SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q SB
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the quarterly period ended December 31, 2001 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
Commission file number 333-64420
SCIENTIO, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 11-3581664
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
P.O. Box 940007, Belle Harbor, New York 11694
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(Address of Principal Executive Office) (Zip Code)
(718) 318-0994
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(Registrant's Telephone Number, Including Area Code)
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 and Exchange
Act of 1934 during the preceding twelve 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 ninety days.
Yes /X / No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 2,015,000.
10QSB-1
SCIENTIO, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2001
I N D E X
Page
BALANCE SHEET - ASSETS 1
BALANCE SHEET - LIABILITIES AND EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CASH FLOWS 4
NOTES TO THE FINANCIAL STATEMENTS 5 - 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
A S S E T S
December 31,
2001
-----------
(Unaudited)
CURRENT ASSETS
- --------------
Cash and Cash Equivalents $ 7,940
------
TOTAL CURRENT ASSETS 7,940
------
FIXED ASSETS, At Cost
Equipment 5,463
Software 1,626
-------
7,089
Less: Accumulated Depreciation (1,376)
-------
FIXED ASSETS, net 5,713
-------
TOTAL ASSETS $13,653
=======
See accompanying summary of accounting policies and notes to financial
statements.
Page 1 of 9
SCIENTIO, INC.
BALANCE SHEET
(A DEVELOPMENT STAGE ENTERPRISE)
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
December 31,
2001
-----------
CURRENT LIABILITIES (Unaudited)
Accounts Payable and Accrued Expenses $ 1,185
Loan Payable 9,420
-------
TOTAL CURRENT LIABILITIES 10,605
-------
SHAREHOLDERS' EQUITY
Common Stock - 30,000,000 Shares
Authorized, 2,015,000 Issued &
Outstanding Shares at $.001 Par Value 2,015
Paid In Capital 197,548
(Deficit) Accumulated during the
Development Stage (196,515)
--------
TOTAL SHAREHOLDERS' EQUITY 3,048
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,653
========
See accompanying summary of accounting policies and notes to financial
statements.
Page 2 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
(UNAUDITED)
Cumulative
Amounts from
For the December 11,
Three Months 2000
Ended (Inception) to
December 31, December 31,
2001 2001
------------ -------------
Interest Income $ -0- $ 531
General and Administrative Expenses (18,089) (51,753)
Officer Salary (39,750) (128,498)
Professional Fees (4,112) (15,429)
Depreciation (397) (1,366)
--------- --------
INCOME (LOSS) BEFORE INCOME TAXES (62,348) (196,515)
Income Tax Expense (Benefit) -0- -0-
--------- --------
NET INCOME (LOSS) $(62,348) $ (196,515)
========= ========
Basic and Diluted Earnings (Loss)
Per Share $ (.03) $ (.10)
======== =========
Weighted Average Number of Shares of
Common Stock Outstanding 2,015,000 2,015,000
========= =========
See accompanying summary of accounting policies and notes to financial
statements.
Page 3 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
(UNAUDITED)
Cumulative
For the Three Amounts from
Months Ended December 11, 2000
December 31, (Inception) to
2001 December 31, 2001
------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (62,348) $(196,515)
Adjustments to Reconcile Net Income (Loss)
to Net Cash
Provided by (Used In) Operating Activities:
Depreciation 397 1,366
Stock Issued for Services -0- 9,471
Change in Assets and Liabilities:
Increase (Decrease) in Accounts Payable 1,107 1,157
Increase (Decrease) in Loan Payable 9,482 9,482
------ -------
Net Cash Provided by (Used In)
Operating Activities (51,362) (175,039)
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (183) (5,532)
------ -------
Net Cash Provided By (Used In)
Investing Activities (183) (5,532)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Common Stock Issuance -0- 229,190
(Increase) in Deferred Registration Costs -0- (40,690)
------ -------
Net Cash Provided By (Used In)
Financing Activities -0- 188,500
------ -------
Effect of Exchange Rate Changes on Cash 46 11
------ -------
Net Increase (Decrease) in Cash and
Cash Equivalents (51,499) 7,940
Cash and Cash Equivalents at Beginning
of Period 59,439 -0-
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,940 $ 7,940
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest Expense $ -0- $ -0-
Income Tax $ -0- $ -0-
Non Cash Investing and Financing Transactions:
Stock Issued for Services $ -0- $ 9,471
Stock Issued for Software $ -0- $ 1,592
See accompanying summary of accounting policies and notes to financial
statements.
Page 4 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(UNAUDITED)
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Scientio, Inc. (Scientio) is a Delaware corporation. Scientio is
in the development stage and has not generated any revenue.
Scientio's offices are located in the United Kingdom and the
United States. Scientio's principal purpose was to acquire the
ownership and commercialization rights to a line of software
products developed by Andrew Edmonds and owned by Anneke Edmonds
and designated "the family of XML products" defined as XML
Miner, XML Rule and Strucfind. These products mine XML code to
find relationships and predict values using fuzzy-logic rules,
then apply them to web sites, applications, or anywhere that a
COM control or Java bean can be used.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Currency Translation
The Company's functional currency is the British pounds sterling
in which revenue and expenses are generated. For reporting
purposes, the reporting currency is the US Dollar. The
translating functional currency statement into the reporting
currency was performed in accordance with Statements of
Financial Accounting Standards (SFAS) 52 and General Accepted
Accounting Principles (GAAP).
Cash and Cash Equivalents
Cash equivalents consist of highly liquid, short-term
investments with original maturities of 90 days or less.
Property and Equipment, At Cost
Depreciation is calculated using the straight line method over
the asset's estimated useful life, which is 5 years for
equipment and 3 years for software.
Revenue Recognition Policy
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped to
customers.
Page 5 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(CONTINUED)
(UNAUDITED)
Estimates in Financial Statements
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 at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." SFAS 109 has as its basic objective the recognition of current and
deferred income tax assets and liabilities based upon all events that have
been recognized in the financial statements as measured by the provisions
of the enacted tax laws.
Valuation allowances are established when necessary to reduce deferred tax
assets to the estimated amount to be realized. Income tax expense
represents the tax payable for the current period and the change during
the period in the deferred tax assets and liabilities.
NOTE 3: DEFERRED REGISTRATION COSTS
For the period December 11, 2000 (inception) through September 30, 2001,
the Company has incurred deferred registration costs of $40,690 relating
to expenses incurred in connection with the Stock Distribution
(see Note 9). As of December 31, 2001, the deferred registration costs
were charged to equity upon consummation of this Stock Distribution.
NOTE 4: OFFICER SALARY AND PROFESSIONAL FEES
The Company has an agreement with its president to complete and maintain
the Company's product. In this agreement, the Company agrees to pay the
officer at least $90,000 per annum. The officer has received $128,498 for
the period December 11, 2000 (inception) to December 31, 2001.
NOTE 5: STOCK BASED COMPENSATION
The person who performed services in relation to the formation of the
corporation received 20,150 common shares approximating the fair market
value of $9,471. This amount was charged to professional fees during the
period ended September 30, 2001. This stock based compensation plan is
accounted for in accordance with SFAS No. 123.
Page 6 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(CONTINUED)
(UNAUDITED)
NOTE 6: TRANSFERS OF NONMONETARY ASSETS BY SHAREHOLDERS
According to the Securities and Exchange Commission's Staff Accounting
Bulleting 48, when the company acquires assets from shareholders in
exchange for stock just prior to its first public offering, the assets
should generally be recorded at cost to the shareholder. On December 15,
2000, the company acquired software from a shareholder and recorded the
software at a cost of $1,592 (the cost to the shareholder).
NOTE 7: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state income tax rates.
Income tax expense is as follows:
Cumulative
For the Amount From
Three Months December 11, 2000
Ended (inception) to
December 31, December 31,
2001 2001
------------- ---------------
Current tax expense (benefit):
Income tax at statutory rates $ -0- $ -0-
Deferred tax expense (benefit):
Operating Loss Carryforward (10,587) (46,162)
-------- -------
(10,587) (46,162)
Valuation allowance 10,587 46,162
-------- -------
Total Tax Expense (Benefit) $ -0- $ -0-
======== =======
As of As of
December 31, September 30,
2001 2001
----------- ------------
Deferred tax assets:
NOL $ 46,162 $ 35,575
Valuation allowance (46,162) (35,575)
------- -------
Net deferred tax assets $ -0- $ -0-
======= =======
The Company has net operating loss (NOL) carryforwards for income tax purposes
of approximately $197,000. This loss is allowed to be offset against
future income until the year 2022 when the NOL's will expire.
The loss has been fully reserved for in the valuation allowance account
due to the startup of operations and the uncertainty of the company to
achieve profitability in the future.
Page 7 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(CONTINUED)
(UNAUDITED)
NOTE 8: OPERATIONS AND LIQUIDITY
The Company has incurred substantial losses in 2001. Until such time that
the Company's products and services can be successfully marketed, the
Company will continue to need to fulfill working capital requirements
through the sale of stock and the issuance of debt.
The ability of the Company to continue in existence is dependent on its
having sufficient financial resources to bring products and services to
market for marketplace acceptance. As a result of its significant losses,
negative cash flows from operations, and accumulated deficits for the
period ending December 31, 2001, there is doubt about the Company's
ability to continue as a going concern.
Management believes that its current available working capital,
anticipated contract revenues and subsequent sales of stock and/or
placement of debt instruments will be sufficient to meet its projected
expenditures for a period of at least twelve months from December 31,
2001. However, any projections of future cash needs and cash flows are
subject to substantial uncertainty. There can be no assurance that
sufficient financing will be available in amounts or on terms acceptable
to the Company.
NOTE 9: STOCK DISTRIBUTION
On December 8, 2000, Modern Technology Corp. ("Modern") entered into an
agreement with Andrew Edmonds, president and Anneke Edmonds, principal
shareholder, to form Scientio. Modern agreed to purchase 403,000 shares
of Scientio, representing 20% of the outstanding shares, for an investment
of $188,500 and an additional investment of up to $50,000 to cover the
costs of registering those shares and distributing them to shareholders of
Modern.
A registration statement for the 403,000 shares owned by Modern Technology
Corp. was filed with the Securities and Exchange Commission. On September
24, 2001, the registration statement was declared effective. During the
first week of October 2001, the 403,000 shares were distributed to
Modern's shareholders.
NOTE 10: RELATED PARTY TRANSACTIONS
The Company is paying rent monthly of about $1,700 to Anneke Edmonds,
treasurer and director, for use of two rooms (about 300 square feet) in
Mrs. Edmond's home under an oral agreement on a month to month basis.
Included in the rental are monthly payments for telephone, utilities and
use of equipment, computers and software owned by Andrew and Anneke
Edmonds. Andrew Edmonds is the President of Scientio Inc. Anneke
Edmonds is the wife of Andrew Edmonds.
Page 8 of 9
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(CONTINUED)
(UNAUDITED)
NOTE 11: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the Company for the period October
1, 2001 through December 31, 2001 and December 11, 2001 (inception)
through December 31, 2001 have been prepared by management from the books
and records of the Company, and reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the financial position
and operations of the company as of the period indicated herein, and are
of a normal recurring nature.
NOTE 12: SUBSEQUENT EVENTS
On January 25, 2002, Modern Technology Corp. converted a $70,000 loan to
the Company into 100,000 restricted shares of common stock of the Company.
The $70,000 advanced by Modern Technology Corp. was used by the Company to
cover operational expenses.
The Company concluded an agreement with vFinance Investments Inc.
("Vfinance") whereby Vfinance will perform consulting services related to
corporate finance and other financial service matters. During January
2002, the Company paid $10,000 and issued 50,000 restricted shares of
common stock to Vfinance for these services.
Page 9 of 9
Part 1. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Scientio, Inc. ("The Registrant") was incorporated in the State of
Delaware on December 11, 2000. It is engaged in the development,
marketing and support of software components that can be used to
analyze data (data mining) flowing from the XML (extensible markup language)
protocol between computers over the internet or intranets. The Registrant
has not yet generated any sales to date.
The Registrant has created five software components along with associated
help files, example code and demonstration software. They are XML Miner,
XML Rule, XR Batch, Strucfind and the Metarule editor. These components
can be used to read data in the XML format, data mine it and use the
results of the analysis to make predictions on new data.
The above components are packaged into two different packages directed
at different developer needs.
Each package is named after the major component. The XML Miner package
contains XML Miner, XML Rule and Strucfind. The XML Rule package
contains XML Rule, XR Batch and the Metarule editor. The
targeted customers for these products are software developers.
While the XML Miner Package has been installed and running on the
Registrant's web site, offering online demonstrations of its
performance in two distinct application areas, it has not yet sold
any units of XML Miner or the XML Miner Package, nor has the
Registrant's technology been installed to date by any
business and no assurance can be given that its technology will work
in an operational setting. To date, the Registrant has not yet
entered into any joint venture or general consultancy agreements nor
licensed any of its technology to software development companies,
although the Registrant is presently in discussions with a European
software provider with the goal of reaching a joint marketing agreement.
No assurance can be given that the Registrant will conclude a joint
marketing agreement with the aforementioned European software provider.
Management has focused its business plan into two areas: to pursue
large companies who sell software products for which the Registrant's
technology would be a vital or useful addition, and to generate
complete products that exploit our technology directed at a larger market
than just software developers.
On December 8, 2000, Modern Technology Corp ("Modern") entered into an
agreement with Andrew Edmonds, President and Anneke Edmonds, principal
shareholder, to form Scientio. Modern agreed to
purchase 403,000 shares of Scientio, representing 20% of the outstanding
shares, for an investment of $188,500 and an additional investment of
up to $50,000 to cover the costs of registering those shares and
distributing them to shareholders of Modern.
A registration statement for the 403,000 shares owned by Modern
Technology Corp. was filed with the Securities and Exchange
Commission. On September 24, 2001, the registration statement was
declared effective. During the first week of October 2001, the
403,000 shares were distributed to Modern's shareholders.
The Registrant is in the development stage, not yet generating any
revenues. Over the next twelve months, the Registrant does not
anticipate the purchase of any significant amount of plant or equipment
and does not anticipate any significant changes in the number of company
employees (presently there are 3 employees).
During the three months ended December 31, 2001, the Registrant had a
net loss of $62,348. During the period from inception (December 11, 2000)
to December 31, 2001, the Registrant generated a net
loss of $196,415. For the three months ended December 31, 2001, the
Registrant's expenses consisted of general and administrative items
amounting to $18,089, Officer's salary to the Registrant's president
amounting to $39,750, professional fees, mainly legal and accounting,
amounting to $4,112 and depreciation of $397.
For the period from inception (December 11, 2000) to December 31, 2001,
the Registrant's expenses consisted of general and administrative
expenses of $51,753, officer's salary of $128,498 (paid to the
Registrant's president), professionalfees (primarily legal and
accounting expenses) of $15,429 and depreciation of $1,366. $531 of
interest income was generated for this period.
As of December 31, 2001, the Registrant had total assets of $13,653, consisting
of $7,940 of cash and cash equivalents and fixed assets of $5,713. Total
liabilities amounted to $10,605, consisting of a loan
payable to Modern Technology Corp of $9,420 and accounts payable and accrued
expenses of $1,185. Shareholders' equity amounted to $3,148.
The Registrant received its initial funding from Modern, one of its principal
shareholders. As of December 31, 2001, Modern has invested $238,500. Modern
has also agreed to loan the Registrant up to $75,000 to cover operational
expenses. Management believes these funds will be sufficient to cover
working capital needs through March 31, 2002. The Registrant will need to
raise an additional $100,000 over the next 12 months. There are presently
no commitments for any additional financing.
The only officer entitled to compensation is Andrew Edmonds, the President of
the Company. Dr. Edmonds devotes his full time to the business of the
Registrant. Pursuant to the shareholder's agreement of December 8, 2000
(signed by Modern Technology Corp), Dr. Edmonds is to be paid a
minimum salary of $90,000 on or before December 8, 2001. Dr. Edmonds has
agreed to transfer to the Company all improvements of the Registrant's
products and any new software products he develops for
a three year period ending December 8, 2003. In the event this salary is not
paid to Dr. Edmonds, he will be free of the three year restriction provided
all shares issued to Mrs. Edmonds (owner of 1,591,850
shares of the Registrant, representing a 79% ownership interest) are returned
to the treasury of the Registrant.
The Registrant is paying rent monthly of about $1,700 to Anneke Edmonds,
treasurer and director, for use of two rooms (about 300 square feet)
in Mrs. Edmond's home under an oral
agreement on a month by month basis. Included in the rental are monthly
payments for telephone, utilities and use of
equipment, computers and software owned by Andrew and Anneke Edmonds.
Management believes the amount paid is equivalent to or less than
current market rental rates. Anneke Edmonds, treasurer
and chief financial officer/director, and Arthur Seidenfeld, secretary and
director, both are non paid officers/directors.
Item 3. Default upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Materially Important Events. None.
Item 6. Exhibits and Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SCIENTIO, INC.
By: Andrew Edmonds
President and Chief Executive Officer
February 5, 2002