SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
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TECHNOLOGY CONNECTIONS, INC.
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TECHNOLOGY CONNECTIONS, INC.
15720 John J. Delaney Drive, Ste 300
Charlotte, North Carolina 28277
INFORMATION STATEMENT
PURSUANT TO REGULATION 14C PROMULGATED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
This information statement is being mailed on or about December 31, 2003 to
holders of record as of December 31, 2003 of shares of common stock, par value
$0.001 ("Common Stock"), of TECHNOLOGY CONNECTIONS, INC., a North Carolina
corporation (the "Company"). It is being furnished in connection with the
adoption of a one-for-twenty Reverse Stock Split by written consent of the
holders of a majority of the outstanding shares of Common Stock.
On April 1, 2003, the Company's Board of Directors approved a
one-for-twenty reverse stock split of the Company's Common Stock. On the same
date, the action was approved in a written consent executed by the holders of
more than a majority of the outstanding shares of Common Stock. Approval by the
Board of Directors and by the holders of a majority of the outstanding shares of
Common Stock is adequate under North Carolina law to effect the action. The
action will become effective following a waiting period of 20 calendar days from
the date this information statement is mailed to stockholders.
This information statement is being provided for your informational
purposes only.
------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
------------------------
OUTSTANDING STOCK AND VOTING RIGHTS
As of the record date, there were 26,956,860 shares of Common Stock
outstanding. Each share of Common Stock entitles its holder to one vote.
REASONS FOR THE REVERSE STOCK SPLIT
The Board of Directors believes that the current per share price of the
Common Stock has had a negative effect on the marketability of existing shares
and on the amount and percentage of transaction costs paid by individual
stockholders seeking to buy or sell the Company's Common Stock. Many brokerage
firms and brokers are reluctant to recommend lower-priced stocks to their
clients. In addition, many institutional and individual investors are reluctant
to purchase lower-priced stocks. The structure of most brokerage commissions
tends to have an adverse affect on potential purchasers of lower-priced stocks
since the brokerage commission payable on buying and selling such stocks almost
always represents a higher percentage of the trade price than the commission on
a relatively higher-priced stock. These factors adversely affect not only the
liquidity of the Common Stock, but also the Company's ability to raise
additional capital through a sale of equity securities.
Although we have no immediate plans to issue stock by way of a merger, an
offering or the like, and we have no transaction pending or in process, we
continue to investigate opportunities to expand our business.
We believe that the Reverse Stock Split may improve the price level of our
Common Stock and that the higher share price could help generate interest in the
Company among investors and other business opportunities. However, the effect of
the reverse split upon the market price for our Common Stock cannot be
predicted, and the history of similar stock split combinations for companies in
like circumstances is varied. There can be no assurance that the market price
per share of our Common Stock after the reverse split will rise in proportion to
the reduction in the number of shares of Common Stock outstanding resulting from
the reverse split. The market price of our Common Stock may also be based on our
performance and other factors, some of which may be unrelated to the number of
shares outstanding.
2
In the reverse stock split, each twenty shares of Common Stock will
automatically be converted into one share, without any action on the part of the
stockholders. Fractional Shares shall be rounded up to the next whole share.
Consummation of the reverse stock split will not change the number of
shares of Common Stock authorized by the Company's Articles of Incorporation or
the par value of each share of Common Stock. However, the aggregate par value of
the issued Common Stock will be reduced. The reverse stock split will not effect
a stockholder's percentage ownership interest in the Company or proportional
voting power, except for minor differences resulting from fractional shares
having been rounded up to the next whole share.
As soon as practicable after the effective date, the Company's transfer
agent will mail an instruction letter to each holder of record of stock
certificates representing issued Common Stock outstanding on the effective date.
The instruction letter will contain instructions for stockholders to follow if
they wish to exchange their old certificates for new certificates representing
the number of whole shares of Common Stock into which the shares of Common Stock
represented by the old certificates have been converted by the reverse stock
split. It will not be necessary, however, for stockholders to exchange their old
certificates. Stockholders will not be required to pay a transfer or other fee
in connection with the exchange of certificates. Stockholders should not submit
any certificates to the Company's transfer agent until they have received the
instruction letter from the transfer agent.
Stockholders should note that the effect of the reverse stock split upon
the price of the Company's Common Stock cannot be accurately predicted. In
particular, there is no assurance that the price for shares of Common Stock
immediately after the reverse stock split will be twenty times the price of
shares of Common Stock immediately prior to the reverse stock split.
Furthermore, there can be no assurance that the reverse stock split will
not adversely impact the price of the Common Stock or, alternatively, that any
increase in price of the Common Stock immediately after the reverse stock split
will be sustained for a prolonged period of time. In addition, the reverse stock
split likely will have the effect of creating odd lots of stock for some
stockholders. These odd lots may be more difficult to sell or have higher
brokerage commissions associated with their sale. Fractional Shares shall be
rounded up to the next whole share.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of December 31, 2003 by (i) each person known by the Company to beneficially own
5% or more of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the named executive officers, and (iv) all directors and
executive officers of the Company as a group. The table does not give effect to
the reverse stock split described above. The information set forth in the table
and accompanying footnotes has been furnished by the named beneficial owners. An
asterisk denotes beneficial ownership of less than 1%. Unless otherwise
indicated, the address of each person is c/o the Company at 15720 John J.
Delaney Drive, Ste 300, Charlotte, North Carolina 28277.
To the best of our knowledge, all persons named have sole voting and
investment power with respect to such shares, except as otherwise noted.
Security Ownership of Certain Beneficial Owners (foot1 Pursuant to Rule
13-d-3 under the Securities Exchange Act of 1934, as amended, beneficial
ownership of a security consists of sole or shared voting power (including the
power to vote or direct the voting) and/or sole or shared investment power
(including the power to dispose or direct the disposition) with respect to a
security whether through a contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, each person indicated above has sole
power to vote, or dispose or direct the disposition of all shares beneficially
owned. We are unaware of any shareholders whose voting rights would be affected
by community property laws. This table is based upon information obtained from
our stock records. Unless otherwise indicated in the footnotes to the tables and
subject to community property laws where applicable, we believe that each
shareholder named in the above table has sole or shared voting and investment
power with respect to the shares indicated as beneficially owned.
2).
Current
Title of Nature of %
Class Name and Address # of Shares Ownership Owned
- ---------------------- ------------------- ------------ --------- -------
Common Kevin G. Kyzer 9,860,000 Direct 39.1%
- ---------------------- ------------------- ------------ --------- -------
Common Stacey A. Kyzer 9,840,000 Direct 39.0%
- ---------------------- ------------------- ------------ --------- -------
Security Ownership of Officers and Directors (2).
Current
Title of Nature of %
Class Name and Address # of Shares Ownership Owned
- ---------------------- ------------------- ------------ --------- -------
Common Kevin G. Kyzer 9,860,000 Direct 39.1%
Common Stacey A. Kyzer 9,840,000 Direct 39.0%
All Officers And
Directors
Common As a Group (2) 19,850,000 Direct 78.7%
- ---------------------- ------------------- ------------ --------- -------
Changes in Control.
There are currently no arrangements, which would result in a change in our
control.
- ----------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the shares shown. Except as indicated by
footnote and subject to community property laws where applicable, to the
Company's knowledge, the stockholders named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
4
Financial Statements
TECHNOLOGY CONNECTIONS, INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 2003
=============================================================================
ASSETS
------
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 11,097
Accounts receivable, net of allowance of $31,564 3,242
Prepaid expenses 82,500
Inventory 3,911
------------
TOTAL CURRENT ASSETS 100,750
------------
PROPERTY AND EQUIPMENT
- ----------------------
Furniture and equipment 33,788
Accumulated depreciation (7,526)
------------
Net property and equipment 26,262
------------
OTHER ASSETS
- ------------
Holdbacks 4,411
------------
TOTAL ASSETS $ 131,423
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable and accrued expenses $ 135,187
Current portion of notes payable 15,000
Loans From Stockholders 209,218
------------
TOTAL CURRENT LIABILITIES 359,405
------------
LONG-TERM DEBT
- --------------
Note Payable $ 52,400
------------
STOCKHOLDERS' DEFICIT
- ---------------------
Preferred Stock ($.001 par value, 5,000,000 authorized:
none issued and outstanding) -0-
Common Stock ($.001 par value, 100,000,000 shares authorized:
26,957,860 shares issued and outstanding) 26,958
Additional Paid-in-Capital 560,090
Retained Deficit (867,430)
------------
TOTAL STOCKHOLDERS' DEFICIT (280,382)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 131,423
============
The accompanying notes are an integral part of the financial statements
The accompanying notes are an integral part of the financial statements
F-2
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
============================================================================
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---------- ---------- ---------- ----------
REVENUES AND COST OF SALES:
- ---------------------------
Sales $ 6,436 $ 82,275 $ 43,547 $ 265,105
Cost of sales (3,598) (32,798) (19,551) (168,396)
---------- ---------- ---------- ----------
Gross profit 2,838 49,477 23,996 96,709
---------- ---------- ---------- ----------
OPERATING EXPENSES:
- -------------------
Selling, general and
administrative 6,245 29,182 140,649 619,349
---------- ---------- ---------- ----------
TOTAL EXPENSES 6,245 29,182 140,649 619,349
---------- ---------- ---------- ----------
OPERATING INCOME
(LOSS) (3,407) 20,295 (116,653) (522,640)
---------- ---------- ---------- ----------
OTHER EXPENSE:
- --------------
Loss on sale of asset - - (363) -
Interest expense - (4,701) (15,000) (15,770)
---------- ---------- ---------- ----------
TOTAL OTHER EXPENSE - (4,701) (15,000) (15,770)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
TAXES (3,407) 15,594 (131,653) (538,410)
INCOME TAX BENEFIT -0- -0- -0- -0-
---------- ---------- ---------- ----------
NET INCOME (LOSS)$ (3,407) $ 15,594 $ (131,653) $ (538,410)
========== ========== ========== ==========
Net income (loss) per
common share -
basic & fully diluted ** ** $ (0.01) $ (0.02)
========== ========== ========== ==========
Weighted average common
shares outstanding 25,310,193 24,274,883 25,310,193 24,569,208
========== ========== ========== ==========
** Less than $.01
The accompanying notes are an integral part of the financial statements
F-3
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
==========================================================================
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net loss $ (131,653) $ (538,410)
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued for services 201,000 462,930
Loss on sale of asset 363 -
Depreciation 5,420 2,700
(Increase) decrease in operating assets:
Accounts receivable (10,381) (11,524)
Inventory 2,500 (23,766)
Prepaid expenses (82,500) -
Holdbacks (4,411) -
Deposits - (2,428)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (96,029) 23,970
Outstanding checks in excess of bank balance - (2,288)
---------- ----------
NET CASH (USED IN) OPERATING
ACTIVITIES (115,691) (88,816)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Purchases of property and equipment - (12,332)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES - (12,332)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Proceeds from sales of common stock - 61,000
Proceeds from notes payable 2,400 -
Proceeds from stockholder loans 119,931 42,773
---------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 122,331 103,773
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,640 2,625
---------- ----------
CASH AND CASH EQUIVALENTS:
- --------------------------
Beginning of period 4,457 1,190
---------- ----------
End of period $ 11,097 $ 3,815
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH FINANCING:
- ----------------------------------------------------------
Cash paid during the period for interest $ 15,000 $ 15,770
========== ==========
Common stock issued for services $ 201,000 $ 462,930
========== ==========
Common stock issued for furniture $ - $ 6,500
========== ==========
The accompanying notes are an integral part of the financial statements
F-4
TECHNOLOGY CONNECTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003 (UNAUDITED)
ITEM 1.
- -------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments consisting only of normal recurring accruals
considered necessary to present fairly the Company's financial position at
September 30, 2003, the results of operations for the three and nine month
periods ended September 30, 2003 and 2002, and cash flows for the nine months
ended September 30, 2003 and 2002. The results for the period ended September
30, 2003, are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 2003.
NOTE 2 - GOING CONCERN AND LIQUIDITY
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity, increasing sales and
achieving profitable operations. The Company has experienced a history of net
losses, has a stockholders' deficit of $280,382 and a net working capital
deficiency of $258,655. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Management's plans in regard to this matter are to implement cost reduction
policies and develop an aggressive sales strategy. The Company believes these
efforts in conjunction with raising equity, will improve liquidity and sustain
continuing operations. The eventual outcome, however, of management's plans
cannot be ascertained with any degree of certainty. The accompanying interim
financial statements do not include any adjustments that might result from the
outcome of these risks and uncertainties.
NOTE 3 - COMMON STOCK ISSUANCES
During the period ended September 30, 2003, the Company issued 1,800,000 shares
of common stock to subcontractors for services. The stock was valued at the
closing price on the date of issuance which resulted in an aggregate expense of
$201,000. The contracts provide for services over the next year which resulted
in a prepaid expense of $82,500 as of September 30.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -------
Technology Connections, Inc. is hereby providing cautionary statements
identifying important factors that could cause our actual results to differ
materially from those projected in forward looking statements made in this
quarterly report on Form 10-QSB. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "likely will result," "are expected to," "will continue," "is
anticipated," "estimated," "intends," "plans" and "projection") are not
historical facts and may be forward looking statements and involve estimates and
uncertainties which could cause actual results to differ materially from those
expresses in the forward looking statements. Accordingly, any such statements
are qualified in their entirety by reference to, and are accompanied by, the
following key factors that have a direct bearing on our results of operations:
the absence of contracts with customers or suppliers; our ability to maintain
and develop relationships with customers and suppliers; our ability to
successfully integrate acquired businesses or new brands; the impact of
competitive products and pricing; supply constraints or difficulties; changes in
the construction industry; the retention and availability of key personnel; and
general economic and business conditions.
We caution that the factors described herein could cause actual results to
differ materially from those expressed in any forward-looking statements such
that the investors should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on
which such statement is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events or circumstances. Consequently, no forward-looking statement can be
guaranteed.
New factors emerge from time to time, and it is not possible for us to
predict all such factors. Further, we cannot assess the impact of each such
factor on our results of operations or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Overview
- --------
We were incorporated in North Carolina on May 23, 2001, to engage in the
business of installing structured wiring capacities into newly constructed homes
and retrofitting existing homes with the same integrated technology components
and systems. Such integrated technology and systems include security systems,
Internet technology, satellite television delivery systems, indoor/outdoor
lighting, solar energy systems and entertainment/communication technology.
We currently have two full-time employees. We are authorized to issue
common and preferred stock. Our total authorized common stock consists of
100,000,000 shares, with a par value of $.001 per share, of which 26,957,860
shares are issued and outstanding. Our total authorized preferred stock consists
of 5,000,000 shares, with a par value of $.001 per share, of which no shares are
issued and outstanding.
RESULTS OF OPERATIONS
- ---------------------
For the three and nine months ended September 30, 2003 and 2002(unaudited).
Sales.
Sales for the three months ended September 30, 2003 and 2002 were $6,436
and $82,275, respectively, a decrease of $75,839 or 91%. Sales for the nine
months ended September 30, 2003 and 2002 were $43,547 and $265,105,
respectively, a decrease of $221,558 or 83%. Sales decreased due to a bad
economy and a lack of capital to sustain operations in a proper manner. Sales
consisted primarily of setup and installation of the following:
Security systems
Outdoor landscape lighting
Audio systems
Central home wiring centers
Video and monitoring systems
Home theater installation
Computer networks
Central vacuum systems
Indoor lighting
Home automation systems, including remote appliance capabilities
All revenues were from unrelated third parties and were made primarily from new
home buyers.
Cost of Sales.
The cost of sales includes the purchase price for equipment plus other
direct costs associated with completing the installing, such as subcontractors
and permits. It is customary to experience variations in the cost of sales as a
percentage of net sales based on the types of products installed at any given
location and the related cost of labor to complete installation.
The cost of sales for the three months ended September 30, 2003 and 2002
were $6,436 and $32,798, respectively, a decrease of $26,362. The cost of sales
for the nine months ended September 30, 2003 and 2002 were $19,551 and $168,396,
respectively, a decrease of $148,845. Cost of sales as a percentage of sales for
the nine month periods ended September 30, 2003 and 2002 were 45% and 63%,
respectively. This imbalance was caused by initial product offerings and loss
leading sales intended to assist us with entering the home wiring market.
To date we have seen a decrease in the cost of sales as a percentage of
sales as we have increased sales and attempted to develop our business plan. We
expect cost of sales as a percentage of sales to decrease to around 40% of total
sales for fiscal year 2003 as we pursue larger installation projects. In
addition, volume discounts will be available to us if we are successful in
achieving sales growth in the future which will further reduce our cost of sales
as a percentage of sales.
Expenses.
Total expenses for the three months ended September 30, 2003 and 2002 were
$6,245 and $29,182, respectively. Total expenses for the nine months ended
September 30, 2003 and 2002 were $140,649 and $619,349, respectively. The
decrease in expenses is attributable to rent expense reductions since we were
operating primarily from expensive offices, professional fees decreased due to
shares of common stock issued to professionals and consultants to assist us in
having our common stock publicly traded in 2002 and fewer subcontractors' were
paid as we curtailed operations due to a cash shortage.
Approximately $75,000 of our accounts payable at September 30, 2003
consisted of credit card balances. The balances are unsecured and bear an
average interest rate of approximately 15%. Interest expense for the nine months
ended September 30, 2003 includes $15,000 in interest pertaining to credit card
balances that were accumulated in connection with our inventory purchases.
We expect stability in expenses through the year 2003 as the Company moves
toward developing its business plan.
Income / Losses.
Net loss for the three months ended September 30, 2003 was $(3,407) versus
net income of $15,594 in the same period in 2002, a decrease of $19,001. Net
losses for the nine months ended September 30, 2003 and 2002 were $(131,653) and
$(538,410), respectively. Our losses for the nine months ended September 30,
2002 were primarily due to $462,930 in common stock issued for professional
services in connection with our initial public offering. We expect to continue
to incur losses at least through the year 2003. In addition, there can be no
assurance that we will achieve or maintain profitability or that our revenue
growth can be sustained in the future.
Impact of Inflation.
We believe that inflation has had a negligible effect on operations since
inception. We believe that we can offset inflationary increases in the cost of
labor by increasing sales and improving operating efficiencies.
Liquidity and Capital Resources.
Substantially all of our accounts payable are on credit cards. Our accounts
payable as of September 30, 2003 includes approximately $75,000 in balances due
various credit cards to purchase our inventory. The amounts are not secured
against our assets and bear a weighted average interest rate of approximately
15%. There are minimum payments which are due each month that approximate
$4,500. Our Company is current on all balances. If we are unable to make our
required payments, our credit rating could be adversely affected.
Cash flows used in operations were $115,691 and $88,816 for the nine months
ended September 30, 2003 and 2002, respectively. Cash flows used in operations
were primarily attributable to our $131,653 net loss for the period partially
offset by $201,000 in common stock issued for services and $82,500 in increases
in prepaid expenses.
Cash flows used in investing activities were $ -0- and $12,332 for the nine
months ended September 30, 2003 and 2002, respectively, which were attributable
to purchases of furniture and equipment for our administrative offices in 2002.
Cash flows generated by financing activities were $122,331 and $103,773,
respectively, for the nine months ended September 30, 2003 and 2002. Cash flows
for the 2002 period included $61,000 in proceeds from sales of our common stock
between $.25-.50 pursuant to a Regulation D private offering. Proceeds were used
for advertising, working capital and towards expenses relating to this
registration statement. Also during the period, the Company received $42,773 in
proceeds from a stockholder loan. The loan bears interest at 6% per annum and is
due on demand. The loan is not evidenced by a written promissory note, but
rather is an oral agreement between the Company and the stockholder. We received
$119,931 in stockholder loan proceeds in 2003.
Overall, we have funded our cash needs from inception through September 30,
2003 with a series of debt and equity transactions, including those with related
parties as described above. If we are unable to receive additional cash from our
related parties, we may need to rely on financing from outside sources through
debt or equity transactions. Our related parties are under no legal obligation
to provide us with capital infusions. Failure to obtain such financing could
have a material adverse effect on operations and financial condition.
We had cash on hand of $11,097 and a working capital deficit of $258,655 as
of September 30, 2003 which is not sufficient to fund our operations through the
next twelve months. Our working capital deficit is primarily due to current
obligations in account payable and loans from stockholders. We will
substantially rely on the existence of revenue from our business; however, we
have no current or projected capital reserves that will sustain our business for
the next 12 months. Also, if the projected revenues fall short of needed capital
we may not be able to sustain our capital needs for the next twelve months. We
will then need to obtain additional capital through equity or debt financing to
sustain operations for an additional year. A lack of significant revenues
beginning in the first half of 2004 will significantly affect our cash position
and move us towards a position where the raising of additional funds through
equity or debt financing will be necessary. Our current level of operations
would require capital of approximately $150,000 to sustain operation through
year 2004 and approximately $200,000 per year thereafter. Modifications to our
business plans or additional property acquisitions may require additional
capital for us to operate. There can be no assurance that additional capital
will be available to us when needed or available on terms favorable to the
Company.
On a long-term basis, liquidity is dependent on continuation and expansion
of operations, receipt of revenues, and additional infusions of capital and debt
financing. We are considering opening additional sales centers during the first
half of 2003. Our current capital and revenues are insufficient to fund such
expansion. If we choose to launch such an expansion campaign, we will require
substantially more capital. If necessary, we will raise this capital through an
additional stock offering. The funds raised from this offering will be used to
market our products and services as well as expand operations and contribute to
working capital. However, there can be no assurance that we will be able to
obtain additional equity or debt financing in the future, if at all. If we are
unable to raise additional capital, our growth potential will be adversely
affected and we will have to significantly modify our plans. For example, if we
unable to raise sufficient capital to develop our business plan, we may need to:
- - Seek projects that are less in value or that may be projected to be less
profitable
- - Seek smaller projects, which are less capital intensive, in lieu of larger
contract projects, or
- - Seek projects that are outside our immediate area to secure terms favorable
to the Company.
Demand for the products and services will be dependent on, among other
things, market acceptance of our products, the real estate market in general,
and general economic conditions, which are cyclical in nature. Inasmuch as a
major portion of our activities is the receipt of revenues from the sales of our
new home products, our business operations may be adversely affected by our
competitors and prolonged recession periods.
Our success will be dependent upon implementing our plan of operations and
the risks associated with our business plans. We operate a home product sales
and installation business in the Charlotte, North Carolina area. We also provide
installation services to various unrelated developers and builders. We plan to
strengthen our position in these markets. We plan to expand our operations
through aggressively marketing our products and Company concept.
ITEM 3. CONTROLS AND PROCEDURES
- -------
(a) On September 30, 2003, we made an evaluation of our disclosure controls and
procedures. In our opinion, the disclosure controls and procedures are
adequate because the systems of controls and procedures are designed to
assure, among other items, that 1) recorded transactions are valid; 2)
valid transactions are recorded; and 3) transactions are recorded in the
proper period in a timely manner to produce financial statements which
present fairly the financial condition, results of operations and cash
flows for the respective periods being presented. Moreover, the evaluation
did not reveal any significant deficiencies or material weaknesses in our
disclosure controls and procedures.
(b) There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since the last
evaluation.