U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the quarterly period ended June 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from _______ to _______
Commission File No. 333-86000
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TECHNOLOGY CONNECTIONS, INC.
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(Exact name of small business issuer as specified in its charter)
North Carolina 56-2253025
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
301C Verbena Street, Charlotte, North Carolina 28217
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(Address of principal executive offices)
(704) 651-5267
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(Issuer's telephone number)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Number of shares of common stock outstanding as of
August 14, 2004: 2,468,901
Number of shares of preferred stock outstanding as of
August 14, 2004: -0-
INDEX TO FORM 10-QSB
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Page No.
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PART I
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Item 1. Financial Statements
Balance Sheet - June 30, 2004 (unaudited) 2
Statements of Operations - Three and Six Months Ended
June 30, 2004 and 2003 (unaudited) 3
Statements of Cash Flows - Three and Six Months Ended
June 30, 2004 and 2003 (unaudited) 4
Notes to Financial Statements (unaudited) 5-6
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations 7-10
PART II
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Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
ITEM 1.
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TECHNOLOGY CONNECTIONS, INC.
BALANCE SHEET
JUNE 30, 2004
(UNAUDITED)
==============================================================================
ASSETS
------
2004
------------
CURRENT ASSETS
Cash and Cash Equivalents $ 36
Inventory 3,000
Accounts Receivable, net of allowance for doubtful
accounts of $31,564 3,023
------------
TOTAL CURRENT ASSETS 6,059
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PROPERTY AND EQUIPMENT
Property and Equipment 33,787
Accumulated Depreciation (12,830)
------------
Net Property and Equipment 20,957
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TOTAL ASSETS $ 27,016
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses $ 201,931
Excess of Outstanding Checks over Bank Balance 134
Notes Payable 67,400
------------
TOTAL LIABILITIES 269,465
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STOCKHOLDERS' DEFICIT
Preferred Stock ($.001 par value, 5,000,000 authorized:
none issued and outstanding) -
Common Stock ($.001 par value, 100,000,000 shares authorized:
2,468,901 shares issued and outstanding) 2,469
Additional Paid-in-Capital 1,104,301
Retained Deficit (1,349,219)
------------
TOTAL STOCKHOLDERS' DEFICIT (242,449)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 27,016
============
The accompanying notes are an integral part of the financial statements
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
===============================================================================================================
Three Months Ended June 30, Six Months Ended June 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
SALES AND COST OF SALES:
Sales $ - $ 18,170 $ 150 $ 36,960
Cost of sales - 4,188 - 15,953
------------ ------------ ------------ ------------
Gross Profit - 13,982 150 21,007
OPERATING EXPENSES:
Selling, general and administrative 199 44,964 2,321 156,633
Consulting fees 123,240 - 313,242 -
------------ ------------ ------------ ------------
123,439 44,964 315,563 156,633
------------ ------------ ------------ ------------
OPERATING LOSS (123,439) (30,982) (315,413) (135,626)
OTHER (INCOME) EXPENSE:
Other income - (22,593) - (22,593)
Loss on sale of asset - 363 - 363
Interest expense 2,793 6,399 5,586 15,001
------------ ------------ ------------ ------------
NET LOSS $ (126,232) $ (15,151) $ (320,999) $ (128,397)
============ ============ ============ ============
Net Loss Per Common Share
Basic & Fully Diluted $ (0.05) $ (0.01) $ (0.14) $ (0.10)
============ ============ ============ ============
Weighted Average Common
Shares Outstanding 2,416,234 1,265,510 2,284,568 1,265,510
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
==========================================================================================================
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (320,999) $ (128,397)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 3,362 5,214
Stock issued for services 313,242 201,000
Loss on sale of asset - 363
(Increase) decrease in operating assets:
Accounts receivable 4,411 (5,432)
Inventory - 2,500
Prepaid expenses - (82,500)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (362) (96,122)
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NET CASH (USED IN) OPERATING ACTIVITIES (346) (103,374)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stockholder loans - 99,281
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NET CASH PROVIDED BY FINANCING ACTIVITIES - 99,281
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (346) (4,093)
CASH AND CASH EQUIVALENTS:
Beginning of period 382 4,457
------------ ------------
End of period $ 36 $ 364
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ - $ 6,070
============ ============
Stock issued for services $ 263,242 $ 201,000
============ ============
Stock issued for accounts payable $ 50,000 $ -
============ ============
The accompanying notes are an integral part of the financial statements
TECHNOLOGY CONNECTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2004 (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited 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 June
30, 2004, the results of operations for the three and six month periods ended
June 30, 2004 and 2003, and cash flows for the six months ended June 30, 2004
and 2003. The results for the period ended June 30, 2004, are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2004.
The interim unaudited consolidated financial statements should be read in
conjunction with the Company's annual report on Form 10-KSB as filed with the
Securities and Exchange Commission.
NOTE 2 - GOING CONCERN AND LIQUIDITY
The Company has experienced losses from operations of $126,232 and $15,151
during the three months ended June 30, 2004 and 2003, respectively, and $320,999
and $128,397 during the six months ended June 30, 2004 and 2003, respectively,
has yet to generate an internal cash flow, has negative working capital, has a
stockholders' deficit and has outstanding and delinquent payables including
payroll taxes as of June 30, 2004. These factors raise substantial doubt about
the Company's ability to continue as a going concern. The Company's continued
existence is dependent upon its ability to resolve its liquidity problems,
principally by obtaining equity funding, increasing sales and achieving
profitable operations. In regard to management's plans in these matters, the
Company entered into a "Merger Agreement" dated February 19, 2004, whereby the
Company is expected that its operations will become a business segment in the
merged entity and that certain liabilities will be paid by the merged entity
(See Note J Subsequent Events in the Form 10-KSB for 2003).
The eventual outcome, however, of management's plans cannot be ascertained with
any degree of certainty. The accompanying financial statements do not include
any adjustments that might result from the outcome of these risks and
uncertainties.
NOTE 3 - ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 4 - COMMON STOCK ISSUANCES
During the six months ended June 30, 2004, the Company issued 1,121,008 shares
of common stock to consultants for services which were expensed at fair value.
The interim financial statements for the six months ended June 30, 2004 include
an expense associated with this of $313,242.
NOTE 5 - LOSS PER SHARE
Statement of Financial Accounting Standard ("SFAS") No.128 requires dual
presentation of basic and diluted EPS with a reconciliation of the numerator and
denominator of the EPS computations. Basic earnings per share amounts are based
on the weighted average shares of common stock outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise, or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for the years presented.
There were no adjustments required to net loss for the years presented in the
computation of diluted earnings per share.
NOTE 6 - MATERIAL EVENT
On February 19, 2004, we executed an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which an unrelated company will merge with and into the
Company, with the unrelated company's stockholders receiving 27,288,732 shares
of common stock and 1,000,000 shares of Class A Convertible Preferred. Our
common stock will be exchanged for the shares of the unrelated company. In
addition, pursuant to this agreement, we agreed to change its corporate name
from "Technology Connections, Inc." to "HouseRaising, Inc." prior to the
closing. The merger closing will be on the second business day following
satisfaction or waiver of all conditions to the obligations of the Parties as
stated in the Merger Agreement. As of August 14, 2004 the merger has not closed.
A special shareholders meeting has been called for August 20, 2004 to consider
the proposals: i. amending our articles of incorporation to change our name to
HouseRaising, Inc.; ii. Approving an agreement and plan of merger dated February
19, 2004 with HouseRaising, Inc. and iii. Electing a new board of directors.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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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
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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 2,468,901 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.
The most important items for evaluating our financial condition and operating
performance are cash and cash flows from operations, respectively. Liquidity and
capital resources relate to these two items. We make our business decisions
based upon our cash position and the cash that is either generated from our used
in operating activities.
Revenue recognition is a critical accounting policy of ours since it represents
the majority of our entire financial statements taken as a whole. It is also
important in light of the Staff Accounting Bulletins published by the Securities
and Exchange Commission over the past few years.
RESULTS OF OPERATIONS
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For the three and six months ended June 30, 2004 and 2003(unaudited).
Sales.
Sales for the three months ended June 30, 2004 and 2003 were $-0- and $18,170,
respectively, a decrease of $18,170 or 99%. Sales for the six months ended June
30, 2004 and 2003 were $150 and $36,960, respectively, a decrease of $36,810 or
99%. 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 June 30, 2004 and 2003 were
$-0- and $4,188, respectively, a decrease of $4,188. Cost of sales as a
percentage of sales for the three month periods ended June 30, 2004 and 2003
were -0-% and 23%, respectively. The cost of sales for the six months ended June
30, 2004 and 2003 were $-0- and $15,953, respectively, a decrease of $15,953.
Cost of sales as a percentage of sales for the six month periods ended June 30,
2004 and 2003 were -0-% and 43%, 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 decreased sales. We expect cost of sales as a percentage of
sales to continue in this trend but we will 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 June 30, 2004 and 2003 were
$123,439 and $44,964, respectively. Total expenses for the six months ended June
30, 2004 and 2003 were $315,563 and $156,633, respectively. The increase in
expenses is attributable to professional fees incurred via payment of common
stock in lieu of cash. We issued shares of common stock to professionals and
consultants to assist us with marketing and investor relations. Common stock was
paid as we curtailed operations due to a cash shortage.
All of our accounts payable are trade payables in connection within the
course of business.
We expect stability in expenses through the year 2004 as the Company moves
toward developing its business plan.
Income / Losses.
Net loss for the three months ended June 30, 2004 was $(126,232) versus net loss
of $(15,151) in the same period in 2003, an increase of $111,081. Our net loss
for the three months ended June 30, 2004 was primarily due to $123,240 in common
stock issued for professional services in connection with financial advisory and
consulting services. Net loss for the six months ended June 30, 2004 was
$(320,999) versus net loss of $(138,397) in the same period in 2003, an increase
of $182,602. Our net loss for the three months ended June 30, 2004 was primarily
due to $313,242 in common stock issued for professional services in connection
with financial advisory and consulting services. We expect to continue to incur
losses at least through the year 2004.
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.
Cash flows used in operations were $346 and $103,374 for the six months ended
June 30, 2004 and 2003, respectively. Cash flows used in operations were
primarily attributable to our $320,999 net loss for the period partially offset
by $313,242 in common stock issued for services.
Cash flows generated by financing activities were $ -0- and $99,281,
respectively, for the six months ended June 30, 2004 and 2003. Cash flows for
the 2003 period included $99,281 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.
Overall, we have funded our cash needs from inception through March 31,
2004 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 $36 and a working capital deficit of $263,406 as of
June 30, 2004 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.
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. 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. 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
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Quarterly Evaluation of Controls
As of the end of the period covered by this quarterly report on Form
10-QSB, We evaluated the effectiveness of the design and operation of (i) our
disclosure controls and procedures ("Disclosure Controls"), and (ii) our
internal control over financial reporting ("Internal Controls"). This
evaluation ("Evaluation") was performed by our President and Chief Executive
Officer, Kevin Kyzer ("CEO"). Kevin Kyzer is also acting Chief Financial
Officer. In this section, we present the conclusions of our CEO based on and as
of the date of the Evaluation, (i) with respect to the effectiveness of our
Disclosure Controls, and (ii) with respect to any change in our Internal
Controls that occurred during the most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect our Internal Controls.
CEO and CFO Certifications
Attached to this annual report, as Exhibits 31.1 and 31.2, are certain
certifications of the CEO and CFO, which are required in accordance with the
Exchange Act and the Commission's rules implementing such section (the "Rule
13a-14(a)/15d-14(a) Certifications"). This section of the annual report contains
the information concerning the Evaluation referred to in the Rule
13a-14(a)/15d-14(a) Certifications. This information should be read in
conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete
understanding of the topic presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed with the objective of ensuring
that information required to be disclosed in our reports filed with the
Commission under the Exchange Act, such as this annual report, is recorded,
processed, summarized and reported within the time period specified in the
Commission's rules and forms. Disclosure Controls are also designed with the
objective of ensuring that material information relating to the Company is made
known to the CEO and the CFO by others, particularly during the period in which
the applicable report is being prepared. Internal Controls, on the other hand,
are procedures which are designed with the objective of providing reasonable
assurance that (i) our transactions are properly authorized, (ii) the Company's
assets are safeguarded against unauthorized or improper use, and (iii) our
transactions are properly recorded and reported, all to permit the preparation
of complete and accurate financial statements in conformity with accounting
principals generally accepted in the United States.
Limitations on the Effectiveness of Controls
Our management does not expect that our Disclosure Controls or our Internal
Controls will prevent all error and all fraud. A control system, no matter how
well developed and operated, can provide only reasonable, but not absolute
assurance that the objectives of the control system are met. Further, the
design of the control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances so of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision -making
can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of a system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated objectives under all
potential future conditions. Over time, control may become inadequate because
of changes in conditions, or because the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
Scope of the Evaluation
The CEO and CFO's evaluation of our Disclosure Controls and Internal
Controls included a review of the controls' (i) objectives, (ii) design, (iii)
implementation, and (iv) the effect of the controls on the information generated
for use in this annual report. In the course of the Evaluation, the CEO and CFO
sought to identify data errors, control problems, acts of fraud, and they sought
to confirm that appropriate corrective action, including process improvements,
was being undertaken. This type of evaluation is done on a quarterly basis so
that the conclusions concerning the effectiveness of our controls can be
reported in our quarterly reports on Form 10-QSB and annual reports on Form
10-KSB. The overall goals of these various evaluation activities are to monitor
our Disclosure Controls and our Internal Controls, and to make modifications if
and as necessary. Our external auditors also review Internal Controls in
connection with their audit and review activities. Our intent in this regard is
that the Disclosure Controls and the Internal Controls will be maintained as
dynamic systems that change (including improvements and corrections) as
conditions warrant.
Among other matters, we sought in our Evaluation to determine whether there
were any significant deficiencies or material weaknesses in our Internal
Controls, which are reasonably likely to adversely affect our ability to record,
process, summarize and report financial information, or whether we had
identified any acts of fraud, whether or not material, involving management or
other employees who have a significant role in our Internal Controls. This
information was important for both the Evaluation, generally, and because the
Rule 13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
disclose that information to our Board (audit committee), and to our independent
auditors, and to report on related matters in this section of the annual report.
In the professional auditing literature, "significant deficiencies" are referred
to as "reportable conditions". These are control issues that could have
significant adverse affect on the ability to record, process, summarize and
report financial data in the financial statements. A "material weakness" is
defined in the auditing literature as a particularly serious reportable
condition where the internal control does not reduce, to a relatively low level,
the risk that misstatement cause by error or fraud may occur in amounts that
would be material in relation to the financial statements and not be detected
within a timely period by employee in the normal course of performing their
assigned functions. We also sought to deal with other controls matters in the
Evaluation, and in each case, if a problem was identified; we considered what
revisions, improvements and/or corrections to make in accordance with our
ongoing procedures.
Conclusions
Based upon the Evaluation, the Company's CEO and CFO have concluded that,
subject to the limitations noted above, our Disclosure Controls are effective to
ensure that material information relating to the Company is made known to
management, including the CEO and CFO, particularly during the period when our
periodic reports are being prepared, and that our Internal Controls are
effective to provide reasonable assurance that our financial statements are
fairly presented inconformity with accounting principals generally accepted in
the United States. Additionally, there has been no change in our Internal
Controls that occurred during our most recent fiscal quarter that has materially
affected, or is reasonably likely to affect, our Internal Controls.
ITEM 4. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------
We do not have any material risk with respect to changes in foreign currency
exchange rates, commodities prices or interest rates. We do not believe that we
have any other relevant market risk with respect to the categories intended to
be discussed in this item of this report.
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
On May 25, 2004, we were served with a summons and complaint in a case styled as
"Maxim Advisors, LLC v. Technology Connections, Inc.", a civil action in the
Circuit Court of Lafayette County, MI. The Plaintiff is demanding judgment for
our stock valued at $17,849 for non-payment of services provided in preparing
our SEC filings during 2003. We intend to vigorously defend all claims, inasmuch
as the plaintiff's work was inadequate and resulted in our temporarily becoming
de-listed from the OTC Bulletin Board last year.
Item 2. Changes in Securities
316,000 unregistered and restricted common shares were issued to three investor
relations parties under section 4(2) of The Securities Act of 1933 during the
quarter ended June 30, 2004.
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
None.
(1) A Form S-8 Post Effective Amendment that was previously filed on July 29,
2004 is incorporated by reference herein.
(2) Forms PRE 14C that were previously filed on August 5, 2004, July 23, 2004,
June 25, 2004, June 8, 2004, April 23, 2004 and April 23, 2001 are
incorporated by reference herein.
(3) A Form DEF 14C that was previously filed on August 10, 2004 is incorporated
by reference herein.
-signature page follows-
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TECHNOLOGY CONNECTIONS, INC.
(Registrant)
/s/ Kevin Kyzer
Date: August 14, 2004 -----------------
Kevin Kyzer
President, Principal/ Chief Executive
Officer, Principal/ Chief Financial
Officer