UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2004
Commission File Number: 33-22142
REDOX TECHNOLOGY CORPORATION
Delaware Corporation 55-0681106
(State of Incorporation) (I.R.S. Employer Identification No.)
1141 Harbor Bay Parkway, Suite 203
Alameda, CA 94502
(510) 769-4600
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 |_|
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.
CLASS 76,046,629
Common Stock NUMBER OF SHARES OUTSTANDING
par value $0.00005 per share ON: March 31, 2004
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Item 2. Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
BALANCE SHEET
March 31, 2004
(Restated)
Total Assets $ --
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Accounts payable $ 152,644
Accrued expenses 253,745
Accrued interest on note payable to founder 148,369
Due to related party 15,000
Note payable to founder 509,163
-----------
Total Liabilities 1,078,921
-----------
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Convertible Preferred stock, $.001 par, 10,000,000
shares authorized, none issued and outstanding --
Common stock, $.00005 par, 100,000,000 shares
authorized, 76,046,629 shares outstanding 3,802
Additional paid in capital 5,196,617
Deficit accumulated during the development stage (6,279,340)
-----------
Total Stockholders' Deficit (1,078,921)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ --
===========
3
REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF EXPENSES
Three Months Ended March 31, 2004, and 2003, and the Period
from April 9, 1993 (Inception) Through March 31, 2004
(Restated)
Inception
Through
March 31,
2004 2003 2004
----------- ----------- -----------
General & administrative
- - cash $ 48,428 $ 60,603 $ 1,758,851
- - non-cash 464,468 -- 4,085,820
- - warrants -- -- 3,698
Research & development -- -- 150,965
Interest expense 12,729 12,335 214,124
Depreciation -- -- 53,959
Impairment expense -- -- 11,923
----------- ----------- -----------
Net loss $ (525,625) $ (72,938) $(6,279,340)
=========== =========== ===========
Basic and diluted net loss
per common share $ (.01) $ (.00)
Weighted average common
shares outstanding 75,819,783 63,744,239
4
REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2004, and 2003, and the
Period from April 9, 1993 (Inception) Through March 31, 2004
(Restated)
Inception
Through
March 31,
2004 2003 2004
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (525,625) $ (72,938) $(6,279,340)
Adjustments to reconcile
net loss to cash used by
operating activities:
Stock issued for lawsuit -- -- 127,500
Stock issued for patent -- -- 1,500
Stock issued for services 464,468 -- 3,757,155
Warrant expense -- -- 3,698
Depreciation -- -- 53,959
Impairment expense -- -- 11,923
Change in:
Accounts payable 4,680 16,854 152,644
Accrued expenses 43,748 43,749 363,248
Accrued interest on note payable
to founder 12,729 12,335 148,369
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES -- -- (1,659,344)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets -- -- (65,882)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock -- -- 120,350
Contributions to capital
by founder -- -- 1,589,876
Advances by related party -- -- 15,000
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- -- 1,725,226
----------- ----------- -----------
NET CHANGE IN CASH -- -- --
CASH AT BEGINNING OF PERIOD -- -- --
----------- ----------- -----------
CASH AT END OF PERIOD $ -- $ -- $ --
=========== =========== ===========
NONCASH ACTIVITIES:
Note to founder exchanged
for common stock $ -- $ -- $ 1,146,467
Stock for accrued expense -- -- 43,749
5
REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Redox Technology
Corporation ("Redox"), have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
Redox's Annual Report filed with the SEC on Form 10-KSB. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim are not necessarily indicative of the results
to be expected for the full year. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial
statements for 2003 as reported in the 10-KSB have been omitted.
NOTE 2 - EQUITY
Redox issued 5,160,750 shares of common stock for services valued at $464,468.
NOTE 3 - SUBSEQUENT EVENTS
Redox issued 400,000 shares of common stock for legal and consulting services
valued at $14,000.
NOTE 4 - RESTATEMENTS OF PREVIOUSLY REPORTED FINANCIAL STATEMENTS
There were misstatements in the originally prepared March 31, 2004 and 2003
financials. See the notes below.
A summary of the restatements are as follows:
Previously Increase
Stated (Decrease) Restated
------------ ----------- ------------
As of March 31, 2004:
Balance Sheet:
Cash $ -- $ -- $ --
------------ ----------- ------------
Total assets $ -- $ -- $ --
============ =========== ============
Accounts payable $ 152,644 $ -- $ 152,644
Accrued expenses 347,890 (1) (81,278) 253,745
(2) (12,867)
Accrued interest on note payable
to founder -- (1) 135,640 148,369
(2) 12,867
(4) (138)
Due to related party 15,000 -- 15,000
Note payable to founder 514,694 (1) (5,531) 509,163
Common stock 3,802 -- 3,802
Additional paid in capital 4,804,326 (1) 392,291 5,196,617
Accumulated deficit (5,838,356)(1) (441,122) (6,279,340)
(4) 138
------------ ----------- ------------
Total liabilities and equity $ -- $ -- $ -
============ =========== ============
For the three months ended March 31, 2004:
Statement of Expenses:
General and administrative
- cash $ 61,295(3) $ (12,867) $ 48,428
- non-cash 464,468 -- 464,468
Interest expense --(4) (138) 12,729
(3) 12,867
----------- ----------- -----------
Net income (loss) $ (525,763) $ (138) $ (525,625)
=========== =========== ===========
Basic and diluted net loss per
common share $(.01) -- $ (.01)
Weighted average common shares
outstanding 75,819,783 -- 75,819,783
For the three months ended March 31, 2003:
Statement of Expenses:
General and administrative
- cash $ 60,603 $ -- $ 60,603
Interest expense 12,778(4) (443) 12,335
----------- ----------- -----------
Net income (loss) $ (73,381) $ (443) $ (72,938)
=========== =========== ===========
Basic and diluted net loss per
common share $(.01) -- $(.01)
Weighted average common shares
outstanding 63,744,239 -- 63,744,239
Restatement notes:
(1) - Restatements from prior years. Prior capital contributions were
reclassified to note payable to founder; 10% interest was accrued on all
amounts reclassified; previously issued stock recorded at a discount was
recorded at fair value with the excess as general and administrative
expense
(2) - Reclassification of interest on note payable to founder from accrued
expenses to accrued interest on note payable to founder.
(3) - Reclassification of interest expense from general and administrative to
interest expense
(4) - Adjustment to interest expense and accrued interest on note payable to
founder
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
Some of the information in this Form 10-QSB contains forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. You should
read statements that contain these words carefully because they:
o discuss our future expectations;
o contain projections of our future results of operations or of our financial
condition; and o state other "forward-looking" information.
We believe it is important to communicate our expectations. However, there may
be events in the future that we are not able to accurately predict or over which
we have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this annual report. See "Risk Factors."
GENERAL
The following discussion and analysis should be read in conjunction with the
financial statements and summary of selected financial data for ReDOX Technology
Corp. This discussion should not be construed to imply that the results
discussed herein will necessarily continue into the future, or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment of the management of the Company.
As previously reported, this corporation is in a development stage and has not
yet conducted any business so as to become an income producing entity. We have
entered into a securities purchase agreement with private investors and will
receive a total of $750,000 to carry out our business plan. To date, subsequent
to the end of the first quarter of 2004, we received our first installment of
$250,000 of that funding commitment.
Our financial condition has not changed materially from December 31, 1999 to the
date of the financial statements herewith provided. We have suffered recurring
losses from operations, and its current liabilities exceed our current assets.
To the extent that we have incurred continuing expenses without any revenues
7
having been generated, shareholder's equity would have suffered proportionately
had it not been for the continuing infusion of capital from the Company's
director, Richard Szymanski. We are relying on outside sources to fund our
operations until we begin significant sales of our licensed products.
PLAN OF OPERATION
We have entered into Exclusive License Agreements with Screen Media Technology,
a company established in Norway that provides mobile and advanced computing and
communications solution. Screen Media owns the rights to certain hardware and
software technologies as well as custom applied technologies. The Exclusive
License provides Redox with the ability to market and sell all of the products
and technologies of Screen Media in the United States.
Redox Technology Corp. has acquired the exclusive license to sell, market, and
sub-license all of Screen Media Technology's mobile and advanced computing and
communications technologies in the United States for a one time cash and Common
Stock license fee. The exclusive license will provide the Company with the
initial rights to current products and solutions developed by Screen Media and
potentially new products and applications for the existing technologies that may
be developed for the marketplace as long as the license agreement remains in
effect. The parties have agreed, in principal, to an initial term of five years
with an automatic five-year renewal upon the meeting of certain minimum-revenue
targets.
We have also entered into a similar Exclusive License Agreement with Haynes
Enterprises, Inc. (soon to be renamed Luminescence) which entity provides
technologies in the areas of lighting, battery technology and light emitting
polymer displays. This exclusive license also will provide the Company with the
initial rights to current products and solutions developed by Haynes Enterprises
and potentially new products and applications for the existing technology that
may be developed for the marketplace as long as the license agreement remains in
effect. The parties have agreed, in principal, to an initial term of five years
with an automatic five-year renewal upon the meeting of certain minimum-revenue
targets.
The Licensors and their products are described below:
SCREEN MEDIA TECHNOLOGY AS
Screen Media develops software and accompanying hardware designed for optimal
performance in a variety of software applications and builds on open standards
and is not exclusive to the Linux based embedded software platform used by
Screen Media Technology. The software platform is modular, allowing easy
adaptation to tailor made solutions for various enterprise and high-end consumer
needs.
The Screen Media "Free Pad"
Screen Media's Free Pad is a Linux-based "Communications Convergent" thin client
device. It allows workers or customers to surf the web, do e-mail, watch TV and
movies, listen to MP3's and internet radio, talk on the phone, pay bills, as
well as a host of other potential vertical applications from their home,
classroom, office, factory or hanger-wirelessly across both Wireless Fidelity
(WiFi) and cellular networks.
The Free Pad uses any 802.11x wireless- or GSM cellular network, and provides
access anywhere for a wide range of user applications. The LINUX based embedded
software platform is stable in operation with modern and flexible design
features supporting multiple applications with expansion options.
HAYNES ENTERPRISES, INC.
Haynes Enterprises is a technology company developing proprietary methods of
producing flat, flexible, fluorescent lighting, light emitting polymer displays
and flat flexible batteries.
LIGHT EMITTING MICROSPHERE (LEM) TECHNOLOGY
Haynes Enterprise is developing light emitting microspheres for screen-printing
flat flexible fluorescent lighting capable of emitting visible and ultraviolet
light. This process eliminates the need for mercury vapor, enabling an
inexpensive, safer, environmentally friendly replacement for the current
fluorescent lighting used in computers, television and industrial applications,
to deliver higher brightness, longer life, flexibility, and energy efficiency.
Market demand at present is being met by, tubular fluorescent lighting, tubular
neon lighting, and light emitting diode signs.
LIGHT EMITTING POLYMER (LEP) TECHNOLOGY
Haynes Enterprise is developing unique lamp constructions and ink formulations
for screen-printing flat flexible light emitting polymer displays. This process
allows low cost manufacturing and uniform light emission across the entire
surface of displays.
FLAT BATTERY TECHNOLOGY
Haynes Enterprise is currently developing a flat, flexible, screen-printed
method of producing batteries to be incorporated into printed display
applications utilizing screen-printed polymer lighting. This proprietary system
8
will address the need for applications with limited space requiring increased
flexibility such as printed ads.
MARKETING STRATEGY:
By the third quarter, we intend to retain a marketing firm to develop a twenty
four month sales and marketing plan. Our marketing consultant will begin
executing its process of product-information dissemination and its product
fulfillment plan. Strategic branding, or creating name recognition through
advertising in trade publications and other traditional formats, will be a
primary focus of our marketing consultant. We believe our marketing plan will
progress in three phases, and we anticipate our marketing costs to run
approximately $100,000, which costs will not begin to in incur until the third
quarter of 2004.
Phase 1 involves establishing a plan of critical reactive measures designed to
provide us with the ability to react immediately to existing market conditions
with the launching of our product. This plan is designed to help us:
1. Field product inquiries precipitated by marketing and public relations
processes already in motion;
2. set up a preliminary mechanism to deliver a consistent brand message to
consumer and other potential buyers;
3. provide a preliminary method to capture critical relationship data from
potential consumers precipitated by any public relations and marketing efforts;
4. provide a basic infrastructure of product design and information from which
to build a solid program of marketing and fulfillment.
The design and functional specifications for a full e- commerce/marketing site
will be developed during the end of Phase 1 for implementation in Phase 2.
Phase 2 will include the tactical deployment of a targeted functional Web site.
The design of the site will be based on the functional requirements identified
in Phase l. Market and brand data that has been collected in Phase 1 will be
analyzed and converted to action items designed to continue to build brand
identity and design direction for implementation of the logo/mark and any
specified marketing verbiage across the appropriate marketing channels. Phase 2
will also involve: (i) exploration of the user interface regarding user's
alignment to the established brand and target market; (ii) product collateral
not developed in Phase 1 (such as user guides, compatibility guides,
point-of-sale collateral, brochures, etc.) will be developed during this Phase.
Phase 3 involves monitoring, budgeting and planning for the projected life-cycle
of the brand as well as adjusting those processes developed in prior phases.
Once ReDOX has established brand identity and begins its implementation of an
effective method of product information dissemination and fulfillment, Phase 3
will focus on building brand equity across multiple channels. This could include
the introduction of an effective media plan for online/offline exposure,
development of ad campaigns, banner campaigns, possible introduction of
additional or co-brand synergies within our Company, development of external
marketing synergies through co-branding, bundling, partnering and other
promotional opportunities.
All three phases can be accomplished within a 60-90 day period, and can begin
upon completion of testing and release of test data for publication.
Revenue Generation: We hope to generate revenue from essentially three sources:
1. Original Equipment Manufacturers (OEMs) will pay a royalty to the Company,
based on a negotiated sub-license agreement to be drafted on a per OEM basis,
for each upload of our software during their own manufacturing process. Our
per-unit price will be negotiated with OEMs based on our estimated volume with
each OEM.
2. Software companies will pay a royalty to the Company, based on a negotiated
sub-license agreement to be drafted on a per company basis, for each unit sold.
3. Our Licensors, Screen Media Technology, AS and Haynes Enterprises both
provide us with the ability to sell and sublicense products and technologies for
which each licensor will receive royalties and we will generate revenues from
sales.
We do not expect to purchase any significant equipment over the next twelve
months. We also do not expect any significant changes in the number of
employees.
Battery Technologies: Our plan of operations does not include our battery
technology. It is our objective to generate revenue through our licensing
agreements over the next 12 to 24 months, and a portion of our profits will be
used to complete the product development and marketing plan necessary to launch
this technology. We expect, through our license agreement with Haynes
Enterprises, to generate additional revenues from that entity's battery
technology.
9
OPERATING DATA:
There was no revenue from sales and ancillary income for the quarter ended March
31, 2004.
General and Administrative expenses (operating expenses) were 61,295 in cash and
464,468 in common stock for the quarter ended March 31, 2004.
LIQUIDITY AND CAPITAL RESOURCES:
We have finalized a financing commitment with private investors for the sale of
up to $750,000 in convertible debentures and warrants. We have received $250,000
upon our signing of a securities purchase agreement; we will receive $250,000
upon the filing of a registration statement covering shares of common stock
underlying the convertible debentures and warrants, and $250,000 upon the
registration statement being declared effective with the Securities and Exchange
Commission. We do not currently have any contracts, plans or agreements in place
for any additional financing. There can be no assurance that financing will be
available in amounts or on terms acceptable to us, if at all.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
As of March 31, 2004, we carried out an evaluation of the effectiveness of the
design and operation of its disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. This evaluation was done under the supervision and
with the participation of our Principal Executive Officer and Principal
Financial Officer. Based upon that evaluation, they concluded that our
disclosure controls and procedures are effective in gathering, analyzing and
disclosing information needed to satisfy our disclosure obligations under the
Exchange Act.
Changes in internal controls
There were no significant changes in our internal controls or in other factors
that could significantly affect those controls since the most recent evaluation
of such controls.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On January 2, 2004, we issued 500,000 shares of our Common Stock to an investor
relations firm in exchange for services. This issuance is considered exempt
under Section 4(2) of the Securities Act of 1933.
On January 20, 2004, we issued a total of 5,160,750 shares of our Common Stock
to Richard Szymanski, Clifton Douglas and James Schuler in lieu of salaries and
director's fees accrued in 2003 as follows: 2,341,9000 shares were issued to
Richard Szymanski; 1,759,750 shares were issued to Clifton Douglas; and to James
Schuler, we issued 60,000 shares as compensation to him as an outside director
during the year 2003, and 1,000,000 shares for other services rendered to the
Company during that period. These issuances are considered exempt under Section
4(2) of the Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. 31.1 - Certification of Chief Executive Officer pursuant to Rule
13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of
1934, as amended
31.2 - Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule
15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
(b) Reports on Form 8-K. None.
10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REDOX TECHNOLOGY CORPORATION
(Registrant)
DATE: 7/12/2004 /s/ James Schuler
---------------------------------------
James Schuler
President, Director