AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 2004
REGISTRATION NO: ____________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
AMENDMENT # 2
SB-2 REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PROTEC INDUSTRIES, INC.
Washington 1311 and 1400 98-037463
(State of jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number)Identification Number)
2200 112th Avenue NE, Suite 200, Bellevue, Washington 98004,
(425) 452-8639, fax (425) 452-8622
(Address and Telephone Number of Principal Executive Offices)
Mr. Arne Przybillia, President and Board Chairman
2200 112th Avenue NE, Suite 200, Bellevue,
Washington 98004, (425) 452-8639, fax
(425) 452-8622 (Name, address and telephone number of
agent for service)
Copy to: Tolan S. Furusho, Attorney at Law
2200 112th Avenue NE, Suite 200, Bellevue, Washington 98004,
(425) 452-8639, fax (425) 452-8622
Approximate date of commencement of proposed sale to the public:
(____________________) Date this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering: ?
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ?
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ?
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ?
CALCULATION OF REGISTRATION FEE
Title of Each Class Amount to be Proposed Maximum
of Securities To Be Resistered Offering Price Per
Registered Share
Title of Each Class Proposed Maximum Proposed Maximum
of Securities To Be Amount To Be Offering Price Per
Registered Registered Share
- ----------------------- --------------------- -------------------- -
Common Stock$.001 par Minimum 50,000 $8.00
-------------------- -------------------
Maximum 3,125,000 $8.00
Proposed Manimun Amount
Aggredage Offering of
Price Registration Fee
$400,000
$25,000,000 $3,167.50
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state
;MADSEN & ASSOCIATES, CPA's INC. 684 East Vine St, # 3
------------------------------- Murray, Utah 84107
Certified Public Accountants and Business Consultants Telephone 801-268-2632
Fax 801-262-3978
Board of Directors
Protec Industries, Inc.
Bellevue, Washington
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheet of Protec Industries, Inc.
(exploration stage company) at September 30, 2004 and December 31, 2003 and the
related statement of operations, stockholders' equity, and cash flows for the
nine months ended June 30, 2004 and the year ended December 31, 2003 and and the
period September 9, 2002 (date of inception) to December 31, 2002 and the period
September 9, 2002 to September 30, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
balance sheet presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Protec Industries , Inc. at
September 30, 2004 and December 31, 2003 and the results of operations, and cash
flows for the nine months ended September 30, 2004 and the year ended December
31, 2003 and the period September 9, 2002 to December 31, 2002 and the period
September 9, 2002 to September 30, 2004, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company will need additional
working capital for its planned activity and to service its debt, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in the notes to the financial
statements . These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
s\ Madsen & Associates, CPA's Inc.
Salt Lake City, Utah,
November 8, 2004
MADSEN & ASSOCIATES, CPA's INC. 684 East Vine St, # 3
- ------------------------------- Murray, Utah 84107
Certified Public Accountants and Business Consultants Telephone 801-268-2632
Fax 801-262-3978
Board of Directors
Tek Corp and Subsidiary
Murray, Utah
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of Tek Corp and
Subsidiary (exploration stage company) at September 30, 2004 and December 31,
2003 and the related consolidated statement of operations, stockholders' equity,
and cash flows for the nine months ended September 30, 2004 and the years ended
December 31, 2003 and 2002 and the period July 15, 2002 (date of inception) to
September 30, 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
balance sheet presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tek Corp and
Subsidiary at September 30, 2004 and December 31, 2003 and the related statement
of operations, and cash flows for the nine months ended September 30, 2004 and
the years ended December 31, 2003 and 2002 and the period July 15, 2002 (date of
inception) to September 30, 2004, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company will need additional
working capital for its planned activity and to service its debt, which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in the notes to the financial
statements . These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
\s\ Madsen & Associates, CPA's Inc.
Salt Lake City, Utah,
November 8, 2004
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
BALANCE SHEETS
September 30, 2004 and December 31, 2003
Sept 30, Dec 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash $ 37,894 $ -
------- -----------
Total Current Assets 37,894 -
------- ------------
OTHER ASSETS
Available-for-sale securities 439,245 173,245
------- -------
$ 477,139 $ 173,245
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ - $ -
--------- ---------
Total Current Liabilities - -
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized, at $.001 par value;
none issued on Sept 30, 2004 -
Common stock
250,000,000 shares authorized,
at $.001 par value;
100,257,191 shares issued and
outstanding on Sept 30, 2004 100,257 5,867
Capital in excess of par value 1,653,066 338,098
Deficit accumulated during the
exploration stage (1,276,184) (170,720)
Total Stockholders' Equity 477,139 173,245
The accompanying notes are an integral part of
these financial statements.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2004 and the Year Ended
December 31, 2003 and the Period September 9,
2002 to December 31, 2002 and the Period September
9, 2002 (Date of Inception) to September 30, 2004
Setp 9,
Sept 30 Dec 31 Dec 31 2002 to
2004 2003 2002 Sept 30
2004
REVENUES $ - $ - $ $ -
EXPENSES
Development expenses
Mexico project 30,000 - - 30,000
Exploration & options
oil and gas properties 133,507 -- 133,507
Exploration & options
talc properties 586,003 - - 586,003
Consultants 67,139 28,919 31,439 127,497
Professional 36,741 40,065 4,500 81,306
Administrative 75,438 65,797 -
-------- --------- --------- ----
141,235
NET LOSS - before
other costs (928,828) (134,781) (35,939) (1,099,548)
FINANCING COSTS (176,636) - - (176,636)
NET LOSS $(1,105,464) $ (134,781) $(35,939) $(1,276,184)
NET LOSS PER COMMON SHARE
Basic and diluted $ (.02) $ (.02) $ (.05)
AVERAGE OUTSTANDING SHARES
Basic (stated in 1,000's) 68,130 5,472 774
The accompanying notes are an integral part of
these financial statements.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period September 9, 2002 (Date of Inception)
to September 30, 2004
Common Stock
Shares Amount
Balance September 9, 2002 - $ -
Issuance of common stock for services
at $.02 - Sept through Dec 2002 1,571,929 1,572
Issuance of common stock for cash
at $.10 - September 2002 45,040 45
Net operating loss for the period
September 9, 2002 to December 31, 2002 - -
Balance December 31, 2002 1,616,969 1,617
Issuance of common stock for a license -
no value recognized - January 2003 199,995 200
Issuance of common stock for cash
at $.001- February 8, 2003 4,050,000 4,050
Contributions to capital - available-for-
sale securities - -
Contributions to capital - expenses - -
Net operating loss for the year ended
ended December 31, 2003 - -
Balance December 31, 2003 5,866,964 5,867
Issuance of common stock for
development rights - Mexico - no
value recognized - March 2004 74,500,000 74,500
Issuance of common stock for services
at $.001 - March 2004 18,890,227 18,890
Issuance of common stock for 40% of
stock of Pumilia AG - August 2004 1,000,000 1,000
Contributions to capital - advances by TEK - -
Net operating loss for the nine months
ended September 30, 2004 - -
Balance September 30, 2004 100,257,191 $ 100,257
Capital in
Excess of Accumulated
Par Value Deficit
Balance September 9, 2002 $ - $ -
Issuance of common stock for services
at $.02 - Sept through Dec 2002 29,867 -
Issuance of common stock for cash
at $.10 - September 2002 4,455 -
Net operating loss for the period
September 9, 2002 to December 31, 2002 - (35,939)
Balance December 31, 2002 34,322 (35,939)
Issuance of common stock for a license -
no value recognized - January 2003 (200) -
Issuance of common stock for cash
at $.001- February 8, 2003 - -
Contributions to capital - available-for-
sale securities 173,245 -
Contributions to capital - expenses 130,731 -
Net operating loss for the year ended
ended December 31, 2003 - (134,781)
Balance December 31, 2003 338,098 (170,720)
Issuance of common stock for
development rights - Mexico - no
value recognized - March 2004 (74,500) -
Issuance of common stock for services
at $.001 - March 2004 - -
Issuance of common stock for 40% of
stock of Pumilia AG - August 2004 145,000 -
Contributions to capital - advances by TEK 1,244,468 -
Net operating loss for the nine months
ended September 30, 2004 - (1,105,464)
Balance September 30, 2004 $ 1,653,066 $(1,276,184)
The accompanying notes are an integral part of these financial statements.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2004 and the Year Ended
December 31, 2003 and the Period September 9,
2002 to December 31, 2002 and the Period
September 9, 2002 (Date of Inception) to
September 30, 2004
Sept 30, Dec 31,
2004 2003
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(1,105,464) $ (134,781)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Issuance common capital stock
for services 18,890 -
Contribution to capital - expenses - 130,731
Net Change From Operations (1,086,574) (4,050)
------------ -------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase securities (120,000) -
--------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Advances contributed to capital-TEK 1,244,468 -
Proceeds from issuance of common stock - 4,050
---------- ------
Net Change in Cash 37,894 -
Cash at Beginning of Period - -
----------- --------
Cash at End of Period $ 37,894 $ -
======= ========
NON CASH FLOWS FROM OPERATING ACTIVITIES
Issuance of 20,462,156 common
shares for services $ 50,329
-------
Contributions to capital - expenses 130,731
-------
Sept 9
2002 to
Dec 31, Sept 30
2002 2004
Net loss $ (35,939) $ (1,276,184)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Issuance common capital stock
for services 31,439 50,329
Contribution to capital - expenses - 130,731
Net Change From Operations (4,500) (1,095,124
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase securities - (120,000)
CASH FLOWS FROM FINANCING
ACTIVITIES
Advances contributed to capital-TEK - 1,244,468
Proceeds from issuance of common stock 4,500 8,550
Net Change in Cash - 37,894
Cash at Beginning of Period - -
Cash at End of Period $ - $ 37,894
NON CASH FLOWS FROM OPERATING ACTIVITIES
Issuance of 20,462,156 common shares for services
Contributions to capital - expenses
The accompanying notes are an integral part of these financial statements.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
1. ORGANIZATION
The Company was incorporated under the laws of the state of Arizona on September
9, 2002 under the name " ANF Telecast, Inc." with authorized common stock of
100,000,000 shares at $.001 par value. On December 13, 2002 the name was changed
to "Protec Industries, Inc." and on March 2, 2004 the domicile was changed to
the state of Washington in connection with an increase in the authorized capital
stock to 250,000,000 common shares and 10,000,000 preferred shares with a par
value of $.001. No terms have been established for the preferred shares..
The Company is in the exploration stage and has not started any significant
operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax bases of the assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recorded, when it is more likely than not, that such tax
benefits will not be realized.
On September 30, 2004, the Company had a net operating loss available for carry
forward of $1,276,184. The tax benefit of approximately $383,000 from the loss
carry forward has been fully offset by a valuation reserve because the use of
the future tax benefit is doubtful since the Company has no operations. The net
operating loss will expire in 2024.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise any common or preferred share rights unless the exercise becomes
antidilutive and then only the basic per share amounts are shown in the report.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Exploration Costs
Costs of acquisition, exploration, carrying, and retaining unproven mining
properties are expensed as incurred. Costs incurred in proving and developing a
property ready for production are capitalized and amortized over the life of the
mineral deposit or over a shorter period if the property is shown to have an
impairment in value.
Environmental Requirements
At the report date environmental requirements related to the mining claims
acquired are unknown and therefore an estimate of the any future cost cannot be
made.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the
completion of a service provided.
Advertising and Market Development
The company will expense advertising and market development costs as incurred.
Foreign Currency Translation
Part of the transactions of the Company were completed in CHF and EUR dollars
and have been translated to US dollars as incurred, at the exchange rate in
effect at the time, and therefore, no gains or losses are recognized from the
translations. US dollars are considered to be the functional currency.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States of
America. Those estimates and assumptions affect the reported amounts of the
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were assumed in preparing these financial statements.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Financial Instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values due to their short term maturities.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. AVAILABLE-FOR-SALE SECURITIES
During November 2003 the Company received 2,500,000 common shares of Epic Energy
from Clarex Finance Establishment, controlled by a shareholder of the reporting
Company, as a contribution to capital. The predecessor purchased the shares at
$.0693 per share for $173,245 immediately prior to the transfer to the Company.
The stock has had a temporary trading suspension, due to late filing of reports,
with the last trading at $.09 per share. For this report the fair value is
considered to be the original cost. The shares represent approximately 4% of the
outstanding shares of Epic Energy.
During February 2004 the Company purchased 3,000,000 shares of EuroGas, Inc. at
$.04 per share, representing 1.8% of the outstanding shares of EuroGas, Inc. The
fair market value on the report date was $.04 per share.
During August 2004 the Company issued 1,000,000 common shares of the Company in
exchange for 40% of the outstanding stock of Pumilia AG. Pumilia AG is a 20 year
old engineering and construction company registered and operating in Switzerland
and is privately owned. The value of the Pumilia AG shares have been recorded at
$146,000, the book value as shown in the reports of Pumilia, which is considered
to their fair value. The 1,000,000 shares of the Company are being held by
Pumilia's bank which will be released by March 1, 2004 as free trading. If the
shares cannot be registered for free trading by March 1, 2005, an officer of the
Company has agreed the substitute his free trading shares in exchange.
The management of the Company intends to hold the above shares as an investment,
however they may be subject to creditor claims. (Note 8)
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004
4. PURCHASE OF DEVELOPMENT RIGHTS TO CANCUN MEXICO PROPERTY
During February, 2004 the Company issued 70,000,000 shares of its common capital
stock, with no value recognized, for the acquisition of the development and
income rights to 3,300 acres, known as La Guadalupe Ranch, located at Km 120
carretera federal Cancun Tulum, Municipio de Cozumel, Estado de Quintana Roo,
Mexico (near Cancun, Mexico) on the Mexican Caribbean Sea, consisting of an area
of approximately 1,498 hectares. The rights expire twelve years and one month
from August 9, 2002.
Future development plans for the property includes hotels, a marina, nature
trails, including an un-excavated pyramid archeology site, individual
residences, museums, and other supporting facilities. The necessary capital to
start and complete the development has not been obtained at the report date.
There can be no assurance that the Company will be able to raise the necessary
capital to proceed with the plans.
The rights were purchased from TEK Corp., (parent of the Company) who holds 70 %
of the Company's outstanding stock, after the above transaction.
5. PURCHASE OF AN OPTION TO PURCHASE INTEREST IN TALC MINING PROPERTY
During January 2004 the Company acquired an option to purchase 49% of a talc
mining property from EuroGas Inc., known as Rozmin s.r.o., located in Slovakia.
The terms of the option provides for a purchase price of EUR26,000,000 with an
advance payment of $627,000 (EUR 500,000), which was paid on January 21, 2004
and expensed. Upon the receipt of the advance payment the Company was granted an
irrevocable right to purchase the 49% interest.
Rozmin s.r.o. is owned 57% by EuroGas Inc. and 43% by Euro Gas Austria GmbH , a
wholly owned subsidiary of EuroGas Inc. Exploration of the property has been
started.
6. CAPITAL STOCK
During January 2003 the Company issued 199,995 net shares for a license, with no
value recognized, and during February 2003 the Company issued 4,050,000 shares
for $4,050 in a private offering. During February 2004 the Company issued
70,000,000 common shares to TEK Corp, and 4,500,000 to an officer of the
company, for the development rights in Cancun Mexico, with no value recognized,
as outlined in note 4 above. During August 2004 the Company issued 1,000,000
common shares in exchange for 40% of the outstanding stock of Pumilia AG as
outlined in note 3.
On January 22, 2003 the Company completed a reverse common stock split of one
share for 100 outstanding shares. This report has been prepared showing post
split shares from inception.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004
7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officer- director's have acquired 15% of the outstanding common stock of the
Company.
During February 2004 TEK Corp, a corporation controlled by an officer of the
Company, acquired 70 % of the outstanding common stock of the Company. TEK Corp
has made advances to the Company of $1,244,468, which have been contributed to
capital. Other shareholders of the Company have made contributions to capital of
$303,976.
8. GOING CONCERN
There is insufficient working capital for any future planned activity, and to
service its debt, which raises substantial doubt about its ability to continue
as a going concern.
TEK Corp, parent of the Company , received net of $2,462,202 in loans from
investors with the agreement that TEK Corp invest the proceeds and pay 20%
return per month to the note holders, (later revised to the terms outlined
below). TEK Corp contracted with ITrust (a state of Utah Trust) to manage the
investments and guarantee the loans, with the knowledge of the note holders, and
TEK Corp received back, a no interest, demand loan of $445,995 from ITrust, and
therefore, TEK Corp has a contingent liability under the terms of the notes
payable if ITrust defaults. The terms of the notes, as revised, provide for
payments of $ 2,462,202 due during October 2004 (extended for 60 days) and
$4,451,620 due during March 2005. The proceeds of the loans, along with other
loans received by TEK Corp from other sources of $1,502,047, which are due
within the coming year, except for $250,000 which is due in three years, have
been used by the Company, TEK Corp, and ITrust in payments toward development
costs on the Mexico project (note 4 ), exploration costs and the purchase of an
option to purchase the Talc Mining Property (note 5), exploration costs in the
oil and gas properties, and real estate and other investments, resulting in a
substantial deficiency in the remaining current marketable assets available to
service the loans.
If there is a default in the payments on the loans due by Itrust, the note
holders can also make claims on the assets of TEK Corp., which consists
primarily, of the Company stock held by TEK Corp. The only assets the Company
has are the securities shown in the balance sheet, which would be substantially
deficient as payment on the debt should a demand be made against the Company,
which raises substantial doubt about the Company's ability to continue as a
going concern.
The management of the Company, TEK Corp, and ITrust, believe they can overcome
the deficiency needed to service the debt of TEK Corp and ITrust, by the
extension of the due dates on the notes beyond the coming year, or by conversion
of the debt to stock equity, by receiving additional equity funding, by loans
from officers through their sale of personal assets, or by obtaining new loans
from the profits in the operations of companies Protect Industries, Inc. owns an
interest in, which will enable the Company to continue operations for the coming
year.
PROTEC INDUSTRIES, INC.
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004
9. CONSOLIDATING FINANCIAL STATEMENTS OF THE COMPANY AND TEC CORP.
During February, 2004 TEK Corp, (parent) acquired 70% of the outstanding common
capital stock of the Company. Included in the following are the consolidating,
financial statements of the Company and TEK Corp (parent). The financial
statements have been prepared assuming the acquisition had been completed on
January 1, 2004. The consolidated statements of operations include the
historical operating information of TEK Corp and the Company beginning on
January 1, 2004. The acquisition is reported as a purchase in which no good will
was recognized.
All intercompany transactions have been eliminated.
TEK CORP & PROTEC INDUSTRIES, INC (subsidiary)
(Exploration Stage Company)
CONSOLIDATING BALANCE SHEETS
September 30, 2004
TEC Corp Protec
Industries Inc.
CURRENT ASSETS
Cash $ 62,751$ 37,894
Account receivable 5,000 -
------- -----------
Total Current Assets 67,751 37,894
------===========--------
OTHER ASSETS
Available-for-sale securities - 439,245
$ 67,751 $ 477,139
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Notes payable $ 1,252,047 $ -
Note payable - related party 250,000 -
Accrued interest payable 90,933 -
Advances - ITrust 445,995 -
Total Current Liabilities 2,038,975 -
CONTINGENT LIABILITIES - note 8 - -
--------------------------
MINORITY INTEREST - deficiency
STOCKHOLDERS' DEFICIENCY
Preferred stock - 100,000,000 authorized
at no par value - 25,000,000 outstanding -
no value recognized - -
Common stock -1,000,000 authorized
at $.001 par value - 1,000,000 out 1,000 100,257
Capital in excess of par value (1,244,468) 1,653,066
Deficit accumulated during
exploration stage (727,756) (1,276,184)
Total Stockholders' Deficiency (1,971,224) 477,139
$ 67,751 $ 477,139
============= ========
Elimination Total
ASSETS
CURRENT ASSETS
Cash $ $ 100,645
Account receivable - 5,000
--------------------------
Total Current Assets - 105,645
--------------------------
OTHER ASSETS
Available-for-sale securities - 439,245
- $ 544,890
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Notes payable - $ 1,252,047
Note payable - related party - 250,000
Accrued interest payable - 90,933
Advances - ITrust - 445,995
Total Current Liabilities - 2,038,975
CONTINGENT LIABILITIES - note 8 - -
--------------------------
MINORITY INTEREST - deficiency (170,465) (170,465)
STOCKHOLDERS' DEFICIENCY
Preferred stock - 100,000,000 authorized
at no par value - 25,000,000 outstanding -
no value recognized - -
Common stock -1,000,000 authorized
at $.001 par value - 1,000,000 out (100,257) 1,000
Capital in excess of par value 7,908 416,506
Deficit accumulated during
exploration stage 262,814 (1,741,126)
Total Stockholders' Deficiency - (1,323,620)
- $ 544,890
============= ========
The accompanying notes are an integral part of these financial statements.
TEK CORP & PROTEC INDUSTRIES, INC. (subsidiary)
(Exploration Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2004 and the Years
Ended December 31, 2003 and 2002 and the Period
November 15, 1999 (Date of Inception) to September 30, 2004
Consolidated TEK Corp
Sept 30 Dec 31
2004 2003
REVENUES $ 24,486 $ -
------ ---------
EXPENSES
Development expenses - Mexico project 30,000 -
Development expenses - California project - -
Development expenses - Ben Cay project - -
Exploration & options - oil & gas properties 133,507 -
Exploration & options - talc properties 586,002 -
Consultants 79,904 64,100
Professional 50,742 -
Management fees 31,167 -
Administrative 131,397 29,207
--------- --------
1,042,719 93,307
------- ---------
NET LOSS - before other expenses (1,018,233) (93,307)
--------- ---------
OTHER EXPENSES
Financing costs (176,636) -
Interest (90,933) -
--------------------------
(267,569) -
--------------------------
NET PROFIT (LOSS) (1,285,802) (93,307)
LESS MINORITY INTEREST 331,639 -
NET PROFIT (LOSS) net minority interest $ (954,163) $ (93,307)
==================== =============
NET LOSS PER COMMON SHARE
Basic and diluted $ (954.) $ (93.)
------ ------
AVERAGE OUTSTANDING SHARES
Basic (stated in 1,000's) 1,000 1,000
----- -----
TEK Corp
Dec 31 Nov 15, 1999 to
2002 Sept 30, 2004
REVENUES $ - $ 24,486
------ --------- -----------
EXPENSES
Development expenses - Mexico project - 30,000
Development expenses - California project 141,976 141,976
Development expenses - Ben Cay project 20,000 20,000
Exploration & options - oil & gas properties - 133,507
Exploration & options - talc properties - 586,002
Consultants 258,437 402,441
Professional 7,161 57,903
Management fees - 31,167
Administrative 25,623 186,227
-------- ----------
453,197 1,589,223
-------------------
NET LOSS - before other expenses (453,197) (1,564,737)
--------- ---------
OTHER EXPENSES
Financing costs - (176,636)
Interest - (90,933)
----------------------------
- (267,569)
----------------------------
NET PROFIT (LOSS) (453,197) (1,832,306)
LESS MINORITY INTEREST - 331,639
NET PROFIT (LOSS) net minority interest $ (453,197) $(1,500,667)
============================
NET LOSS PER COMMON SHARE
Basic and diluted $ (453.)
------
AVERAGE OUTSTANDING SHARES
Basic (stated in 1,000's) 1,000 1,000
The accompanying notes are an integral part of these financial statements.
TEK CORP
(Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
1. ORGANIZATION
The Company was incorporated under the laws of the state of Utah on November 15,
1999 with authorized common stock of 1,000,000 shares at $.001 par value and
100,000,000 preferred shares with no par value.
The preferred shares have no voting rights and the terms provide for a dividend
to be given the holders of the stock at the year end, which is due by the end of
the first following quarter, with the amount of the dividend to be determined by
the board of director's.
2. NOTES PAYABLE
The Company has six notes payable totaling $1,252,047 due February through April
2005 with interest from 12% to 14%. The accrued interest payable on the notes at
September 30, 2004 was $90,933.
3. NOTE PAYABLE - RELATED PARTY
On September 25, 2004 the Company received a loan of $250,000 from an officer of
the Company. The loan is due September 22, 2007 including 10% accrued annual
interest.
4. ACQUSITION OF DEVELOPMENT RIGHTS TO CANCUN MEXICO PROPERTY
On August 9, 2002 the Company issued 5,000,000 preferred shares for the
acquisition of the development and income rights to 3,300 acres, known as La
Guadalupe Ranch, located at Km 120 carretera federal Cancun Tulum, Municipio de
Cozumel, Estado de Quintana Roo, Mexico (near Cancun, Mexico) on the Mexican
Caribbean Sea, consisting of an area of approximately 1,498 hectares. The rights
expire twelve years and one month from August 9, 2002. No value was recognized
on the exchange.
During February 2004 the Company transferred the rights to its subsidiary. (
note 4 - Protec Industries, Inc.)
5. ACQUISITION OF STOCK OF UNIVERSAL ROCKWELL CORPORATION
During January 2003 the Company acquired 15,000,000 common shares of Universal
Rockwell Corporation, a Nevada corporation, which is 10% of its outstanding
stock, in exchange for 20,000,000 preferred shares of the Company. Included in
the exchange was an agreement that no additional stock may be issued by either
party without the approval of both parties. Universal Rockwell Corporation is in
the business of real estate development, however, on the date of the exchange
Universal had no assets or liabilities. No value was recognized on the exchange.