UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
000-50146
(Commission file number)
NUCOTEC, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 94-3409645
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3841 Amador Way, Reno, Nevada 89502
(Address of principal executive offices)
(775) 827-2324
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock outstanding as of June 10, 2004 was
6,600,000.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
1
NUCOTEC, INC.
Index
Page
Number
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Consolidated Balance Sheet as of March 31, 2004 (Unaudited) 2
Consolidated Statements of Operations for the
three-months ended March 31, 2004 and 2003 (Unaudited) 3
Consolidated Statements of Cash Flows for the
three-months ended March 31, 2004 and 2003 (Unaudited) 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis or Plan of Operations 10
Item 3. Controls and Procedures 12
PART II. OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Change in Securities and Small Business Issuer
Purchases of Equity Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NUCOTEC, INC.
CONSOLIDATED BALANCE SHEET
-------------------------------------------------------------------------------
March 31,
2004
--------------------
(Unaudited)
ASSET
CURRENT ASSET
Cash $ -
--------------------
TOTAL CURRENT ASSET $ -
====================
LIABILITY AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITY
Note payable, including accrued interest of $3,704 $ 653,704
--------------------
TOTAL CURRENT LIABILITY 653,704
--------------------
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' (DEFICIT)
Common stock; $0.001 par value; 10,000,000 shares authorized;
6,600,000 shares issued and outstanding 6,600
Additional paid-in capital 7,988
Stock subscription receivable (10,000)
Accumulated (deficit) (658,292)
--------------------
TOTAL STOCKHOLDERS' (DEFICIT) (653,704)
--------------------
TOTAL LIABILITY AND STOCKHOLDERS' (DEFICIT) $ -
====================
The accompanying notes are an integral part of
these financial statements.
3
NUCOTEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
Three-Months Ended
---------------------------------------
March 31, March 31,
2004 2003
----------------- -----------------
(Unaudited) (Unaudited)
NET REVENUE $ - $ -
OPERATING EXPENSES 41,030 24,727
----------------- -----------------
LOSS FROM OPERATIONS (41,030) (24,727)
----------------- -----------------
OTHER INCOME (EXPENSE)
Interest expense (5,544) -
----------------- -----------------
TOTAL OTHER INCOME (EXPENSE) (5,544) -
----------------- -----------------
LOSS BEFORE PROVISION FOR INCOME TAXES
AND DISCONTINUED OPERATIONS (46,574) (24,727)
PROVISION FOR INCOME TAXES - -
----------------- -----------------
NET LOSS FROM CONTINUING OPERATIONS (46,574) (24,727)
----------------- -----------------
DISCONTINUED OPERATIONS:
Income (loss) from operations of Salty's Warehouse, Inc. 871 (5,566)
----------------- -----------------
----------------- -----------------
NET LOSS $ (45,703) $ (30,293)
================= =================
NET LOSS PER SHARE - BASIC AND DILUTED
Continuing operations $ (0.00) $ (0.00)
Discontinued operations $ (0.00) $ (0.00)
----------------- -----------------
$ (0.00) $ (0.00)
================= =================
WEIGHTED AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING - BASIC AND DILUTED 264,608,791 303,800,000
================= =================
The accompanying notes are an integral part of
these financial statements.
4
NUCOTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------
Three-Months Ended
--------------------------------------------
March 31, March 31,
2004 2003
------------------ ---------------------
(Unaudited) (Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss from continuing operations $ (46,574) $ (24,727)
Adjustment to reconcile net loss to net cash used in operating activities:
Income (loss) from discontinued operations 871 (5,566)
Value of options granted for services 4,540
Increase in Liabilities:
Accounts payable and accrued expenses 2,307 26,549
------------------ ---------------------
Net Cash Used In Operating Activities (38,856) (3,744)
----------------- ---------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from note payable 650,000 -
Payment on note payable, related party (42,500) -
Repurchase of shares of common stock (570,000) -
Transfer of Salty's Warehouse, Inc's cash balance at date of disposition (6,068) -
------------------ ---------------------
Net Cash Provided By Financing Activities 31,432 -
------------------ ---------------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (7,424) (3,744)
CASH AND CASH EQUIVALENTS, Beginning of period 7,424 10,113
------------------ ---------------------
CASH AND CASH EQUIVALENTS, End of period $ - $ 6,369
================== =====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ - $ -
================== =====================
Income taxes paid $ - $ -
================== =====================
The accompanying notes are an integral part of
these financial statements.
5
NUCOTEC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Nucotec, Inc. was incorporated in the state of Nevada on October 8, 2001.
Nucotec, Inc. and its subsidiary, Salty's Warehouse, Inc. (the "Company") sell
various home and automobile electronic equipment, computer accessories and
supplies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The unaudited consolidated financial statements have been prepared by Nucotec,
Inc. (the "Company"), pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management, necessary to fairly present the operating results
for the respective periods. Certain information and footnote disclosures
normally present in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been omitted pursuant to such rules and regulations. These consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes for the year ended December 31, 2003 included
in the Company's Annual Report on Form 10-KSB. The results of the three months
ended March 31, 2004 are not necessarily indicative of the results to be
expected for the full year ending December 31, 2004.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company has no established source of material revenue, has incurred a net loss
from continuing operations of $46,574, and at March 31, 2004 had a negative
working capital of $653,704 and had a negative stockholders' deficit of
$653,704. These conditions raise substantial doubt as to the Company's ability
to continue as a going concern. These consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management plans to take the following steps that it believes will be sufficient
to provide the Company with the ability to continue in existence:
o Management intends to raise additional financing through private
equity financing, loans from officer-stockholders or other means and
interests that it deems necessary, with a view to moving forward and
sustain a prolonged growth in its strategy phases.
o The Company plans to raise additional operating funds through equity
or debt financings. The Company intends to raise working capital from
a variety of sources, including from investors who are associates of
the Company's management, or by waiting until a public market develops
for shares of the Company's common stock. There is no assurance that
the Company will be able to arrange for financing and has not, to
date, had any substantive discussions with any third parties regarding
such financing.
6
o The Company will also look to merge with an operating company that is
generating positive cash flow.
o In March 2004, the Company borrowed $650,000 from an unrelated third
party, which was used to redeem the shares of the Company's former
management. This loan matures on July 5, 2004 when the full principal
and accrued interest becomes due.
o In April 2004, the Company borrowed $225,000 from an unrelated third
party to use as working capital. The loan and accrued interest is due
on demand.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Nucotec, Inc. and its wholly owned subsidiary, Salty's Warehouse, Inc. The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America.
All material inter-company accounts and transactions have been eliminated in
consolidation.
PLAN OF REORGANIZATION
On March 19, 2004, Earl T. Shannon, Steven W. Hudson, and Scott W. Bodenweber
agreed that 255,510,000 (5,110,200 pre-split) of their shares of the Company
will be redeemed by the Company in exchange for all of the Company's shares of
Salty's Warehouse, Inc. (the "Transfer"). Earl T. Shannon, Steven W. Hudson, and
Scott W. Bodenweber have futher agreed that 45,890,000 (917,800 pre-split) of
their shares of the Company will be redeemed by the Company in exchange for
$570,000 (the "Sale"). As a condition to these transactions, Messrs. Shannon,
Hudson, and Bodenweber have resigned as officers of the Company. Earl W. Abbott
has been appointed President, Chief Financial Officer and Secretary of the
Company. In addition, Mr. Abbott, Carl A. Pescio and Stanley B. Keith have
collectively purchased 84,000 shares (4,200,000 post-split shares) of common
stock from the Company for $10,000. Mr. Abbott, Mr. Pescio and Mr. Keith
replaced Messrs. Shannon, Hudson and Bodenweber on the Board of Directors of the
Company.
CASH AND CASH EQUIVALENTS
For purpose of the statements of cash flows, the Company considers cash and cash
equivalents to include all stable, highly liquid investments with maturities of
three months or less.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments", the Company is required to estimate the fair value of all
financial instruments included on its balance sheets as of March 31, 2004. The
Company considers the carrying value of such amounts in the financial statements
to approximate their face value.
STOCK SPLIT
On April 19, 2004, the Company authorized a 50:1 stock split. The accompanying
consolidated financial statements have been retroactively restated to present
the effect of this event.
STOCK OPTIONS
The Company has adopted only the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." It applies Accounting Principles Bulletin ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its Stock Option Plan and does not recognize compensation expense
for its Stock Option Plan other than for restricted stock and options issued to
outside third parties. If the Company had elected to recognize compensation
expense based upon the fair value at the grant date for awards under the Stock
Option Plan consistent with the methodology prescribed by SFAS No. 123, the
Company's net loss and loss per share would be reduced to the pro forma amounts
indicated below for the three months ended March 31, 2004 and 2003:
2004 2003
------------------ -------------------
Net loss
As reported $ (45,703) $ (30,293)
Compensation recognized under APB 25 - -
Compensation recognized under SFAS 123 - -
------------------ ------------------
Pro forma $ (45,703) $ (30,293)
================== ==================
Basic and diluted loss per common share
As reported $ (0.00) $ (0.00)
Pro forma $ (0.00) $ (0.00)
This option valuation model requires input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing model does not necessarily provide a reliable single
measure of fair value of its employee stock options.
In March 2004, the Company issued 3,000,000 (60,000 pre-split) options to former
employees of the Company. The fair value for these options was estimated to be
$4,540 and has been recorded as an expense in the accompanying statement of
operations. The fair value was estimated using a Black-Scholes option pricing
model with the following weighted-average assumptions: risk-free interest rate
of 5.5%; dividend yields of 0%; volatility factors of the expected market price
of the Company's common stock of 50%; and a weighted average expected life of
the option of 10 years, respectively.
The accompanying notes are an integral part of
these financial statements.
8
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2003, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 104, "Revenue Recognition." SAB 104 supersedes
SAB 101, "Revenue Recognition in Financial Statements." SAB 104's primary
purpose is to rescind accounting guidance contained in SAB 101 related to
multiple element revenue arrangements, superseded as a result of the issuance of
EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables."
Additionally, SAB 104 rescinds the SEC's Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers ("the FAQ") issued with SAB
101 that had been codified in SEC Topic 13, Revenue Recognition. Selected
portions of the FAQ have been incorporated into SAB 104. While the wording of
SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue
recognition principles of SAB 101 remain largely unchanged by the issuance of
SAB 104, which was effective upon issuance. The adoption of SAB 104 did not
impact the financial statements.
LOSS PER SHARE
The Company reports earnings (loss) per share in accordance with SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is computed by dividing
income (loss) available to common shareholders by the weighted average number of
common shares available. Diluted earnings (loss) per share is computed similar
to basic earnings (loss) per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. Diluted earnings (loss) per share has not been presented
since the effect of the assumed conversion of options and warrants to purchase
common shares would have an anti-dilutive effect. The only potential common
shares as of March 31, 2004 and 2003 were 3,000,000 (60,000 pre-split) and 0,
respectively, stock options which have been excluded from the computation of
diluted net loss per share because the effect would have been anti-dilutive.
NOTE 3 - NOTES PAYABLE, RELATED PARTIES
Notes payable, related parties consisted of $85,000 in notes payable to former
officers of the Company as follows: $15,000 originally due on October 18, 2003,
$25,000 is due on April 30, 2004; $30,000 is due on August 8, 2004; $7,500 is
due on November 13, 2004; and $7,500 is due on December 2, 2004. All the notes
bear interest at 10% per annum. On March 19, 2004, the Company paid $42,500 as
full settlement of these outstanding notes payable, related parties and accrued
interest. As a result of this transaction, the Company has recognized a gain on
extinguishments of debt of $49,309, which has been recorded directly to
stockholders' (deficit) since this settlement was with related parties.
NOTE 4 - NOTE PAYABLE
On March 5, 2004, the Company borrowed $650,000 from an unrelated third party
pursuant to a promissory note due and payable on July 5, 2004, which bears
interest at the rate of 8% per annum.
NOTE 5 - STOCKHOLDERS' (DEFICIT)
During the three months ended March 31, 2004, Mr. Earl W. Abbott, Carl A. Pescio
and Stanley B. Keith (the new management of the Company) collectively purchased
84,000 shares (4,200,000 post-split shares) of common stock from the Company for
$10,000. The payment for these shares was received in April 2004.
The accompanying notes are an integral part of
these financial statements.
9
NOTE 6 - DISCONTINUED OPERATIONS
On March 19, 2004, Earl T. Shannon, Steven W. Hudson, and Scott W. Bodenweber
agreed that 255,510,000 (5,110,200 pre-split) of their shares of the Company
will be redeemed by the Company in exchange for all of the Company's shares of
Salty's Warehouse, Inc. As a result of this transaction, the operations of
Salty's has been shown as a discontinued operation in the accompanying financial
statements.
Salty's revenues were $1,415 and $1,397 the period starting January 1, 2004 to
March 19, 2004, and for the three months ended March 31, 2003, respectively. The
results of operations of Salty's have been reported separately as discontinued
operations.
Actual net income (loss) of Salty's during the period from January 1, 2004
through March 19, 2004 and the three months ended March 31, 2003 was $871 and
($5,566), respectively. The gain on the disposition of Salty's was $1,418, which
has been recorded directly to stockholders' deficit since this was a transaction
among related parties.
The following is a summary of the net assets of Salty's at March 19, 2004:
March 19, 2004
------------------
Asset:
Cash $ 6,068
------------------
Total asset $ 6,068
------------------
Liabilities:
Accounts payable $ 1,371
Accrued expenses 1,005
------------------
Total liabilities $ 2,376
------------------
Net assets of discontinued operations $ 3,692
==================
The gain on the disposition of Salty's of $1,418 was calculated as the
difference in the value of the stock returned of $5,110 and the net assets of
Salty's of $3,692.
NOTE 7 - SUBSEQUENT EVENTS
On April 19, 2004, the Company authorized a 50:1 stock split. The accompanying
financial statements have been retroactively restated to present the effect of
this event.
On April 27, 2004, the Company borrowed $225,000 from an unrelated third party
pursuant to a promissory note that is due and payable on demand and bears
interest at the rate of 8% per annum.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The accompanying notes are an integral part of
these financial statements.
10
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
CRITICAL ACCOUNTING POLICY AND ESTIMATES.
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations section discusses our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to
revenue recognition, accrued expenses, financing operations, and contingencies
and litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The most significant accounting estimates
inherent in the preparation of our financial statements include estimates as to
the appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources, primarily allowance for doubtful accounts
receivables, accruals for other costs, and the classification of net operating
loss and tax credit carry forwards between current and long-term assets. These
accounting policies are described at relevant sections in this discussion and
analysis and in the notes to the financial statements included in our Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2003.
OVERVIEW
We were incorporated in Nevada on October 8, 2001 in order to serve as a holding
company for Salty's Warehouse, Inc. On March 19, 2004, pursuant to a Plan of
Reorganization and Acquisition, we acquired 255,510,000 (5,110,200 pre-split)
shares of our common stock from Earl T. Shannon and Steven W. Hudson in exchange
for 80 shares of common stock of Salty's Warehouse, Inc. As a result of this
transaction, we no longer own Salty's Warehouse, Inc. The 255,510,000 (5,110,200
pre-split) shares of common stock was subsequently cancelled.
The accompanying notes are an integral part of
these financial statements.
11
We are in the process of arranging to undertake a different business focus under
our new management, which is the identification, acquisition and resale of
properties exhibiting the potential for gold mining operations by others. As of
June 10, 2004, we entered into letters of intent to acquire interests in certain
such properties in Nevada from Pescio Exploration, which is owned by Carl
Pescio, one of our directors.
LIQUIDITY AND CAPITAL RESOURCES
On April 30, 2003, we borrowed a total of $25,000 from Earl T. Shannon and
Steven W. Hudson ($12,500 from each), pursuant to promissory notes requiring us
to repay the principal and interest accrued at the rate of 10% on April 30,
2004. On August 8, 2003, we borrowed a total of $30,000 from Earl T. Shannon and
Steven W. Hudson ($15,000 from each), pursuant to promissory notes requiring us
to repay the principal and interest accrued at the rate of 10% on August 8,
2004. On November 12, 2003, we borrowed $7,500 from Earl T. Shannon, one of our
officers and directors at the time, pursuant to a promissory note requiring us
to repay the principal and interest accrued at the rate of 10% on November 12,
2004. On December 1, 2003, we borrowed $7,500 from Steven W. Hudson, one of our
officers and directors at the time, pursuant to a promissory note requiring us
to repay the principal and interest accrued at the rate of 10% on December 1,
2004. All of these notes and accrued interest were settled on March 19, 2004 for
$42,500. The gain on the settlement of these notes and accrued interest of
$49,309 has been recorded directly to stockholders' deficit.
As of March 31, 2004 we had a net working capital deficit of $653,704 as
compared to $88,158 as of December 31, 2003. The net increase of the capital
deficit pertains to the borrowing of $650,000 from an unrelated third party ,in
March 2004, pursuant to a promissory note due July 5, 2004 that bears interest
at 8% per annum. On March 19, 2004, we made a payment of $42,500 to Earl T.
Shannon and Steven W. Hudson , and they agreed to forgive the remaining
aggregate sum of $42,500, plus accrued interest that was due to them. Also in
March 2004, we redeemed 45,890,000 (917,800 pre-split) of the shares owned by
our outgoing management in exchange for $570,000.
Net cash used for operating activities was $38,856 for the three months ended
March 31, 2004 compared to $3,744 for the three months ended March 31, 2003.
Since we have no current source of revenue, our only source of cash is from the
sale of debt or equity instruments.
Due to numerous economic and competitive risks, any or all of which may have a
material adverse impact upon our operations, there can be no assurance that we
will be able to successfully generate significant revenues or achieve a level of
profits which will permit us to stay in business. In March 2004, we had a change
of management under which we plan to undertake a different business focus, which
is the identification and acquisition of potential gold mining properties for
resale to others. However, due to the change in our business plan, we plan to
raise additional capital which we hope will be sufficient to fund all or our
general and administrative expenses for the next twelve months.
OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
As a result of the disposition of Salty's on March 19, 2004, we have no ongoing
operations.
As of June 10, 2004, we are in the process of arranging to undertake a different
business focus under our new management, which is the identification and
acquisition of properties exhibiting the potential for gold mining operations by
others. On March 5, 2004 we borrowed $650,000 from an unrelated third party due
on July 5, 2004 at an annual interest rate of 8%. On April 27, 2004, we borrowed
$225,000 from an unrelated third party due and payable on demand; this note also
accrues interest at an annual rate of 8%.
The accompanying notes are an integral part of
these financial statements.
12
We have cash of $113,871 as of June 10, 2004. We believe we do not have adequate
funds to satisfy our working capital requirements for the next twelve months.
Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
could fail as a result of a number of factors. We may need to raise additional
capital to expand our operations. In the event that we experience a shortfall in
our capital, we intend to pursue capital through public or private financing as
well as borrowings and other sources, such as our officers and directors. We
cannot guaranty that additional funding will be available on favorable terms, if
at all. If adequate funds are not available, then our ability to expand our
operations may be significantly hindered. If adequate funds are not available,
we believe that our officers and directors will contribute funds to pay for our
expenses to achieve our objectives over the next twelve months. Our belief that
our officers and directors will pay our expenses is based on the fact they own
approximately 70% of our outstanding common stock. We believe that our officers
and directors will continue to pay our expenses as long as they maintain their
ownership of our common stock. Therefore, we have not contemplated any plan of
liquidation in the event that we do not generate revenues.
We are not currently conducting any research and development activities. We do
not anticipate conducting such activities in the near future. In the event that
we expand our customer base, then we may need to hire additional employees or
independent contractors as well as purchase or lease additional equipment.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
ITEM 3. CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures at the end of the period
covered by this report. This evaluation was carried out under the supervision
and with the participation of our management, including our principal executive
officer and principal financial officer. Based on this evaluation, these
officers have concluded that the design and operation of our disclosure controls
and procedures are effective. There were no changes in our internal control over
financial reporting or in other factors that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
including principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
13
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES
During the three months ended March 31, 2004, we sold an aggregate of 4,200,000
(84,000 pre-split) unregistered shares of our securities to Mr. Earl W. Abbott,
Carl A. Pescio and Stanley B. Keith (the new management of the Company) for a
total of $10,000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None during the reporting period covered by this report. However, in April 2004,
our new directors were appointed to office, as described herein and on our
report on Form 8-K filed on April 14, 2004, and we effected a 50:1 forward stock
split, as reported on our report on Form 8-filed April 27, 2004. In May 2004,
our Board of Directors approved our name change to Tornado Gold International
Corp. which we anticipate becoming effective in July 2004. Also in May 2004, we
engaged a new auditor as reported on our Form 8-K filed on June 1, 2004.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
REGULATION EXHIBIT
S-B NUMBER
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
10.1 Plan of Reorganization and Acquisition, dated
May 10, 2002 (1)
10.2 Yahoo! Store Merchant Service Agreement (1)
10.3 Promissory Note for Steven W. Hudson, executed
October 18, 2002 (1)
10.4 Promissory Note for Earl T. Shannon, executed
October 18, 2002 (1)
10.5 Commission Agreement with International Yacht Collection,
dated May 11, 2000 (1)
10.6 Promissory Note for Steven W. Hudson, executed
October 18, 2002 (1)
10.7 Promissory Note for Earl T. Shannon, executed
October 18, 2002 (1)
31 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer and Chief Financial Officer of
the Company
32 Section 906 Certification by Chief Executive Officer and
Chief Financial Officer
14
(1) Incorporated by reference from our Registration Statement on Form SB-2,
filed on September 11, 2002, as amended (Registration No. 333-99443)
(b) Reports on Form 8-K
On March 19, 2004, we filed a Current Report on Form 8-K under Items 1
announcing that On March 19, 2004, Earl T. Shannon, Steven W. Hudson, and Scott
W. Bodenweber agreed that 255,510,000 (5,110,200 pre-split) of their shares of
our stock will be redeemed by us in exchange for all of our shares of Salty's
Warehouse, Inc. (the "Transfer"). Earl T. Shannon, Steven W. Hudson, and Scott
W. Bodenweber have agreed that 45,890,000 (917,800 pre-split) of their shares
our stock will be redeemed by us in exchange for $570,000 (the "Sale"). As a
condition to these transactions, Messrs. Shannon, Hudson, and Bodenweber have
resigned as our officers. Earl W. Abbott has been appointed our President, Chief
Financial Officer and Secretary. In addition, Mr. Abbott, Carl A. Pescio and
Stanley B. Keith have collectively purchased 84,000 shares (4,200,000 post-split
shares) of common stock from us for $10,000. Mr. Abbott, Mr. Pescio and Mr.
Keith replaced Messrs. Shannon, Hudson and Bodenweber on our Board of Directors
ten days after Schedule 14f-1 was mailed to our stockholders.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NUCOTEC, INC.
June 10, 2004 By: /s/ Earl W. Abbott
------------------------------------
Earl W. Abbott
President, Chief Financial Officer
and Secretary