U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: March 31, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number: 33-22175
Safetek International, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2226896
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(State or other jurisdiction (I.R.S. Employer
or incorporation or organization) Identification No)
21 Ahavat Zion St. Tel Aviv, Israel 62153
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(Address of principal executive offices) (Zip Code)
972-3-5463251
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(Issuer's telephone number)
5509 11th Avenue Brooklyn NY 11219
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Former name or former address, if changed since last report
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the Registrant's Common Stock, $0.0001 par
value, as of the close of business on May 16, 2005 was 53,188,923.
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTERLY PERIOD ENDED MARCH 31, 2005
INDEX
Part I. FINANCIAL INFORMATION Page
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Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet (Unaudited)at March 31, 2005 2
Consolidated Statement of Operations(Unaudited) for the
three months ended March 31, 2005 and 2004 3
Consolidated Statement of Cash Flows(Unaudited) for the
three months ended March 31, 2005 and 2004 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis or Plan of Operation 6
Item 3. Controls and Procedures 7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds 8
Item 3. Defaults upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES
SAFETEK INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 2005
(Unaudited)
ASSETS
Cash $ --
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Total Assets $ --
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 249,015
Loans payable 72,646
Subordinated convertible redeemable debentures 104,800
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Total Current Liabilities 426,461
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Stockholders' Deficit
Redeemable convertible preferred shares(4,648 shares,
par value $.0001, redeemable prior to February 21,2002
at $50 per share, 50,000,000 shares authorized) 232,400
Common stock, par value $.0001 per share
authorized 500,000,000 shares;
issued and outstanding 39,909,041 shares
at March 31, 2005 3,991
Additional paid-in capital 3,234,854
Accumulated deficit (3,897,706)
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Total stockholders' deficit (426,461)
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Total Liabilities and Stockholders' Deficit $ --
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See notes to consolidated financial statements
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SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months ended March 31,
2005 2004
(Unaudited) (Unaudited)
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Revenue $ -- $ --
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Operating Expenses:
Professional fees 12,000 --
Office & general expenses 3,810 --
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Total Operating Expenses 15,810 --
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Net loss From operations (15,810) --
Other Income:
Gain on Debt Forgiveness 12,600 --
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Net loss (3,210) --
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Net loss per share -
Basic & diluted $ 0.00 $ 0.00
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Weighted average number of
shares outstanding -
Basic and diluted 26,902,974 382,472
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See notes to consolidated financial statements
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SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months ended March 31,
2005 2004
(Unaudited) (Unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,210) $ --
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Adjustments to reconcile net
loss to net cash used in
operating activities:
Gain on Debt Forgiveness (12,600) --
Changes in operating assets
and liabilities:
Increase in accounts payable
& accrued expenses 6,000 --
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Net cash used in operating
activities $ (9,810) $ --
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 37,369 --
Payments on debenture (15,827) --
Payments on loans payable (11,732) --
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Net cash provided by financing
activities 9,810 --
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INCREASE IN CASH -- --
CASH - BEGINNING OF PERIOD -- --
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CASH - END OF PERIOD $ -- $ --
=========== ===========
Cash Paid during the Quarter for:
Interest $ -- $ --
Taxes $ -- $ --
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Issuance of common stock for
payment of debenture $ 14,400 $ --
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See notes to consolidated financial statements
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SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements of Safetek
International, Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles in the United States
for interim financial information and with instructions for Form 10-QSB and Item
310 of Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Results of operations for the three months ended March 31,
2005 are not necessarily indicative of the results that may be expected for the
fiscal year ended December 31, 2005. The accompanying consolidated financial
statements should be read in conjunction with the consolidated financial
statements in the Company's annual report on Form 10-KSB for the fiscal year
ended December 31, 2004 and notes thereto filed with the Securities and Exchange
Commission in April 2005. The Consolidated Financial Statements are prepared in
accordance with generally accepted accounting principles in the United States of
America ("US GAAP"). These statements include the Company and it's Subsidiaries.
All material intercompany balances and transactions have been eliminated.
ORGANIZATION
Safetek International, Inc. (the "Company", "we", "our", or "us") is a company
that reorganized in May 2001 for the purpose of providing embryonic companies
with good concepts and promising patented ideas, presented to them by inventors
and actual proof of concepts and working prototypes, in order to bring these
products to fruition. With the appointment of Dr. Goldstein as the Company's
Chairman, Chief Executive Officer and Secretary, as of April 15, 2005 the
Company intends to focus on new technologies in the life sciences and health
care fields. Towards such end, the Company will establish a wholly owned
subsidiary (the "Subsidiary") under the laws of Israel, to serve as a platform
for the Company to screen the Israeli high-tech industry and identify, analyze,
and acquire or invest in new technologies in the life sciences and healthcare
markets As of March 31, 2005, we had an accumulated deficit of $3,897,706. Our
prospects must therefore be evaluated in light of the problems, expenses, delays
and complications associated with a development stage company
USE OF ESTIMATES
Our financial statements and accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires our management to make
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. We continually evaluate the accounting
policies and estimates we use to prepare the consolidated financial statements.
We base our estimates on historical experiences and assumptions believed to be
reasonable under current facts and circumstances. Actual amounts and results
could differ from these estimates made by management. We do not participate in,
nor have we created, any off-balance sheet special purpose entities or other
off-balance sheet financing. In addition, we do not enter into any derivative
financial instruments for speculative purposes and use derivative financial
instruments primarily for managing our exposure to changes in interest rates.
LOSS PER COMMON SHARE
Basic and diluted loss per share of common stock for the quarter ended March 31,
2005 is based on the weigted average number of shares outstanding of 26,902,974.
NOTE 2. LOANS PAYABLE
Loans payable of $72,646 as of March 31, 2005 are due on demand and are
non-interest bearing.
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NOTE 3. SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE
The subordinated convertible redeemable debenture was in default as of March 31,
2005, but the holders of the debentures agreed to extend the due date until June
30, 2005. During the three month period ended March 31, 2005, $30,227 was paid
on this debenture in cash and the issuance of 1,800,000 shares of common stock
at $0.001 per share which results in a gain from debt forgiveness of $12,600.
The balance of $104,800 was paid on April 8, 2005 with the issuance of
13,100,000 shares of common stock at $0.001 per share. As of that date, the
subordinated convertible redeemable debentures are fully paid.
NOTE 4. COMMON STOCK
During the three month period ended March 31, 2005 the Company sold 37,369,500
shares of its common stock to various investors for $0.001 per share or
$37,369.50 in total. In addition, in March 2005, the holders of the Debentures
converted $14,400 of their debentures into 1,800,000 shares of common stock.
NOTE 5. GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company has a history of losses with an accumulated deficit from
inception through March 31, 2005 of $3,897,706. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The Company's continuation as a going concern is dependent upon its ability to
ultimately attain profitable operations, generate sufficient cash flow to meet
its obligations, and obtain additional financing as may be required. The outcome
of these uncertainties cannot be assured.
NOTE 6. SUBSEQUENT EVENTS
On April 8, 2005, the holders of the Debentures converted $104,800 into
13,100,000 shares of common stock. On April 15, 2005, Mr. Shmuel Shneibalg, who
had been serving as the director and as the Chairman, Chief Executive Officer,
and Secretary of Safetek International, Inc., resigned from all his positions as
director and officer of the Registrant. On that same date, Dr Shay Goldstein was
appointed director, Chairman, Chief Executive Officer, and Secretary of the
Registrant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD LOOKING STATEMENTS
This report may include forward-looking statements. The Company has based these
forward-looking statements on its current expectations and projections about
future events. Forward-looking statements can be identified in this report based
upon the usage of such words or phrases as "anticipate," "believe," "estimate,"
"expect," "intend," "may be," "objective," "plan," "predict," "project" and
"will be" and similar words or phrases, or the negative thereof. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties. Although the Company believes the expectations reflected in its
forward-looking statements are based upon reasonable assumptions, it can give no
assurance that it will attain these expectations or that any deviations will not
be material. Except as otherwise required by the federal securities laws, the
Company disclaims any obligations or undertaking to publicly release any updates
or revisions to any forward-looking statement contained in this report to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
Overview
Safetek International, Inc. (the "Company", "we", "our", or "us") is a company
that reorganized in May 2001 for the purpose of providing embryonic companies
with good concepts and promising patented ideas, presented to them by inventors
and actual proof of concepts and working prototypes, in order to bring these
products to fruition. With the appointment of Dr. Goldstein as the Company's
Chairman, Chief Executive Officer and Secretary, the Company intends to focus on
new technologies in the life sciences and health care fields. On May 4, 2005,
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the Company resolved to focus on new technologies in the life sciences and
healthcare fields. Towards such end, the Company will establish a wholly owned
subsidiary (the "Subsidiary") under the laws of Israel, to serve as a platform
for the Company to screen the Israeli high-tech industry and identify, analyze,
and acquire or invest in new technologies in the life sciences and healthcare
markets
As of March 31, 2005, we had an accumulated deficit of $3,897,706. Our prospects
must therefore be evaluated in light of the problems, expenses, delays and
complications associated with such a company.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements and accompanying notes have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires our management to make
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses. We continually evaluate the accounting
policies and estimates we use to prepare the consolidated financial statements.
We base our estimates on historical experiences and assumptions believed to be
reasonable under current facts and circumstances. Actual amounts and results
could differ from these estimates made by management.
We do not participate in, nor have we created, any off-balance sheet special
purpose entities or other off-balance sheet financing. In addition, we do not
enter into any derivative financial instruments for speculative purposes and use
derivative financial instruments primarily for managing our exposure to changes
in interest rates.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2005 TO THE THREE MONTHS ENDED
MARCH 31, 2004
Revenues
For the three months ended March 31, 2004 and 2005, there were no revenues.
General and Administrative Expenses
For the three months ended March 31, 2005, our general and administrative
expenses were $15,810 as compared to $-0- for the three months ended March 31,
2004. Our expenses increased mainly as a result of professional and filing fees.
Other Income
For the three months ended March 31, 2005, we recorded a $12,600 gain on the
forgiveness of debt on the conversion of $14,400 in exchange for 1,800,000
shares of our common stock at $.001 per share.
Net Loss
During the three month period ended March 31, 2005, we reported a net loss of
$3,210 compared to no income or loss for the three month period ended March 31,
2004. The reason for the increase in net loss from the corresponding period is
as a result of general and administrative expenses.
Liquidity and Capital Resources
Net cash provided by financing activities were mainly from proceeds from
issuance of our common stock. Net cash used in operating activities were mainly
from the gain of debt forgiveness fron the conversion of $14,400 in exchange for
1,800,000 shares of our common stock at $.001 per share. As of March 31, 2005,
we had a stockholders' deficit of $426,461 and an accumulated deficit of
$3,897,706.
Our balance sheet as of March 31, 2005 reflects total liabilities of $426,461.
We currently have no revenues and operations, and accordingly have no source of
funding for our operations. As of May 18, 2005, we have cash on hand of
approximately $13,000 which we received for stock subscriptions. This amount is
inadequate for us to effectuate our planned activities during the next 12
months. Accordingly, we may be unable to continue operations in the future as a
going concern. Our plans to deal with this uncertainty include raising
additional capital or entering into a strategic arrangement with a third party.
There can be no assurance that our plans can be realized. We have not identified
any potential sources of debt or equity financing and there can be no assurance
that we will be able to obtain additional financing if and when needed or that,
if available, financing will be on acceptable terms. Additional equity
financings may be dilutive to holders of our common stock and debt financing, if
available, may involve significant payment obligations and covenants that
restrict how we operate our business.
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Going Concern
Our independent registered public accounting firm, in their report on our
financial statements for the year ended December 31, 2004 expressed substantial
doubt about our ability to continue as a going concern. Our continuation as a
going concern, however, is dependent upon, among other things, our ability to
obtain additional financing when and as needed and to generate sufficient cash
flow to meet our obligations on a timely basis. No assurance can be given that
we will be able to obtain such financing when and if needed on acceptable terms
or on any terms. These circumstances could complicate our ability to raise
additional capital. Our financial statements do not include any adjustments to
the carrying amounts of our assets and liabilities that might result from the
outcome of this uncertainty.
Additional equity financings may be dilutive to holders of our Common Stock and
debt financing, if available, may involve significant payment obligations and
covenants that restrict how we operate our business.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on an evaluation as of the end of the period covered by this quarterly
report, our principal executive officer (and principal financial officer) has
concluded that our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) are
effective for the purposes set forth in such definition.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial reporting
identified in connection with the evaluation discussed above that occurred
during the three months ended covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
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Part II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
We are not a party to any material legal proceeding.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three monthe ended March 31, 2005, the Company issued the following
unregistered equity securities:
(i) In January 2005, we sold 37,369,500 shares of our common stock to investors
for gross proceeds of $37,369.50.
(ii) In March 2005, we issued 1,800,000 shares of common stock to the holders of
the debentures.
The shares described above were sold or issued in transactions not involving a
public offering and were issued without registration in reliance upon the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D and Regulation S promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
..
ITEM 6. EXHIBITS
(a) Exhibits
31.1 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302(a) of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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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..
Signature Capacity Date
Chief Executive Officer,
/s/ Dr. Shay Goldstein Chairman, and Secretary May 19, 2005
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