings Incorporated by Reference.
1. Form 10-SB12G, filed on June 8, 2000 registering the
common shares and preferred shares of Toner Systems
International, Inc. (the previous name of Trident).
2. Form 10-SB12G/A, filed on July 7, 2000, updating the
information in the original Form 10-SB12G filed on June
8, 2000.
13
Signatures
In accordance with the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Trident Systems International, Inc.
Dated: December 14, 2001
By: /s/ Alan R. Sporn
-------------------------------
Alan R. Sporn
President and CEO
14