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
February 29, 2004 000-13822
RESCON TECHNOLOGY CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
NEVADA
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(State or other jurisdiction of incorporation or organization)
83-0210455
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(I.R.S. Employer Identification No.)
1500 Market Street, 12th Floor, East Tower,
Philadelphia, Pennsylvania 19102
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(Address of principal executive offices)
(215) 246-3456
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
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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
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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; 24,591,091 shares outstanding as of May 12,
2004
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
RESCON TECHNOLOGY CORPORATION
Condensed Financial Statements
February 29, 2004
RESCON TECHNOLOGY CORPORATION
Condensed Balance Sheet
(Unaudited)
<Table>
<Caption>
ASSETS
-------
February 29, 2004
-----------------
Current Assets
Cash $ 16,260
Prepaid professional fees 42,666
------------
Total Current Assets 58,926
Fixed Assets (Net) 36,878
Prepaid Equipment Lease 33,334
Software & Technology License Agreement 403,280
Investment Speed of Thought 286,720
Other receivable 6,000
------------
Total Non-Current Assets 766,212
------------
Total Assets $ 825,138
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
--------------------------------------
Accounts payable $ 35,403
Payable to shareholders 183,015
------------
Total Current Liabilities 218,418
------------
Total Liabilities 218,418
Minority Interest (750)
Stockholders' Equity
Common stock 2,459
Additional paid in capital 6,340,802
Accumulated deficit prior to development stage (4,467,609)
Accumulated deficit during the development stage (1,268,182)
------------
Total Stockholders' Equity 607,470
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 825,138
============
</Table>
See accompanying notes
RESCON TECHNOLOGY CORPORATION
Condensed Statements of Operations
(Unaudited)
<Table>
<Caption>
For the Three For the Three
Months Ended Months Ended
February 29, 2004 February 28, 2003
----------------- -----------------
Revenues $ 0 $ 0
General & Administrative Expenses 181,035 117,957
------------ ------------
Operating Income (Loss) (181,035) (117,957)
Other Income and Expense
Income (Loss) on investment in GIT 0 3,493
------------ ------------
Net Income (Loss) Before Taxes (181,035) (110,971)
Current Year Provision for Income Taxes 0 0
------------ ------------
Net Income (Loss) $ (181,035) $ (110,971)
============ ============
Income Per Share $ (0.01) $ (0.01)
============ ============
Weighted Average Number of Shares
Outstanding 22,109,772 11,258,091
============ ============
</Table>
See accompanying notes
RESCON TECHNOLOGY CORPORATION
Condensed Statements of Operations
(Unaudited)
<Table>
<Caption>
For the
Development
For the Six For the Six Stage
Months Ended Months Ended Through
February 29, February 28, February 29,
2004 2003 2004
------------ ------------ ------------
Revenues $ 0 $ 0 $ 0
------------ ------------ ------------
General & Administrative Expenses 560,143 203,344 1,975,264
------------ ------------ ------------
Operating Income (Loss) (560,143) (203,344) (1,975,264)
Other Income and Expense
Income from forgiveness of debt 0 0 755,145
Income (Loss) on investment in GIT 0 29,759 (48,063)
------------ ------------ ------------
Net Income (Loss) Before Taxes (560,143) (173,585) (1,268,182)
------------ ------------ ------------
Current Year Provision for Income Taxes 0 0 0
Net Income (Loss) $ (560,143) $ (173,585) $(1,268,182)
============ ============ ============
Income Per Share $ (0.03) $ (0.02) $ (0.22)
============ ============ ============
Weighted Average Number of Shares
Outstanding 21,081,750 11,258,091 5,874,746
============ ============ ============
</Table>
See accompanying notes
RESCON TECHNOLOGY CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
<Table>
<Caption>
For the
Development
For the Six For the Six Stage
Months Ended Months Ended Through
February 29, February 28, February 29,
2004 2003 2004
------------ ------------ ------------
Cash Flows from Operating Activities:
Net Income (Loss) $ (560,143) $ (173,585) $(1,268,182)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 43,617 0 65,426
Income from investment in GIT 0 (29,759) 48,063
Increase in investments (6,000) 0 (6,000)
Income from forgiveness of debt 0 0 (755,145)
Issued common stock for service or expenses 0 0 535,881
Decrease in accounts payable (2,542) 920 35,402
Decrease in prepaid expenses 13,333 50,600 13,333
Change in minority interest (194) 0 (750)
Expenses paid by shareholders 0 0 5,345
------------ ------------ ------------
Net Cash from operating Activities (511,929) (151,824) (1,326,627)
Cash Flows from Financing Activities:
Issued stock for cash 442,500 0 442,500
Loan proceeds 85,689 155,490 900,387
------------ ------------ ------------
Net Increase/(Decrease) in Cash 16,260 3,666 16,260
------------ ------------ ------------
Beginning Cash Balance 0 0 0
------------ ------------ ------------
Ending Cash Balance 16,260 3,666 16,260
============ ============ ============
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
RESCON TECHNOLOGY CORPORATION
Notes to Condensed Financial Statements
February 29, 2004
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. 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 three months and six months ended February 29, 2004, the
Company generated net losses of $181,035 and $560,143 respectively. This
represents increases in net loss of $70,064 and $386,558 over the
corresponding three month and six month periods ending February 28, 2003.
During the three months and six months ended February 29, 2004, general and
administrative expenses increased by $63,078 and $356,799 over the
corresponding periods ended February 28, 2003. Total assets of the Company
at February 29, 2004 were $825,138, compared to $112,271 at February 28,
2003. 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 $1,268,182. At February 29, 2004, the
Company had cash on hand of $16,260.
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 third 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.
The Company continues to seek funding to allow it to pursue certain
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 is still seeking funds 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
Principal Executive Officer and Principal Financial Officer has conducted
an evaluation of the Company's disclosure controls and procedures as of a
date (the "Evaluation Date") within 90 days prior to the filing of this
quarterly report. Based on his evaluation, the Company's Principal
Executive Officer and Principal 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.
(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 February 29, 2004.
During the quarter ended February 29, 2004 and subsequent thereto, the
Company issued the following securities, which were not registered under
the Securities Act of 1933.
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.
On February 10, 2004, the Company issued 2,250,000 restricted common
shares in satisfaction of loans in the amount of $112,500 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 pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Principal Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
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: May 13, 2004 By:/S/ Christian Nigohossian
___________________________________
Christian Nigohossian, CEO