SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________________TO
__________________________
Commission Fine Number 0 - 30164
TENSLEEP TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
COLORADO 33-0789960
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2201 N. LAMAR BLVD., SUITE 205, AUSTIN, TEXAS 78705
(Address of Principal Executive offices, Zip Code)
(512) 236-8140
(Issuer's Telephone Number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ] No [X]
The number of shares outstanding of issuer's only class of Common Stock.
$0.01 par value, was 6,695,016 on August 20, 1999.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Financial Statements for Tensleep Technologies, Inc.:
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Operations . . . . . . . . . . . . . . . . . . 4
Statements of Shareholders' Equity . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to the Financial Statements . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis or Plan of Operations
Overview . . . . . . . . . . . . . . . . . . . . . . . . . .16
Plan of Operation . . . . . . . . . . . . . . . . . . . . . .19
Part II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . .25
Item 2. Changes in Securities . . . . . . . . . . . . . . . .25
Item 3. Defaults Upon Senior Securities . . . . . . . . . . .25
Item 4. Submission of Matters to Vote of Security-Holders . .25
Item 5. Other Information . . . . . . . . . . . . . . . . . .25
Item 6. Exhibits and Reports on Form 8 - K . . . . . . . . . .25
PART I. FINANCIAL INFORMATION
<PAGE> 1
ITEM 1. FINANCIAL STATEMENTS
Introduction
The financial statements have been prepared by Tensleep Technologies,
Inc. (the "Company"), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read with the Company's financial statements for the year ended September 30,
1998. The financial information presented reflects all adjustments,
consisting only of normal recurring adjustments, which are, in the opinion of
management, normal recurring adjustments, which are, in the opinion of
management, necessary for a fair statement of the results from the periods
presented.
<PAGE> 2
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
Balance Sheet As Of
June 30, 1999 and September 30, 1998
(unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
<S> <C> <C>
Current Assets
Cash $ 525 $ 182
Investment in Pooled Account, (Note 7) 6,033 22,693
-------- ------------
Total Current Assets 6,558 23,075
Fixed assets:
Machines & Equipment 102,105 102,014
Software 172,171 172,371
Accumulated Depreciation (114,330) (45,732)
--------- ------------
Total Fixed Assets 160,146 228,653
Other Assets:
Credits for Engineering Services (Note 12) 77,850
Secured Note Receivable (Note 5) 105,000
Securities held for sale (Note 2) 398,000 198,000
------- -----------
Total Other Assets 580,850 198,000
------- -----------
Total Assets $747,554 $ 449,728
======== ===========
</TABLE>
<PAGE> 3
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Liabilities:
<S> <C> <C>
Loan Payable (Note 4) $ 14,442 $ 14,142
Accrued Consulting Fee Expenses 2,800 120,000
Convertible note payable 1,500,000
---------- ----------
Total Liabilities 17,242 1,634,142
Stockholders' Equity:
Preferred stock, no stated value,
10,000,000 shares authorized, no shares
issued and outstanding 0 0
Common stock, $0.01 stated value,
50,000,000 shares authorized, 6,695,016
and 6,103,016 issued and outstanding
as of June 30, 1999 and December 31,1998 66,950 61,030
Additional paid-in capital 3,084,466 535,186
Retained earnings (1,780,930)
Note Receivable, Related Party (Note 5) (565,200)
Net Income (Loss) For Period (74,974) (1,780,930)
----------- -----------
Total Stockholders Equity (Deficit) 730,312 (1,184,714)
----------- -----------
Total Liabilities & $ 747,554 $ 449,728
Stockholders' Equity =========== ===========
</TABLE>
<PAGE> 4
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
Statement of Operations
For the Three Months Ended June 30, 1999 and the
Three Months Ended June 30, 1998
(unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
<S> <C> <C>
Income
Equipment Rental $ 28,950 $ 0
Equipment Sales 0 0
-------- ---------
Net Income 28,950 0
Operating Expenses
Operating Expenses 57,781 26,033
-------- ---------
Net Operating Income (Loss) (28,831) (26,033)
Other Income (Expenses) 0 0
-------- ---------
Net Loss Before Income Taxes (28,831) (26,033)
Income Taxes 0 0
-------- --------
Net Loss After Taxes ($28,831) ($26,033)
========= =========
Earnings (Loss) Per Common Share (Note 14) (0.004) (0.004)
========== ==========
</TABLE>
<PAGE> 5
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
Statement of Operations
For the Nine Months Ended June 30, 1999 and
For the Nine Months Ended June 30, 1998
Cumulative From Inception to June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
June 30, June 30, Cumulative
1999 1998 from
Inception
<S> <C> <C> <C>
Income
Equipment Rental $ 86,850 $ 0 $ 92,200
Equipment Sales 12,000 0 14,150
---------- ---------- ------------
Net Income 98,850 0 106,350
Operating Expenses
Operating Expenses 176,546 (1,368,163) ( 1,964,975)
---------- ---------- -----------
Net Operating Income (Loss) (77,696) (1,368,163) ( 1,858,625)
Other Income (Expenses) 2,722 0 2,722
---------- ---------- -----------
Net Loss Before Income Taxes (74,974) (1,368,163) ( 1,855,903)
Income Taxes 0 0 0
---------- ----------- -----------
Net Loss After Taxes ($ 74,974) ($1,368,163) ($1,855,903)
=========== =========== ===========
Earnings (Loss) Per Common Share (Note 14) (0.01) (0.22) (0.29)
=========== =========== ===========
</TABLE>
<PAGE> 6
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
Statement of Stockholders' Equity
October 23, 1997 (Inception) to June 30, 1999
(unaudited)
<TABLE>
<CAPITION>
Additional
See Number of Common Paid-In Retained
Note Date Shares Consideration Stock Capital Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stock issued 5A 11/10/97 4,500,000 Non-cash $ 45,000 -0- -0- $ 45,000
Stock issued 5B 11/10/97 1,000,000 Non-cash 10,000 190,000 -0- 200,000
Stock issued 5C 12/23/97 500,000 Non-cash 5,000 245,000 -0- 250,000
Exercise 5D 4/1/98 400 Non-cash 4 156 -0- 160
Class A
Warrants
Exercise 5D 4/1/98 400 Non-cash 4 156 -0- 160
Class A
Warrants
Exercise 5D 5/27/98 2,000 Non-cash 20 780 -0- 800
Class A
Warrants
Exercise 5E 6/2/98 200 Cash 2 78 -0- 80
Class A
Warrants
Exercise 5D 6/17/98 16 Non-Cash -0- 16 -0- 16
Class A
Warrants
Exercise 5F 6/23/98 100,000 Non-Cash 1,000 99,000 -0- 100,000
Class A
Warrants
Net(Deficit
accumulated
during the
development
stage) (1,780,930) (1,780,930)
Balance, 6,103,016 $61,030 $ 535,186 $(1,780,930) $(1,184,714)
September 30,1998
Stock issued 5G 12/15/98 35,000 Cash/Note 350 174,650 -0- 175,000
Stock issued 5H 12/15/98 8,000 Non-Cash 80 39,920 -0- 40,000
Stock issued 5I 12/15/98 300,000 Non-Cash 3,000 1,497,000 -0- 1,500,000
Stock issued 5H 12/15/98 4,000 Non-Cash 40 19,960 -0- 20,000
Stock issued 5H 12/15/98 4,000 Non-Cash 40 19,960 -0- 20,000
Stock issued 5H 12/15/98 4,000 Non-Cash 40 19,960 -0- 20,000
Stock issued 5H 12/15/98 4,000 Non-Cash 40 19,960 -0- 20,000
Stock issued 5J 12/15/98 4,000 Non-Cash 40 19,960 -0- 20,000
Stock issued 5K 12/15/98 137,000 Non-Cash 1,370 683,630 -0- 685,000
Exercise 5K 12/15/98 88,000 Non-Cash 880 34,320 -0- 35,200
Class A
Warrants
Exercise
Class B
Warrants 5L 5/10/99 4,000 Non-Cash 40 19,960 -0- 20,000
Net Loss -0- -0- -0- (74,574) (74,574)
(Deficit
accumulated
from10/1/98
to 6/30/99)
Balance, 6,695,016 $66,950 $3,084,466 $(1,855,504) $ 1,295,912
June 30, 1999
</TABLE>
<PAGE> 7
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
Statement of Cash Flows
For the Nine Months
October 1, 1998 to June 30, 1999
(Unaudited)
Cash flows from operating activities:
Net income ($ 74,974)
Adjustments to reconcile net loss to net cash used:
Depreciation and amortization 68,598
Expenses incurred in exchange for common stock 40,000
Non cash expense for accrued consulting fees 2,800
Accrued Equipment Rental ( 77,850)
--------------
Net cash used by operating Activities ( 41,426)
Cash flows from investing activities:
Purchase of property and equipment ( 91)
--------------
Net cash provided by (used in) investing activities ( 91)
Cash flows from financing activities:
Proceeds from Pooled Investment Account 16,660
Net Proceeds from Sale of Securities 25,000
-------------
Net cash provided by (used in) financing activities 41,660
-------------
Net increase (decrease) in cash and cash equivalents 143
Cash and cash equivalents, beginning of period 382
-------------
Cash and cash equivalents, end of period $ 525
=============
<PAGE> 8
TENSLEEP TECHNOLOGIES, INC.
(Formerly Tensleep Design, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
This interim financial statement has been prepared by the management of
the Company and it is of the opinion that the statements include all
adjustments that are necessary in order to make them not misleading.
Organization
Tensleep Technologies, Inc. (the "Company"), a Colorado corporation,
formerly Tensleep Design, Inc., is a development stage company. It is an
Integrated Internet company. The Company has both a Consumer and business to
business focus. Its Consumer focus is directed toward a hub for Financial
Services and E-Consumer stores. Its business focus is directed toward the
business of designing, developing, and marketing Internet Appliances
and other integrated circuits with a specific focus on digital signal
processors. The Company is located in Austin, Texas. It is expected that
the Company's primary customers will be original equipment manufacturers
located in California and Japan for inclusion into their products.
Development Stage Company
The Company is currently in its development stage, and has not generated
any income from operations. The Company was incorporated in October 1997, and
is currently obtaining funding to proceed with development and marketing
its services, products and technologies. The Company's success is dependent
on obtaining additional funding and the ultimate successful sales of its
products. There is no assurance that funding will be obtained or that the
Company can ever operate profitably. Success in also dependent on many other
factors, such as management and distribution. Some of these factors may be
beyond the Company's control.
Cash and Cash Equivalents
For the purposes of financial statement reporting, the Company considers
all highly liquid investments with maturity of 3 months or less to be
considered cash equivalents.
Concentration of Credit Risk
The Company maintains its operating cash account at a commercial bank in
Orange County, California. The account at the bank is guaranteed by the
Federal Deposit Insurance Corporation (FDIC) up to $100,000 per bank.
Property and Equipment, Depreciation and Amortization
Property and equipment obtained in exchange for stock is carried at the
fair market value of the equipment on the date of exchange, if purchased it
is carried at cost as of the date of purchase.
Depreciation and amortization is computed using the straight-line method
over the assets' expected useful lives. The useful lives of property and
equipment for purposes of computing depreciation and amortization are:
Machinery & Equipment 3 years
Software 3 years
Repairs and maintenance are charged to operations when incurred. Cost of
betterments which materially extend the useful lives of the asset are
capitalized. Gains and losses from sales or disposition of assets are
included in the statement of operation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Fair Value of Financial Instruments
For most of the Company's financial instruments, the carrying value is
considered to approximate the fair value. Cash, most accounts receivable and
accounts payable are settled so close to the balance sheet date that fair
value does not differ significantly from the stated amounts.
Revenues
The revenue included in these statements is from an equipment rental
agreement with Silicon Resources, Inc. (See Note 12) The company recognizes
revenues on rentals and sales on an accrual basis at the time of invoice upon
delivery of the Company's products or as right to income is incurred.
Income Taxes
The Company has not generated any taxable income and therefore a
provision for income taxes is not necessary. Similarly, a provision for
deferred taxes is not necessary. The Company has available at September
30, 1998, unused operating loss carryforward that may be applied against
future taxable income and that expire as follows:
Amount of Unused Operating Expiration During Year
Loss Carryforward Ended September 30:
Federal State - Colorado Federal State
---------- ---------- ------- ------
$1,780,930 $1,780,930 2018 2013
Adjustments
In the opinion of management the data reflects all necessary adjustments
for a fair statement of results for this period. All adjustments are of a
normal and recurring nature.
Advertising
Advertising costs, except for costs associated with direct-response
advertising, are charged to operations when incurred. The costs of direct-
response advertising, if any, are capitalized and amortized over the period
during which future benefits are expected to be received.
NOTE 1: INVESTMENT IN POOLED EQUITY ACCOUNT
The Company owns a $6,033 interest in a personal brokerage account held
by a shareholder. Originally, the Company received a $45,000 interest in the
account which was obtained in exchange for 4.5 million shares of common stock,
as described in Note 3. The Company has received $38,967 from the
shareholder.
NOTE 2: INVESTMENT IN CORPORATE FINANCE COMPANY
In 1997 the Company acquired 80,000 shares of Corporate Finance Company
("CFC") common stock. CFC is an affiliate company. Shares acquired represent
approximately a 4.4% ownership in CFC. A major shareholder of the Company is
also a major shareholder of CFC. Based on the 4.4% ownership interest in CFC,
the Company has accounted for the investment under the cost method. The
shares were obtained in the cash-free exchange described in Note 3 and were
valued at $2.50 per share, which represents the sale price of CFC shares in
transactions during the six to twelve months before the date of the
exchange. The valuation of the shares obtained was an agreed-upon value as of
the date of the exchange and will be carried on the books of the Company at
cost. In 1998 the Company sold 800 shares of CFC common stock to unrelated
parties. The proceeds from the sale were given directly to CFC to reduce the
Company's loan payable to CFC (See note 4). In December 1998 the Company
received another 80,000 shares of CFC common stock in payment of $200,000,
$2.50 per share, which was applied against the note receivable from a related
party. This is also accounted for under the cost method.
NOTE 3: NON CASH TRANSACTIONS
As explained in Note 1, 4.5 million shares of common stock were sold for
$45,000. In lieu of cash, a $45,000 shared interest in a personally held
brokerage account was granted. The account has been funded by a shareholder
with cash payments totaling $77,000.
As explained in Note 2, the investment of 80,000 shares of Corporate
Finance Company was obtained in exchange for 1 million investment units. Each
unit is composed of one share of common stock and one warrant to purchase one
share of common stock at a specified price (see note 7).
As explained in Note 5C, the Company obtained its licensing agreement in
exchange for 500,000 shares of common stock. The common stock was valued at
the agreed-upon price of $250,000, or 50 cents per share.
As explained in Note 5F and Note 11, the Company acquired from LS2
equipment and software in exchange for 100,000 shares of common stock.
NOTE 4: LOAN PAYABLE TO CORPORATE FINANCE COMPANY
CFC has loaned the Company certain funds to cover operating expenses.
The balance due on the loan from CFC as of September 30, 1998 in the amount
of $14,442 is covered by a non-interest bearing demand note. In January
1999 CFC assigned the note to R Tucker & Associates.
NOTE 5: CAPITAL FUNDING
The Company had authorized private offerings pursuant to
Regulation S, Section 3 (b) and/or 4(2) of the Securities Act of 1933, as
amended, and/or Rule 504 of Regulation D promulgated thereunder. These
offerings were composed of common stock and/or warrants. Such offerings
resulted in dilution to Company stockholders before each offering.
Additionally, dilution could also result from the exercising of warrants,
incentive stock options, and non-incentive stock options. Stock option
plans are described in Note 6. The following summarizes the various stock
and warrant transactions as reported in the accompanying Statement of
Changes in Stockholders' equity (deficit):
Note A - upon value as of the date of exchange.
Note C - upon price of $250,000, or 50 cents per share. The original
agreement made in 1997 required a royalty be paid to the
licensor based upon sales. In 1998 the Company acquired from
the licensor machinery and equipment, software, technology,
goodwill and cancellation of royalties (See note 10).
Note D 2840 warrants were exercised. The exercise price of the
warrants was $.40 per share and the cash from the exercise of
these warrants was received by CFC and was used to reduce the
Company's loan payable to CFC. The warrants were exercised
by unrelated third parties.
Note E 200 warrants were exercised. The exercise price of the warrants
was $.40 per share. The cash from these warrants was deposited
into the Company's checking account and were exercised by
unrelated third parties.
Note F In exchange for 100,000 warrants the Company acquired testing
equipment, design software, hardware, and intellectual property
from LS Squared, Inc. a California corporation, valued at
$100,000 and appearing on LS2 books and records at approximately
$120,000. The common stock was valued at $100,000, the
agreed-upon value of the property received from LS Squared, Inc.
Note G - The Company received $25,000 in cash and promissory notes in the
amount of $155,000. One of the promissory notes received was
for $50,000 and R Tucker & Associates was the payee
(see note K).
Note H - 24,000 shares of common stock were issued for $120,000 in
exchange for accrued consulting fees, which was expensed as
operating expense (see note 9)
Note I - 300,000 shares of common stock were issued for $1,500,000 to pay
off the convertible note, which was issued in exchange for fixed
assets of $173,948 and Research & Development expenses of
$1,327,052 (see note 13).
Note J - 4000 shares of common stock were issued for $20,000 in exchange
for advertising in 1999.
Note K - 137,000 shares of common stock were issued for $685,000 and
88,000 warrants exercised in exchange for a $765,200
promissory note, secured by 200,000 shares of common stock.
The $765,200 note includes $50,000 resulting from the
cancellation of a $50,000 note previously issued by R Tucker
& Associates to an unrelated party in an unrelated
transaction (see note G).
Note L - 4,000 shares of common stock were issued by the exercise of
4,000 Class B Warrants at $4.50 per share in exchange for
$20,000 in advertising and promotional services.
NOTE 6: STOCK OPTION PLANS
The Company has a stock option plan pursuant to Section 422A of the
Internal Revenue Code. The plan has yet to be defined other than the
reserving of 500,000 shares of common stock for such a plan.
The Company has also adopted a non-incentive stock option plan. This
plan grants options that can be exercised at a specified price. The Company
has resolved that 800,000 shares of common stock be reserved for this plan.
As of March 31, 1999, the options to purchase 200,000 shares at 50 cents per
share (same as the then current market price) had been granted to the
majority and controlling shareholders and an independent consultant.
These options expire December 1, 2002.
NOTE 7: WARRANTS
As part of its funding activities, the Company has issued warrants for
the purchase of common stock. Additional warrants may be issued in the
future during additional offerings. As of June 30, 1998, the following
warrants were outstanding:
Class A - One Warrant can purchase one common share
Ronald S. Tucker - 200,000 warrants at 40 cents per share
R Tucker & Associates, Inc. - 108,960 warrants at 40 cents per share
R Tucker & Associates, Inc. - 500,000 warrants at 80 cents per share
The warrants expiration dated has been extended from July 31, 1999,
to March 31, 2000.
Class B - one warrant can purchase one common share
George N. Haddad - 35,000 warrants at $4.50 per share
R Tucker & Associates, Inc. - 461,000 warrants at $4.50 per share
The warrants are to expire on May 31, 2002.
NOTE 8: RISKS AND UNCERTAINTIES
As discussed in "Organization and Summary of Significant Accounting
Policies", the Company has been in the development stage since its
inception on October 23, 1997. Realization of a major portion of the
assets is dependent upon the Company's ability to meet its future
financing requirements, and the success of capital funding and future
operations. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
The investments in the pooled equity account are held
available-for-sale. As of June 25, 1999, the account consists of 500
shares of Sabine Royalty Trust, listed on the New York Exchange,
symbol "SBR", with a value of $14 3/16 per share, bid price, 7000 shares
Karzco Realty Trust, listed on the New York Exchange, symbol "KRT", with
a value of $13 1/4 per share, short 400 shares of Elantec Semiconductor,
Inc., listed on the NASDAQ national market, symbol "ELNT", with a value
of $12 11/32 per share, short and short 1000 Gasonics Intl Corp.,
listed on NASDAQ national market, symbol "GSNX", with a value of $13 5/8
per share, and short Aeroflex, Inc., listed on the New York Exchange,
symbol "ARX", with a value of $17 1/4 per share. The aggregate value of the
account is $64,769 as of June 25, 1999.
The investment in the pooled equity account is subject to the hazards of
trading equities on the open market. The account will experience growth and
loss in varying amounts depending on the performance of the securities traded.
All of the Company's $6,033 interest in the account is at risk and subject to
loss. The sum of $6,033 will be paid to the Company as required to pay its
costs and expenses as incurred until revenues are sufficient to pay such costs
and expenses. Any unpaid balance, at the time revenues are sufficient to pay
monthly costs and expenses, will be repaid pursuant to a plan to be made at
that time.
The Company has commenced a plan of strict limits on and control over
costs, expenses, compensation and capital expenditures. The Company believes
it will receive sufficient capital from the exercise of warrants and the
repayment of Notes from related and unrelated parties and the sale of an
affiliates common stock, held by the Company, through a private placement.
NOTE 9: RELATED PARTY TRANSACTIONS
A director of the Company is also a director and major shareholder of
R Tucker & Associates and Corporate Finance Company. Transactions between
the Company and these entities above have been described in Notes 2, 3
and 4.
In November 1997 the Company issued 4,500,000 shares of its common stock
at a stated value of $.01 per share to a related party in exchange for an
assignment of a right to $45,000 in a pooled investment account. (See Note 1,
3, 5, and 8)
In November 1997 the Company issued 1,000,000 investment units to a
related party in exchange for 80,000 shares of its common stock.
(See Note 2)
In December 1997 the Company issued 500,000 shares of its common stock to
an unrelated party, which later became a related party, in exchange for a
license agreement valued at $250,000. (See Notes 3 and 5C)
In December 1998 the Company issued 300,000 of its common stock to a
related party in cancellation of an indebtedness incurred in the purchase of
technology and other assets pursuant to a purchase agreement entered into by
the Company in January 1998. (See Note 10)
In June 1998 the Company issued 100,000 shares of its common stock to an
unrelated party in exchange for technology and equipment/software valued at
$100,000. (See Note 11)
The accrued consulting fee is payable to Dennis Kaliher and Ronald S.
Tucker, the president and vice president of the Company, respectively, for
consulting services rendered. This liability was canceled December 15, 1998
in exchange for 24,000 shares of common stock (See note 15).
In conjunction with the purchase of LS Squared, Inc. equipment by the
Company, Ronald S. Tucker, a major shareholder of the Company, also
purchased LS Squared, Inc. individually (See note 11).
NOTE 10: PURCHASE OF TECHNOLOGY
On January 30, 1998 the Company acquired from the Licensor, pursuant to
an agreement dated January 23, 1998, the following items valued as follows:
Machines & Equipment $ 40,577.00
Software 132,371.00
Technology
A/dsc321 Digital Signal Controller
A/dsc421 Dual Processor Controller
A/dsc 521 Digital Signal Controller
V.29/V.17 Fax Modem software
V.32/V.32bis Data Modem software
Z80-compatible 8-bit Microcontroller
Products
T2901 Fax Modem
T1701 Fax Modem
T3217 Data/Fax Modem
Total Technology & Products 1,200,000.00
Goodwill and cancellation of Royalties 127,052.00
------------
Total $ 1,500,000.00
The Licensor received a non-interest bearing note from the Company
for specified items in the amount of $1,500,000.00. The amount representing
Technology, Products, Goodwill and cancellation of Royalties was charged to
research and development costs (See note 13) in the development stage period
as required by generally accepted accounting principles. The convertible
note payable was reported under current liabilities in the accompanying
balance sheet since the Licensor has agreed to accept the Company's
securities in cancellation of the indebtedness. The Licensor had agreed to
accept 300,000 tradable Units at $5 per unit, if qualified by July 31, 1998
or 500,000 restricted shares of common stock if not qualified by July 31,
1998. The date for qualifying the tradable Units was extended until
December 31, 1998. This note was canceled December 15, 1998 in exchange for
300,000 shares of common stock (See note 5).
NOTE 11: PURCHASE OF EQUIPMENT AND DESIGN SOFTWARE
On June 19, 1998, the Company acquired testing equipment, design
software, hardware, and intellectual property from LS Squared, Inc.,
(LS2) a California corporation, valued at $100,000 and appearing on LS2
books and records with a book value of an approximate amount. LS2 was an
independent third party and a non-affiliate of the Company and none of its
officers and directors were or are affiliated with the Company at the time
of the equipment acquisition. The terms of the agreement provided that the
Company receive the assets in exchange for 100,000 shares of the Company's
common stock through the exercise of 100,000 Class A Warrants. In July
1998 Ronald S. Tucker, a major shareholder of the Company purchased LS2 as
an individual. At the time of purchase, LS2 was a California Corporation
with no assets or liabilities.
NOTE 12: LEASE INCOME
The Company entered into an agreement to lease equipment to an unrelated
third party, Silicon Resources, Inc., dated August 21, 1998 and received a
partial payment in the amount of $5,350. The original agreement had the
following terms:
18 months
$8500 per month if all the workstations are installed
Silcon Resources, Inc. was to bill the Company for office space rental at
$1.50 square foot per month and provide engineering services at a rate of
$104.05 per hour or $18,000 per month as requested by the Company as a credit
for the lease of the equipment.
The above lease agreement was amended on October 22, 1998 to provide for
the following terms:
Silicon Resources, Inc., rented equipment from the Company for a rental
rate of $9,650 per month for five work stations payable in the form of a
credit. Silicon Resources would provide the Company with office space
for $1,000 per month and the Company will credit Silicon Resources for
$1,000 of the equipment the Company with office space for a $1,000 credit
against the equipment rental payment. The remainder of the credit will
be used to employ Silicon Resources, Inc. to provide engineering
personnel on the Company's projects at a rate of $104 per hour. Any
unused credit in a month would be accrued and could be used in
subsequent months.
NOTE 13: RESEARCH AND DEVELOPMENT COSTS
Research and Development costs are charged to operations when incurred.
The components of research and development costs consist of the following:
Technology license $
250,000
Purchase of technology, products,
goodwill, and cancellation of royalties 1,327,052
------------
$ 1,577,052
============
NOTE 14: EARNINGS PER SHARE
As of June 30, 1999 The Company had 6,695,016 common shares outstanding
and no preferred shares outstanding. The earnings per share amount is based
on the weighted average number of shares outstanding. The number of
shares used in the computation for June 30, 1998 was 6,495,905 shares.
<PAGE> 16
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
OVERVIEW
The Company was founded as fab-less semiconductor company, and was
recently reorganized and is being restructured into an Integrated Internet
company.
The Company is being restructured into two segments the Technology and
Internet Divisions. The Technology Division is divided into two
subdivisions. The Semi-Conductor Subdivision designs, develops, markets, and
sells integrated circuits, e.g., fax modems and controllers, to original
equipment manufacturers. The Services/Solutions Subdivision will design,
develop, market and sell communication products to original equipment
manufacturers through a network of independent sales representatives. The
Internet Division is also to be divided into two subdivisions. The Financial
Services Subdivision will be a financial services provider on the Internet as
a hub. The E-Commerce Subdivision will become an Internet service provider,
content provider, communications product store, and Industry store. This
subsidiary will be formed to distribute consumer communications and internet
products designed and manufactured by the Company or other manufacturers.
These consumers' communications products will be distributed to consumers via
the Internet and retail outlets through a network of independent sales
representatives.
Initial Objectives
The Company acquired developed technology and products from the
Licensor, but has no fabrication facilities to fabricate its products. In
spite of having developed PC modem technology and products, the Company's PC
modem does not meet today's 56k transmission speed standard for multimedia
use. The hardware is sufficient but the software is not. The facsimile modem
technology and products have a lower transmission speed standard than do the
PC modems. The facsimile modem could be marketed and sold but the market has
matured. The Company is without a fabricator for its own designed fax-modem
chip.
In the beginning of its first year of business the management assessed
and evaluated the strengths and weaknesses of its technology, products and
management to establish a set of objectives. Based on its evaluations,
management established objectives as follows:
1. Identify niche markets for its Technology and sale of its
products.
2. Establish a capital structure to raise operating capital.
3. Identify other potential sources of revenue.
The first objective has been met by identifying three markets upon which
management believes it can build the Company's business. They are the thin
internet server, internet communication, and facsimile modem markets. A "thin
internet server" is a server that can process only a few requests from
customers at a time, as opposed to regular servers that many have to
accommodate thousands of simultaneous requests.
The second objective has been met by initiating and concluding its
Regulation D, Rule 504 private offering, its Regulation A Offering under the
Securities Act of 1933, as amended, and filing Form 10 pursuant to the
Securities Exchange Act of 1934, as amended. On becoming effective on
registering as a Reporting Company, the Company intends to apply for listing
on the OTC Bulletin Board.
The third objective has been met by identifying four additional
potential sources of revenues. These are the licensing of intellectual
property, chip or integrated circuit design services, and web-store selling
consumer communications products.
The management, in late 1998, recognized the need to reorganize the
organizational structure of the Company. They determined that the new
organizational structure should be according to the markets in which the
Company would be engaged. (See Item 1. Description of Business - General)
New Objectives
The management has established its objectives for the next twelve months
as follows:
1. To initialize and sustain revenues from the Company's Technology
Division, through the thin internet server market, fax-modem market,
design services, and licensing of intellectual property.
2. To establish the Company's Financial Service Provider web-site.
3. To establish the Company's E-Commerce web-sites, and commence
business on those sites.
Implementation of Plan
The implementation of the Company's general plan, for the next twelve
months, requires additional personnel for the development of the CyberServer
and upgrading of the Company's developed products. The Company currently has
limited employees and financial resources. The Company will seek to engage
one or more independent third party organizations to provide the quality and
number of personnel and services required for the development of the
CyberServer and to upgrade its other developed products. The development and
upgrading services provided by these organizations will be supervised and
directed by Mr. Kaliher. In addition, the Company will also seek strategic
relationships with independent third party organizations to participate in the
development and upgrading services. The Company, with limited financial
resources, is seeking third party service providers willing to invest in the
Company. The investment in services would be exchanged for shares of the
Company's common stock and/or other non-cash consideration. Other non cash
consideration could include licenses to use or sell the Company's intellectual
property, or use its designing software and computers. Any shares issued in
exchange for services will be pursuant to Section 4(2) of the Securities Act
of 1933, as amended, and will be subject to Rule 144.
The Company is currently negotiating with several independent third
parties to provide all or part of its required development and upgrading
services, but no agreement has been reached.
The Company plans to obtain funds, to implement its operational plan,
through the exercise of the Class A and Class B Warrants and the payment of
all or part of two notes totaling $670,200.
RISKS
The factors, which follow, make the Company's Plan of Operation for the
next twelve months risky.
Access to Wafer Production Technology
The Company, to produce and sell its developed products, is dependent
upon developing a relationship with a semiconductor foundry or fabricator. At
this time, the Company has no source of production for its own developed but
un marketed products. The Samsung fax modem/controller chips, currently sold
by the Company are produced by Samsung, are an exception. To produce its own
developed products, the Company will require significant funds to initialize
production once a relationship with a fabricator is established. There is no
guaranty, the Company can obtain sufficient funds, or even develop a
relationship with a fabricator.
Dependence upon new product and production development
The communications and Internet markets are characterized by rapid
technological change, evolving industry standards, changes in customer needs
and frequent new product introductions, and are therefore highly dependent
upon timely product and production innovation. In particular, data
communication products are subject to continuous changes in the fabrication
process. Each change in technology and the fabrication process requires a
concomitant change in design and developed of the Company's products. The
Company may not have the resources to make those changes.
The Company's future success is dependent in part upon its ability to
anticipate changes in technology and industry standards and to develop
successfully and introduce new and enhanced products on a timely basis. The
Company will be required to replace declining revenues from older products
with new products. The Company's developed products are modular in design,
which may reduce the cost and time to market.
There is no assurance the Company, even if it has sufficient funds, will
be able to introduce new products on a timely basis. There is no assurance
the Company can produce the new or old products, nor achieve any significant
degree of market acceptance for them, nor that it can sustain acceptance for
any significant period. Failure to produce or achieve or sustain market
acceptance of its products would affect the Company's operating results.
Competition
The markets in which the Company operates are characterized by
competition among a small number of large companies that enjoy the major share
of the market. The large companies are well financed with a long history.
They have substantial advantages in terms of breadth of technology, sales,
marketing and support capability and resources. Most, if not all, have their
own fabrication facilities that cost hundreds of millions of dollars, if not
billions. The Company has limited capital and no fabrication facilities. The
Company is like a flea among giants.
Ability to manage a rapidly changing business
The Company is anticipating significant growth, which will place a
substantial strain on its operational, administrative and financial resources.
The Company's officers have experience in managing companies as large and as
rapidly changing as is anticipated. However, there is no assurance that the
experience will prove beneficial to the new situation posed by the Company's
challenges. The Company's ability to manage any future changes effectively
will require it to have sufficient funds to attract, train, motivate and
manage its employees effectively.
Dependence on key personnel
The value of the Company lies in the experience of Mr. Kaliher and its
developed technology and products. Mr. Kaliher in the early 1980's was the
general manager of Rockwell International's modem division (This division has
been spun off and its new name is "Coexant").
The Company recognizes that some people believe that the high technology
industry, in which the Company hopes to compete, is one where significant
developments are in new technology and "expertise" is a quantity that dates
and loses value quickly.
The Company's success depends greatly on the continued contributions of
Mr. Kaliher. The loss of Mr. Kaliher's services could have a material
adverse impact on the Company's operating results. The Company has no
employment agreement with Mr. Kaliher and no keyman life insurance on his
life.
The Company believes its future success will depend in large part upon
its ability to attract and retain additional highly skilled management,
technical, marketing, research and development, product development and
operations personnel. Competition for such personnel is intense, and no
assurance can be given that the Company will be successful in attracting and
retaining such personnel.
Lack of Revenues
The Company as of July 15, 1999 has no revenues. No assurance can be
given that the Company can earn revenues or obtain sufficient funds to sustain
its planned operations beyond the current minimal level for the next twelve
months.
Lack of Funds
The Company to market effectively its products will require significant
cash to cover specific marketing costs, costs of prototypes and technical and
specific design services to be done for potential customers. No assurance can
be given that the Company can obtain sufficient funds to enable it to conduct
an adequate marketing and sales program.
PLAN OF OPERATION
The Company's business and operational plan, based on the described
objectives, for the next twelve months are directed toward developing revenues
and a foundation for growth. Management, based on its objectives, has
developed the following operational plan.
Operations
The Company is currently operating and will continue to operate with its
available funds. The current burn rate for the company is approximately
$3,000 to $5,000 per month. These funds have been and will continue to be
supplied by R Tucker & Associates or Mr. Tucker. The funds will come from the
Pooled Investment Account owned by Mr. Tucker and/or the Company's note
receivable owed by R Tucker & Associates, as described below. The Pooled
Investment Account has an accumulated value of more than $50,000 as of July
15, 1999 and comprises listed securities on the New York Stock Exchange and
NASDAQ National Market. The Company is now and will continue to limit its
expenses and not incur debt beyond the $3,000 to $5,000 per month limit,
unless additional funds are available. The Company's expenses are limited to
phone bills, limited travel, office supplies, accounting services, repairs and
maintenance, outside services and other small but ordinary business expenses.
The Company believes that it can continue operating over the next twelve
months. It can do so by continuing the current level of expenditure and not
increasing the expenditure of cash without having the cash on hand.
Technology Division
The Company during the next twelve months, at this level of expenditure,
will be able to (1) continue marketing the facsimile modem and facsimile
controller integrated circuits through its network of independent sales
representatives, as described herein; (2) seek third parties to perform
product design and development services in exchange for non-cash
consideration; (3) seek to acquire other technology or business with unrelated
parties with non-cash consideration; (4) seek additional products manufactured
by others that can be sold by the Company's sales network; and (5) seek
private Placements with accredited investors through the assignment and
exercise of the Company's warrants. Non-cash consideration includes, but is
not limited to, an exchange of the Company's common stock.
The Company will not be able to start or complete the scheduled
development of the CyberServer or CyberCommunicator or achieve any of the
other objectives if it cannot obtain sufficient funds or make use of non-cash
consideration.
If the Company does not receive sufficient funds and is not able to
obtain design and development services for non-cash consideration early
enough, the Company will not reach its objectives within the scheduled time,
if at all.
Internet Division
The Company during the next twelve months, at this level of expenditure,
will be able to (1) setup its financial services and E-Commerce web-sites, (2)
setup and establish the organizational structure for being an internet service
provider, (3) identify and negotiate for third party content provider, (4)
seek third parties to perform design and development services in exchange for
non-cash consideration, (5) seek to acquire or enter strategic relationships
with service providers with non-cash consideration, and (6) seek private
placements with accredited investors through the assignment and exercise of
the Company's warrants. Non-cash consideration includes, but is not limited
to, an exchange of the Company's common stock.
If the Company does not receive sufficient funds and is not able to
obtain design and development services for non-cash consideration , the
Company may not reach its objectives within the next twelve months.
Capital Structure
Management believes that its present capital structure is sufficient to
provide the funds necessary to carry out the operational plan. Raising funds
from new offerings will not be necessary for the Company, private or public.
The present capital structure consists of and allows for funding through the
following:
1. 500,000 Class B Warrants exercisable at $4.50 per warrant for a
total of $2,250,000. These Warrants were issued pursuant to
Regulation A and the Company does not plan to register the shares
underlying the Warrants.
2. 808,960 Class A Warrants exercisable at $.40 and $.80 per warrant
for a total of $523,589. These Warrants were issued pursuant to
Regulation D, Rule 504 and the Company does not plan to register
the shares underlying the Warrants.
3. Notes Receivable totaling $665,400 are owed by R Tucker &
Associates, Inc., for $560,400, and an unrelated third party for
$105,000. Both notes are due on December 31, 2000 and are secured
by 200,000 shares of the Company's common stock. The Company
believes that it will receive payment on or before that date, but
it does not know if it will be in time to meet the Company's
schedule for expenditures.
Financing
The operational plan allows for the Company to receive funds during the
next twelve months from the exercise of the above Class A and Class B Warrants
and the payment of all or part of two notes totaling $665,400. The expiration
date of the Class A Warrants is March 31, 2000 and the Class B Warrant is May
31, 20002. Most if not all these warrants are held by R Tucker & Associates,
an affiliate, who is also is indebted to the Company for $560,400, which is
one of the two previously mentioned promissory notes. The Company believes,
that to the extent possible R Tucker & Associates will exercise the warrants
and pay down its note sufficient for the Company to continue its operations
during the next twelve months.
The Company also plans to finance the development services, with one or
more independent third parties, through an exchange of services for shares of
the Company's common stock. These transactions, if any, will be pursuant to
Section 4(2) of the Act and the shares will be restricted per Rule 144. The
services will be for the development of the CyberServer and the upgrade of the
Company's developed products and technology. The Company may also finance
such services with other non cash consideration, such as services, rental of
design software and computers, licenses to use and market the Company's
intellectual property.
Research and Development
The Company within the next twelve months plans to complete the initial
concept design of the CyberServer and will continue with developing the logic
design, board design and software design. Initial system design of the
CyberCommunicator is in progress but logic design, board design, packaging
design and software design will not start until completion of the CyberServer
that is a module within the CyberCommunicator. The Company is formulating
plans to market and sell its CyberServer products.
Purchase and Sale of Equipment
The Company does not expect to purchase or sale equipment during the
next 12 months.
Availability of Products
The Company is now marketing the facsimile modem and facsimile
controller integrated circuits. The Cyberserver is not expected to be ready
for the market until near the end of the next 12 months. This is dependent on
the Company's being able to finance its product development. The
CyberCommunicator will not be available until after the next 12 months. The
ability to market the Company's synthesized intellectual property is scheduled
for February 2000.
The Company is seeking products manufactured by others that it can
market through its established independent sales network.
Employees
The Company expects to add employees or independent third parties to
perform design and development and other services for the Company during the
next 12 months. The number of employees will depend on (1) the funds on hand
and (2) the sales of the facsimile modems and facsimile controller integrated
circuits. The number of consultants' engaged depends on the above factors and
the Company's ability to negotiate the exchange of non-cash consideration for
their services. The number of employees and/or consultants hired within the
next 12 months could range from three to four.
The operational plan calls for the Company to accomplish a series of
events or steps, but is not limited thereto, as follows, but not necessarily
in order of value:
1. Completing the development of the hardware and software of a
CyberServer.
2. Selling the fax-modem chip acquired from Samsung Electronics.
3. Establishing a relationship with Samsung Electronics for the
fabrication of the Cyberserver components and medium-speed modems.
4. Establishing a chip or integrated circuit design center.
5. Synthesizing and licensing of the Company's intellectual property.
6. Establishing a web-store selling consumer communication products.
7. Completing the initial development of the hardware and software of
the CyberCommunicator.
INTERNET DEVICES
CyberServers
The operational plan provides for the Company to develop and sell a
series of products in the thin internet server market. These products will be
developed in three stages. The Company plans to complete development and
commence selling the first stage thin Internet server within the next 12
months; however, the company has not developed any products for sale as of
this date.
The first product will be a thin Internet server designed and built by
the Company. Management estimates that it will cost $100,000 to develop this
product and that it will be developed over more than a six to ten month period
by qualified unrelated third parties. The Company does not have an agreement
with a qualified person to develop the CyberServer at this time. This product
will be distributed through the Company's current network of independent
representatives that are currently selling the fax modem chips.
CyberCommunicator
The operational plan provides for the Company to seek out an unrelated
third party to participate in and perform the development of the
CyberCommunicator by the end of the next 12 months. The development of the
product requires designing skills different from those possessed by the
Company's contractors or consultants. Management at this time has made no
estimate of the development cost of this product and has not identified the
unrelated design firm to do the development. Management estimates that the
administrative cost of securing the unrelated design firm and refining its
design specifications will not exceed $10,000.
SAMSUNG ELECTRONICS
Fax Modem Chips
The operational plan provides for the Company's fax modem chips,
fabricated by Samsung, to be distributed through its network of independent
sales representatives. These representatives sell to fax machine
manufacturers in Japan and the United States. Presently the Company has one
representative in Japan and two in the United States. Management estimates
that the marketing costs will be approximately $25,000 over the next 12
months. Once the orders are received, the Company will incur the costs of
buying the chips, providing product support, and commissions. The customer
will pay the Company upon invoicing when the customer receives the chips.
Fabrication
The operational plan calls for management to expand its relationship
with Samsung. Management believes that an expanded relationship with Samsung
would be beneficial for several reasons. Those reasons are (1) Samsung has
several fabrication facilities that could produce the Company's products; (2)
Samsung, fabricates, markets and sells many electronic products that require
many diverse intellectual properties that could be used in the development of
the Company's products; and (3) Samsung has worldwide distribution.
Management believes that with a strong relationship it can reduce its cost of
worldwide distribution, product development and fabrication. The cost to
develop this relationship is estimated to be approximately $20,000 but the
Company could payout approximately $44,000 to purchase one order of fax-modem
chips. The Company does not have any agreement or commitment for Samsung to
perform items (1)
The operational plan provides for management to receive integrated
circuit design and synthesization services from an unrelated third party
pursuant to an equipment lease agreement entered in 1998. The unrelated party
is to pay an equipment rental fee of $9,650 per month. From that amount, the
unrelated party is to provide chip design services, valued at up to $8,650 per
month, as a credit against the unrelated party's rental of the design
equipment and design software. Any unused monthly credit will be accumulated
by the Company. The agreement also calls for the unrelated party to provide
design personnel for any design contracts obtained by the Company. The
unrelated party is to receive a fee of $104 per hour for each person it
provides for performing design services. The fee is to be off set by the
accumulated monthly credit.
Management does not believe it will have an actual out of pocket cost
for the design services of the unrelated third party. It probably will have
an administrative or overhead cost of not more than $15,000 during the next 12
months.
Core Licensing
The operational plan provides for the Company to market the intellectual
property in the A/DSC521 DSC technology. This technology contains many major
elements that have potential to be licensed and be incorporated in chip
designs of other manufacturers. The Company's technology must be repackaged
into an easily abstracted form so that it can be adapted to any fabrication
process ("synthesization"). Management intends to market its a/DSC521
technology to manufacturers of proprietary chip products.
The Company, as part of its equipment lease agreement with an unrelated
party, has received a commitment from the lessee to synthesize the Company's
intellectual property as an offset to the monthly credit. This is expected to
be completed within six months. The Company is also negotiating an agreement
with the same party to market its synthesized technology. Little cost is
expected in synthesizing the Company's intellectual property. An
administrative or overhead cost of not more than $20,000 may be incurred.
INTERNET SALES
The operational plan provides for the Company to acquire an internet
sales company, commence an internet sales company or to enter a joint venture
that will engage in internet sales of consumer communications products. The
Company has been negotiating with an unrelated company to either acquire all
or part of it or to enter a joint venture with it. If the Company acquires
all or part of that company it will be based on an exchange of shares of the
Company's common stock. If the Company acquires the internet sales company or
enters a joint venture with it, the Company could be required to invest up to
$150,000. The Company has not determined want it would cost to set up its own
internet sales company, but management estimates that it would not invest more
than $100,000. To negotiate an acquisition or to enter a joint venture or
investigate starting an internet sales company, management estimates that its
administrative or overhead cost will be not more than $20,000.
STRATEGIC RELATIONSHIPS AND NEW TECHNOLOGY
The operational plan provides for seeking strategic relationship with
other companies in consumer internet and communications consumer products and
the acquisition of new products. The development of strategic relationship
and acquisition of new technologies is to exploit and enhance the Company's
business. Management intends to acquire other companies and acquire
technology by exchanging shares of its common stock or, in limited cases, when
sufficient funds are on hand to use cash. Management believes that its cost
to find and negotiate its acquisitions of business or technology and joint
ventures indirectly cost not more than $20,000.
YEAR 2000 ISSUES
The Company has completed the Year 2000 assessment and has determined
that Year 2000 issues will have no material effect.
CREDIT FACILITY
The management does not have a credit facility.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any litigation incidental to its business
or material to the business activities or financial performance of the
Company.
The Company is unaware of any legal proceedings being brought by the
former Chief Financial Officer of Sundance Design, Inc., claiming a security
interest in the Company's digital signal processing intellectual property.
The Company to avoid liability to Claimant is holding all securities to be
issued to Sundance Design, Inc. The shares will be delivered as agreed to by
the Claimant and Sundance Design or an order of a court exercising
jurisdiction over that matter.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K.
(a) Exhibits.
Exhibit No. Description Method of Filing
3. Charter and Bylaws
3.1 Articles of Incorporation A
3.1.1 Amended Articles for change of Name C
3.2 Bylaws A
10. Material Contracts
10.1 License Agreement with Tensleep Design, Inc.,
a Texas corporation A
10.2 Purchase Agreement and Bill of Sale with
Tensleep Design, Inc., a Texas corporation A
10.3 Warrant Agreement for Class A Warrants A
10.4 Warrant Agreement for Class B Warrants A
10.5 Stock Option Plan A
10.6 Distribution Agreement C
11. Statement re: Computation of Per Share Earnings **
21. Subsidiaries of the Registrant B
27. Financial Data Schedule **
99. Additional Exhibits
99.1 Audited Financial Statement for the
Company date December 31, 1997 A
99.2 Agreement with Silicon Resources for
Rental B
** Contained in Financial Statements included herewith.
A Incorporated by reference to the Company's Form 1 - A Registration
Statement No. 24-3960.
B Filed with original Form 10SB, Accession Number:
0001006024-99-000010
C Filed with Form 10SB/A which became effective August 2, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed by the undersigned, there unto
duly authorized.
Tensleep Design, Inc.
(Registrant)
Signature Title Date
/S/ Ronald S. Tucker President, CEO and CFO July 29, 1999
Ronald S. Tucker
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tensleep
Technologies, Inc., audited Financial Statements dated September 30, 1998 and
unaudited Interim Financial Statements dated June 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001006024
<NAME> TENSLEEP TECHNOLOGIES, INC.
<S> <C> <C>
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