United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
November 30, 2003 000-13822
RESCON TECHNOLOGY CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
NEVADA
------
(State or other jurisdiction of incorporation or organization
83-0210455
-----------
(I.R.S. Employer Identification No.)
1500 Market Street, 12th Floor, East Tower,
Philadelphia, Pennsylvania 19102
---------------------------------------------
(Address of principal executive offices)
(215) 246-3456
------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
-------
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.
X Yes No
----- ------
State the number of shares outstanding of each of the registrant's classes
of common equity, as of the latest practicable date.
Common stock, par value $.0001; 22,341,091 shares outstanding as of
February 9, 2004
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
RESCON TECHNOLOGY CORPORATION
Condensed Financial Statements
November 30, 2003
RESCON TECHNOLOGY CORPORATION
Condensed Balance Sheet
(Unaudited)
<Table>
<Caption>
ASSETS
--------
November
30, 2003
--------------
Current Assets
Cash $ 50,852
Prepaid professional fees 42,666
--------------
Total Current Assets 93,518
Fixed Assets (Net) 58,687
Prepaid Equipment Lease 40,000
Software & Technology License Agreement 403,280
Investment Speed of Thought 286,720
Other Receivable 6,000
--------------
Total Non-Current Assets 794,687
Total Assets $ 888,205
--------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Liabilities
Accounts payable $ 41,403
Payable to shareholders 226,451
--------------
Total Current Liabilities 267,854
--------------
Total Liabilities 267,854
Minority Interest (653)
Stockholders' Deficit
Common stock 2,124
Additional paid in capital 6,173,637
Accumulated deficit prior to development stage (4,467,609)
Accumulated deficit during the development stage (1,087,147)
--------------
Total Stockholders' Deficit 621,005
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 888,205
--------------
</Table>
See accompanying notes
3
RESCON TECHNOLOGY CORPORATION
Condensed Statements of Operations
(Unaudited)
<Table>
<Caption>
For the
Development
For the Three For the Three Stage
Months Ended Months Ended Through
November 30, November 30, November 30,
2003 2002 2003
-------------- -------------- --------------
Revenues $ 0 $ 0 $ 0
General & Administrative Expenses 379,108 85,386 1,794,229
-------------- -------------- --------------
Operating Income (Loss) (379,108) (85,386) (1,794,229)
Other Income and Expense
Income from forgiveness of debt 0 0 755,145
Income (Loss) on investment in GIT 0 26,266 (48,063)
-------------- -------------- --------------
Net Income (Loss) Before Taxes (379,108) (59,120) (1,087,147)
Current Year Provision for Income Taxes 0 0 0
-------------- -------------- --------------
Net Income (Loss) $ (379,108) $ (59,120) $ (1,087,147)
-------------- -------------- --------------
Income Per Share $ (0.02) $ (0.02) $ (0.22)
Weighted Average Number of
Shares Outstanding 20,053,728 3,860,869 5,001,069
</Table>
See accompanying notes
4
RESCON TECHNOLOGY CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
<Table>
<Caption>
For the
Development
For the Three For the Three Stage
Months Ended Months Ended Through
November 30, November 30, November 30,
2003 2002 2003
-------------- -------------- --------------
Cash Flows from Operating Activities:
Net Income (Loss) $ (379,108) $ (854) $ (1,087,147)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 21,808 0 43,616
Income from investment in GIT 0 (26,266) 48,063
Increase in investments (6,000) (6,000)
Income from forgiveness of debt 0 0 (755,145)
Issued common stock for service or
expenses 275,000 0 810,881
Decrease in accounts payable 3,457 920 41,402
Decrease in prepaid expenses 6,667 26,200 6,667
Change in minority interest (97) (653)
Expenses paid by shareholders 0 0 5,345
-------------- -------------- --------------
Net Cash from operating Activities (78,273) 0 (892,971)
Cash Flows from Financing Activities:
Loan proceeds 129,125 0 943,823
Additional paid in capital 0 0
-------------- -------------- --------------
Net Increase/(Decrease) in Cash 129,125 0 943,823
Beginning Cash Balance 0 0 0
-------------- -------------- --------------
Ending Cash Balance 50,852 0 50,852
-------------- -------------- --------------
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the year for
interest $ 0 $ 0 $ 0
Cash paid during the year for
income taxes $ 0 $ 0 $ 0
Issued stock for investment $ 0 $ 0 $ 548,223
Issued stock for professional
fees contracts $ 0 $ 0 $ 788,500
</Table>
See accompanying notes
5
RESCON TECHNOLOGY CORPORATION
Notes to Condensed Financial Statements
November 30, 2003
PRELIMINARY NOTE
----------------
The accompanying condensed financial statements have been prepared
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. These interim financial statements include all adjustments,
which in the opinion of management, are necessary in order to make the
financial statements not misleading. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended August 31, 2003.
ITEM 2. PLAN OF OPERATIONS
This Form 10-QSB contains certain forward-looking statements. For
this purpose any statements contained in this Form 10-QSB that are not
statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate" or "continue" or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties.
Actual results may differ materially depending on a variety of factors.
For a complete understanding, this Plan of Operations should be read in
conjunction with Part I- Item 1. Financial Statements to this Form 10-QSB.
During the quarter ended November 30, 2003, the Company generated a
net loss of $379,108, an increase in net loss of $319,988 over the three-
month period ended November 30, 2002. During the three-months ended
November 30, 2003, general and administrative expenses increased by
$293,740 over the prior year to $379,108. Total assets of the Company
increased to $888,205 at November 30, 2003 compared to $129,512 at November
30, 2002. These significant increases in net loss, general and
administrative expenses and total assets are the result of a number of
factors, including a significant increase in operating expenses incurred by
the Company in investigating and identifying businesses and technologies to
acquire, and the development of those technologies. The Company has an
accumulated deficit since reactivation of $1,087,244. At November 30,
2003, the Company had cash on hand of $50,852.
As the Company has limited working capital and limited cash on hand,
and as it is not currently realizing revenue from operations, the Company
needs to seek additional funding from third parties. This funding may be
sought by means of private equity or debt financing. The Company currently
has no commitments from any party to provide funding and there is no way to
predict when, or if, any such funding could materialize. There is no
assurance that the Company will be successful in obtaining additional
funding on attractive terms, or at all. If the Company is unsuccessful in
obtaining additional debt or equity financing during the second quarter of
2004, the Company may be unable to continue operations. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
6
The Company is still seeking the funding to allow it to pursue the
business opportunities, including final development and marketing of the
Reading & Writing Plus educational product, the digital yearbook and its
trading software platform, it acquired in 2003, as well as investigating
potential new opportunities.
Campus continues to seek funding to complete the development of its
educational product called Reading & Writing Plus. This product will
require some additional development before it is ready for market. The
Company anticipates that it can finish final development of the Reading &
Writing Plus educational product for approximately $100,000 to $150,000.
If funding is obtained, the Company believes final development can be
completed within 30-60 days. The Company believes it will also need
approximately $150,000 to $200,000 to purchase equipment for installation
at the first school district. These funds are advanced to the school
district and are collected out of initial deposit paid by the school
district once the system is installed and operational.
In addition to the Reading & Writing Plus product, Campus has
developed a digital yearbook product. As this product is ready for market,
Campus will begin marketing its digital yearbook product as soon as it can
raise sufficient funds to hire a sales staff and undertake a direct
marketing campaign. The Company believes that with $20,000 Campus should
be able to undertake its initial marketing campaign of the digital
yearbook.
The Company will also seek to raise sufficient funds to market and
sell the trading platform it acquired from Speed. This product is also
ready to market pending the Company raising sufficient funds to hire a
marketing staff and negotiating a hosting agreement, which the Company is
currently negotiating with a third party. Once a hosting agreement is in
place, the Company expects it will need approximately $20,000 to begin
marketing its trading product.
Unless the Company discovers a business opportunity that will allow it
to begin realizing revenue in the immediate future, the Company intends to
allocate the first funds it raises to Campus for the marketing of its
digital yearbook product. Thereafter, the Company will allocate funds to
the marketing and sale of its trading platform. Once sufficient funding
for those projects has been raised, the Company will allocate remaining
funds to the final development and marketing of the Reading & Writing Plus
educational product and to the investigation of other business
opportunities.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
-------------------------------------------------
The Company's Chief Executive Officer and Chief Financial Officer
has conducted an evaluation of the Company's disclosure controls and
procedures as of a date (the "Evaluation Date") within 90 days before the
filing of this quarterly report. Based on his evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it
files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
applicable Securities and Exchange Commission rules and forms.
7
(b) Changes in Internal Controls and Procedures.
--------------------------------------------
Subsequent to the Evaluation Date, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls, nor were any corrective actions
required with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
No instruments defining the rights of the holders of any class of
registered securities were materially modified, limited or qualified
during the quarter ended November 30, 2003.
During the quarter ended November 30, 2003 and subsequent thereto, the
Company issued the following securities, which were not registered under
the Securities Act of 1933.
In September 2003, the Company issued 400,000 restricted common shares
to Dailyfinancial.com, Inc., to undertake a marketing campaign to build
awareness of the Company and its products and to design, develop and build
a website for the Company. The shares were issued without registration
under the Securities Act of 1933 in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act, and from
similar applicable state securities laws, rules and regulations exempting
the offer and sale of these securities by available state exemptions. No
general solicitation was made in connection with the offer or sale of these
securities. The Company received no funds in connection with the issuance
of these securities.
On January 27, 2004, the Company issued 1,100,000 restricted common
shares in satisfaction of loans in the amount of $55,000 made by several
individuals to the Company. The shares were issued without registration
under the Securities Act of 1933 in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act of 1933, and
Rule 506 of Regulation D of the rules and regulations promulgated under the
Securities Act of 1933, and from similar applicable state securities laws,
rules and regulations exempting the offer and sale of these securities by
available state exemptions. No general solicitation was made in connection
with the offer or sale of these securities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Reports on Form 8-K
None.
(B) Exhibits. The following exhibits are included as part of this
report:
Exhibit 31.1 Certification of Principal Executive Officer
Exhibit 31.2 Certification of Principal Financial Officer
Exhibit 32.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this to be signed on its behalf by the
undersigned thereunto duly authorized.
ResCon Technology Corporation
Dated: February 11, 2004 By: /S/ Christian Nigohossian
----------------------------------
Christian Nigohossian, CEO
9