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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-QSB
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|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO _____
005-78248
(Commission file number)
GLOBAL PHARMATECH, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
33-0976805
(IRS Employer Identification No.)
89 Ravine Edge Drive, Richmond Hill, Ontario, Canada L4E 4J6
(Address of principal executive offices)
(905) 787-8225
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
CLASS OUTSTANDING AS OF MARCH 8, 2005
----- -------------------------------
COMMON STOCK, $.0001 PAR VALUE 3,415,627
Transitional Small Business Disclosure Format (check one): |_| Yes |X| No
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GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.)
FORM 10-QSB
DECEMBER 31, 2004
INDEX
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets..........................................2
Consolidated Statements of Operations................................3
Consolidated Statements of Stockholders' Deficit.....................5
Consolidated Statements of Cash Flows................................6
Notes to Consolidated Financial Information..........................7
Item 2. Management's Discussion & Analysis..................................11
Item 3. Controls and Procedures.............................................13
Part II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................13
Item 2. Changes In Securities...............................................13
Item 3. Defaults Upon Senior Securities.....................................13
Item 4. Submission Of Matters To A Vote Of Security Holders.................13
Item 5. Other Information...................................................13
Item 6. Exhibits and Reports on Form 8-K....................................14
Signatures...................................................................14
Certifications...............................................................14
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
To the Board of Directors and Stockholders
Global Pharmatech, Inc. (F/K/A Autocarbon, Inc.) and Subsidiary
I have reviewed the accompanying balance sheet of Autocarbon, Inc. (a
development stage company) as of December 31, 2004, and the related statements
of operations for the nine-month periods ended December 31, 2004 and
2003 and for the period from June 26, 2001 (Inception) to December 31, 2004 and
the statement of changes in stockholder's equity for the nine-month periods
ended December 31, 2004 and for the period from June 26, 2001 (Inception) to
December 31, 2004, and cash flows for the three and nine-month periods ended
December 31, 2004 and 2003 and for the period from June 26, 2001 (Inception) to
December 31, 2004. This interim financial statement is the responsibility of the
Company's management.
I conducted my review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should to
the accompanying consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a stockholders' deficit that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Aaron Stein CPA
Woodmere, New York
March 4, 2005
1
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
(A Development Stage Company)
BALANCE SHEET
DECEMBER 30, 2004
(Unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents $ -
------------
Total current assets $ -
------------
$ -
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Payment for Shares not Issued 1,200
Advance from Shareholders 21,455
------------
Total current liabilities $ 22,655
STOCKHOLDERS' DEFICIT
Common Stock, $.0001 par value,
100,000,000 shares authorized,
34,156,185 issued and outstanding $ 3,416
Additional Paid-in Capital 1,046,450
Deficit Accumulated During the Development Stage (1,072,521)
------------
Total Stockholders' Deficit (22,655)
------------
$ -
============
See accompanying notes to consolidated financial statements
2
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
(A Development Stage Company)
STATEMENT OF OPERATIONS
Three Months Three Months
Ended Ended
December 31, December 31,
2004 2003
----------- -----------
(Unaudited) (Unaudited)
Revenues $ -- $ --
General and Administrative Expenses -- --
---------- ----------
Income (Loss) Before Discontinued
Operations Net of Income Taxes of $ -0- -- --
---------- ----------
Discontinued Operations, Net of Income
Taxes of $-0- -- --
Expenses (Income) in Connection With
Discontinued Operations, Net of Income
Taxes of $-0- -- --
---------- ----------
Net Loss $ -- $ --
========== ==========
Loss Per Share
Basic $ -- $ --
========== ==========
Weighted Average Number of
Common Shares outstanding 33,056,185 1,402,122
========== ==========
See accompanying notes to consolidated financial statements
3
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
(A Development Stage Company)
STATEMENT OF OPERATIONS
June 26, 2001
Nine Months Ended (Inception) to
December 31, December 31,
2004 2003 2004
------------ ----------- ------------
(Unaudited) (Unaudited) (Unaudited)
Revenues $ -- $ -- $ --
General and Administrative Expenses -- -- --
------------ ----------- ------------
Income (Loss) Before Discontinued
Operations Net of Income Taxes of $ -0- -- -- --
------------ ----------- ------------
Discontinued Operations, Net of Income
Taxes of $-0- -- (9,129) (1,065,561)
Expenses (Income) in Connection With
Discontinued Operations, Net of Income
Taxes of $-0- 5,000 9,400 6,960
------------ ----------- ------------
Net Loss $ (5,000) $ (18,529) $ (1,072,521)
============ =========== ============
Loss Per Share
Basic $ (0.0001) $ (0.0132) $ (0.0314)
============ =========== ============
Weighted Average Number of
Common Shares outstanding 34,156,185 1,402,122 34,156,185
============ =========== ============
See accompanying notes to consolidated financial statements
4
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
Accumulated
Deficit
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage Total
----------- ------- ----------- ----------- ---------
Common stock issued at inception -
for services rendered 170,000 $ 17 $ 56,933 $ -- $ 56,950
Issuance of common stock - private
placement July 1 - September 30, 2001 5,185 1 129,599 -- 129,600
Issuance of common stock - private
placement - November 1 - November 30, 2001 2,280 -- 57,000 -- 57,000
Issuance of common stock -
for services rendered 30,000 3 9,997 -- 10,000
Issuance of common stock -
for services rendered 1,200 -- 30,000 -- 30,000
Net loss - year ended March 31, 2002 -- -- -- (425,932) (425,932)
----------- ------- ----------- ----------- ---------
Balance - March 31, 2002 208,665 21 283,529 (425,932) (142,382)
Common stock issued 8,800 1 219,999 -- 220,000
Issuance of common stock -
for services rendered 12,900 1 317,499 -- 317,500
Common stock issued 1,200 -- 15,000 -- 15,000
Exercise of stock options 1,000 -- 12,500 -- 12,500
Issuance of common stock - private
placement - January 6 - January 30, 2003 993,520 99 49,577 -- 49,676
Net loss-year ended March 31, 2003 -- -- -- (607,276) (607,276)
----------- ------- ----------- ----------- ---------
Balance-March 31, 2003 1,226,085 122 898,104 (1,033,208) (134,982)
Issuance of common stock-
for services rendered 25,000 3 13,243 -- 13,246
Common stock issued 200,000 20 9,980 -- 10,000
Issuance of stock for acquisition of subsidiary 31,295,000 3,130 (3,130) -- --
Rescission of common stock (9,900) (1) 1 -- --
Issuance of stock for settlement of accounts payable 320,000 32 93,703 -- 93,735
Net loss- year ended March 31, 2004 -- -- -- (34,313) (34,313)
----------- ------- ----------- ----------- ---------
Balance-March 31, 2004 33,056,185 3,306 1,011,901 (1,067,521) (52,314)
Issuance of common stock-
for services rendered 1,100,000 110 4,890 -- 5,000
Shareholder foregiveness of debt -- -- 29,659 -- 29,659
Net loss - nine months ended December 31, 2004 (Unaudited) -- -- -- (5,000) (5,000)
----------- ------- ----------- ----------- ---------
Balance - December 31, 2004 (Unaudited) 34,156,185 $ 3,416 $ 1,046,450 $(1,072,521) $ (22,655)
=========== ======= =========== =========== =========
See accompanying notes to consolidated financial statements
5
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
(A Development Stage Company)
STATEMENT OF CASH FLOWS
June 26, 2001
Nine Months Ended (Inception) to
December 31, December 31,
2004 2003 2004
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net Loss From Discontinued Operations $ (5,000) $ (18,529) $(1,072,521)
Adjustments to reconcile net loss to cash
used in operating activities
Issuance of common stock for services 5,000 13,246 526,431
Depreciation -- -- 8,575
-------- --------- -----------
-- (5,283) (537,515)
Changes in Assets and Liabilities
(Increase) decrease in:
Accounts Receivable -- -- --
Increase (decrease) in:
Accounts Payable -- (4,976) --
Deferred Revenue -- -- --
Customer Deposits Payable -- -- --
-------- --------- -----------
Net Cash Used in Operating Activities -- (10,259) (537,515)
-------- --------- -----------
Cash Flows from Investing Activities
Purchase of fixed assets - computer software -- -- (34,300)
Write-off of net assets of discontinued -
operation -- -- 25,725
-------- --------- -----------
Net Cash Used in Investing Activities -- -- (8,575)
-------- --------- -----------
Cash Flows from Financing Activities
Proceeds from issuance of common stock and options -- 10,000 493,776
Advances from shareholders (29,659) -- 21,455
Payment for shares not issued -- -- 1,200
Increase in paid-in capital 29,659 29,659
-------- --------- -----------
Net Cash Provided by Financing Activities -- 10,000 546,090
-------- --------- -----------
Net increase in cash -- (259) --
Cash at beginning of period -- 284 --
-------- --------- -----------
Cash at end of period $ -- $ 25 $ --
======== ========= ===========
See accompanying notes to consolidated financial statements
6
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1: GENERAL ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America for interim financial statements and the instructions to
Form 10-QSB related to interim period financial statements. Accordingly,
these financial statements do not include certain information and
footnotes required by accounting principles generally accepted in the
United States of America for complete financial statements. However, the
accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring accruals), which, in the opinion of
management, are necessary in order to make the financial statements not
misleading. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.
The interim financial statements should be read in conjunction with the
financial statements and related notes included in the Company's Form
10-KSB for the year ended March 31, 2004.
Organization
Global Pharmatech Inc. (formerly Autocarbon, Inc., and previously
Autocarbon.com, Inc.) (the "Company") was incorporated on June 26, 2001
under the laws of the State of Delaware as Autocarbon.com, Inc. On October
25, 2002 Autocarbon, Inc. was incorporated under the laws of the State of
Delaware and became a wholly owned subsidiary of Autocarbon.com, Inc. and
was merged into Autocarbon.com, Inc. on October 28, 2002. The surviving
corporation, Autocarbon.com, Inc. changed its name to Autocarbon, Inc.
On January 26, 2004 the Board of Directors by unanimous consent elected a
new President and appointed a new Secretary of the Company.
On February 15, 2004 two members of the Board of Directors resigned their
respective positions.
Business
The Company was engaged in the sale and marketing of carbon fiber and
composite products. The Company's focus has historically been on the auto
industry and the many different types of components consisting of wheels
and other body parts that are used in the production of automobiles. The
Company had marketed and sold products manufactured for the Company by
Rocket Composites, Ltd., a privately owned company that was located in the
United Kingdom that was wholly owned, controlled and operated by the
Company's Chairman, James Miller, pursuant to a five-year distribution
agreement. The distribution agreement with Rocket has been terminated and
Rocket has been placed in liquidation. As a result, the Company has had to
secure other sources for product manufacturing. In order to do so, the
Company had entered into a share exchange agreement with Autocarbon Ltd.
and the shareholders of Autocarbon Ltd., pursuant to which the Company had
agreed to purchase all of the issued and outstanding capital stock of
Autocarbon Ltd. in exchange for an aggregate of 9,447,160 shares of the
Company. Autocarbon Ltd. is a privately owned company located in the
United Kingdom, in which James Miller; the Company's Chairman is a
minority shareholder. Due to Autocarbon Ltd's inability to fulfill the
terms of the share exchange agreement on March 22, 2004, the Directors of
the Company have deemed this transaction null and void. As A result of the
aforementioned facts the Company has determined to discontinue virtually
all of its operations and will seek to effectuate an acquisition or merge
into another business entity. The Company has negotiating settlement
agreements with all of its creditors.
On January 19, 2004 the Company entered into a stock purchase agreement
and plan of reorganization to acquire all of the issued and outstanding
shares of New Concept Nutriceuticals, Inc. (NCN) in a transaction intended
to qualify as a tax-free exchange pursuant to section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended. NCN will be a wholly owned
subsidiary of the Company. NCN is in the business of offering for sale
weight management and nutritional supplement products to the general
public.
7
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1: GENERAL, ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES,
CONTINUED
Business, continued
On September 15, 2004 the Company sold all of their shares of NCN pursuant
to a Common Stock Purchase Agreement, the sales price has been determined
not be material to these financials.
Going concern considerations
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has no operating
history nor any revenues or earnings from operations. The Company's
continued existence is dependent upon its ability to resolve its liquidity
problems, principally by obtaining additional debt financing and equity
capital until such time the Company becomes profitable or effectuates a
merger or acquisition by or into a profitable company. The lack of
financial resources and liquidity raises substantial doubt about its
ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Significant accounting policies
USE OF ESTIMATES IN FINANCIAL STATEMENTS - Management uses estimates and
assumptions in preparing these financial statements in accordance with
generally accepted accounting principles. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenue and expenses.
Actual results could vary from the estimates that were used.
CASH AND CASH EQUIVALENTS - For purposes of reporting cash flows, the
Company considers all cash accounts, which are not subject to withdrawal
restrictions or penalties, as cash and equivalents in the accompanying
balance sheet.
FIXED ASSETS - Fixed assets consists of CAD production software stated at
cost. Major expenditures that substantially increase the useful lives are
capitalized. Maintenance, repairs and minor renewals are expensed as
incurred. When assets are retired or otherwise disposed of, their costs
and related accumulated amortization are removed from the accounts and
resulting gains or losses are included in income. Amortization will be
provided on a straight- line basis over the estimated useful lives of the
assets.
DEFERRED REVENUE - Deferred revenue represents amounts received from
customers for tooling costs that will be amortized over an estimated
number of units delivered pursuant to the customers purchase order.
INCOME TAXES - Any provision (benefit) for income taxes is computed based
on the loss before income tax included in the Statement of Operations. The
asset and liability approach is used to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and
liabilities. At present the Company has a benefit due to a net tax loss
carry forward. The benefit has been fully reserved due to the uncertainty
of its use. The Company has a tax net operating loss of $1,033,208 that
may be carried over and utilized against taxable income in future years.
EARNINGS PER COMMON SHARE - Basic earnings per share are computed using
the weighted average number of shares outstanding during the year. Basic
earnings per share also exclude any dilutive effects of options, warrants
and convertible securities. Diluted net loss per share does not include
options, warrants or convertible securities, as they would be
anti-dilutive.
8
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 2: STOCKHOLDERS' DEFICIT
Authorized Stock
The Company is authorized to issue 100,000,000 shares of common stock with
a par value of $0.0001 per share.
Private Placement
The Company, from July 1, 2001 through September 30, 2001 offered for sale
40,000 Units at a value of $0.50 per Unit consisting of one share of
common stock and one warrant to purchase one additional share of common
stock at a value of $0.25 in a "private placement" pursuant to Regulation
D, Rule 506 of the Securities Act of 1933.
The Company, from November 1, 2001 through November 30, 2001 offered for
sale an additional 40,000 Units at a value of $0.50 per Unit consisting of
one share of common stock and one warrant to purchase one additional share
of common stock at a value of $0.25 in a "private placement" pursuant to
Regulation D, Rule 506 of the Securities Act of 1933.
The Company, from January 6, 2003 through January 30, 2003 offered for
sale 20,000 Units at a value of $.05 per unit consisting of one share of
common stock and one common stock purchase warrant.
Common Stock Issued for Services
The Company issued common stock to various individuals and companies (non-
employees) in return for services rendered. 170,000 shares of common stock
along with warrants to acquire an additional 37,500 shares of common stock
at a value of $0.25 were issued.
The Company has determined that the value of the common stock issued is
more reliably determined based on the value of the services rendered. All
services were provided prior to the Private Placement. The 170,000 shares
of common stock were valued at $56,950.
Legal and consulting services valued at $10,000 were paid for with the
issuance of 30,000 shares of common stock and warrants to acquire an
additional 15,000 shares of common stock at a value of $0.25.
Additionally, $30,000 of marketing, and promotional expenses was paid for
with the issuance of 1,200 shares of common stock.
Consulting services valued at $317,500 were paid for with the issuance of
12,900 shares of common stock.
9
GLOBAL PHARMATECH, INC. (F/K/A AUTOCARBON, INC.) AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 2: STOCKHOLDERS' DEFICIT, CONTINUED
The Company issued 31,295,000 shares of common stock to the shareholders
of New Concept Nutriceuticals, Inc. (NCN) in exchange for all of the
issued and outstanding shares of NCN. The shares were exchanged on the
basis of 10 shares of the Company for each share owned of NCN. The
Company's President owned 3,000,000 shares of NCN at the time of this
transaction. As a result of this transaction 30,000,000 shares of the
Company were issued to the Company's President.
The Company issued 320,000 shares of common stock in settlement with
creditors who collectively were owed $93,735.
The Company issued 1,100,000 shares of S-8 common stock to Simon Piers
Thurlow pursuant to a compensation agreement dated September 29, 2004.
Reverse Stock Split
Pursuant to the written consent of a majority of the stockholders dated
August 21, 2002, the Company effected a one-for-fifty reverse stock split
of the Company's Common Stock. All per share amounts have been
retroactively restated for the effect of this reverse split. All
information pertaining to shares issued pursuant to a private placement or
for service has been retroactively restated as well.
Other Transactions
On December 23, 2004, the Company entered into an agreement with Simon
Piers Thurlow ("Thurlow") and certain Purchasers (the "Purchasers").
Pursuant to the Agreement, Thurlow agreed to sell 29,500,00 shares of the
Company's common stock, representing approximately 90% of the outstanding
shares to the Purchasers. On December 28, 2004, the purchase of the shares
was completed and Ms. Qu Liangin was appointed as Chairman of the Board of
Directors.
NOTE 3: SUBSEQUENT EVENT
On January 31, 2005 the Company filed an amendment to its Certificate of
Incorporation whereby it changed its name from Autocarbon, Inc. to Global
Pharmatech, Inc., declared a one for ten reverse stock split and
authorized the issuance of 5,000,000 shares of preferred stock.
On January 24, 2005 the Company entered into a Share Purchase Agreement,
with Natural Pharmatech, Inc., a British Virgin Islands corporation
("Natural Pharmatech") and the shareholders of Natural Pharmatech. Under
the terms of the Share Purchase Agreement, the Company agreed to acquire
100% of the Natural Pharmatech's shares in exchange for 80% of the
Company's common stock, which will be issued to the Natural Pharmatech
shareholders. The Company's acquisition of Natural Pharmatech was
completed on February 9, 2005.
On March 3, 2005 Thurlow forgave the remaining advance from shareholder of
$21,445.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update
forward-looking statements.
OVERVIEW
Global Pharmatech, Inc. (formerly Autocarbon, Inc., and previously
Autocarbon.com, Inc.) (the "Company") was incorporated on June 26, 2001 under
the laws of the State of Delaware as Autocarbon.com, Inc. On October 25, 2002
Autocarbon, Inc. was incorporated under the laws of the State of Delaware and
became a wholly owned subsidiary of Autocarbon.com, Inc. and was merged into
Autocarbon.com, Inc. on October 28, 2002. The surviving corporation,
Autocarbon.com, Inc. changed its name to Autocarbon, Inc.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS, CONTINUED
BUSINESS
We were previously engaged in the sale and marketing of carbon fiber and
composite products. That business was discontinued on or before February 2003.
In 2004 we refocused our business model to market and distribute a cosmetic
product through our wholly-owned subsidiary, New Concepts Nutraceuticals, Inc.,
a Delaware corporation ("NCN"). We sold NCN on September 15, 2004.
On September 29, 2004, our Board of Directors entered into a compensation
agreement with Simon P. Thurlow. As more fully explained in the Form S-8 filed
with the SEC on October 22, 2004, Mr. Thurlow is entitled to 1,100,000 shares of
our common stock as compensation for services rendered and to reimburse him for
certain expenses that have been disbursed on our behalf. We and our present and
future subsidiaries jointly and severally agreed to indemnify and hold harmless
Mr. Thurlow against any loss, claim, damage or liability whatsoever, (including
reasonable attorneys' fees and expenses), to which Mr. Thurlow may become
subject as a result of performing any act (or omitting to perform any act)
contemplated to be performed by Mr. Thurlow each pursuant to this agreement
unless such loss, claim, damage or liability arose out of Mr. Thurlow's
negligence, or intentional misconduct.
While we may, under certain circumstances, seek to effect business combinations
with one or more than one target business, unless and until additional financing
is available, we do not believe that we will have sufficient financing to pursue
an additional business combination without effecting a further change in control
in our company. We are however constantly looking for any business transaction
that would be in the best interests of our shareholders.
EQUIPMENT AND EMPLOYEES
We have very limited business operations, and thus has no equipment. During the
reported period for this Report, Mr. Thurlow was our President, Chief Financial
Officer and director and our only employee.
SUBSEQUENT TRANSACTIONS
None
RESULTS OF OPERATIONS
During the third quarter of our fiscal year, ending December 31, 2004, we did
not have any sales. Therefore a comparison of sales to the previous year is not
an accurate representation of the increase or decrease of the revenues, costs
and sales of our company.
LIQUIDITY AND FINANCIAL RESOURCES
We experienced sales, expenses, and a profit of zero for the quarter ended
December 31, 2004. We had no assets as of December 31, 2004, and were therefore
reliant on advances from shareholders to pay for our expenses.
These factors raise doubts about our ability to continue as a going concern. It
is the intention of management to increase revenues significantly, through
growth and acquisitions. The ultimate success of these measures is not
reasonably determinable at this time.
12
ITEM 3. CONTROLS AND PROCEDURES
Our chief executive officer and our chief financial officer, after evaluating
the effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date
(the "Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, our disclosure controls
and procedures were adequate and designed to ensure that material information
relating to us and our consolidated subsidiaries would be made known to them by
others within those entities.
Our chief executive officer and chief financial officer have concluded that
there were no significant changes in our internal controls or in other factors
that could significantly affect our disclosure controls and procedures
subsequent to the Evaluation Date.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant*
3.2 By-laws of the Registrant*
31.1 Section 302 Certification of Principal Executive Officer
31.2 Section 302 Certification of Principal Financial Officer
32.1 Section 906 Certification of Principal Executive Officer
32.2 Section 906 Certification of Principal Financial Officer
------------
* These documents are hereby incorporated by reference to Form SB-2, as amended,
filed on August 17, 2001
(b) Reports on Form 8-K filed during the three months ended December 31, 2004.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 10, 2005 By: /s/ Xiaobo Sun
----------------
Name: Xiaobo Sun
Title: President and Chief Executive Officer
(Principal Executive Officer)
Date: March 10, 2005 By: /s/ Zongsheng Zhang
---------------------
Name: Zongsheng Zhang
Title: Chief Financial Officer
(Principal Financial Officer)
14