U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1997
( ) Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to ____________
Commission File Number: 028836
Paradigm Advanced Technologies, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 33-0692466
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5140 Yonge Street, Suite 1525, North York, Ontario, Canada M2N 6L7
(Address of Principal Executive Offices)
(416) 222-9629
(Issuer's Telephone Number, Including Area Code)
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__________
As of May 15, 1997, the issuer had 15,440,445 shares of its common stock
issued and outstanding.
Traditional Small Business Disclosure Format (check one):
Yes x No __________
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
PARADIGM ADVANCED TECHNOLOGIES, INC.
INTERIM BALANCE SHEET
(UNAUDITED)
ASSETS
Assets
March 31, 1997 March 31, 1996
Bank short term deposits $26,310 $ 15,940
Accounts Receivable 535,017 -0-
Share subscription receivable 54,000 -0-
Inventories (Note 1 and 5) 190,501 349,275
Miscellaneous Receivables 23,680 2,626
________ ________
$829,508 $367,841
Capital Assets (Notes 1 and 4) 49,488 4,725
------ ----------
Total Assets $878,996 $372,566
LIABILITIES
Current Liabilities
Accounts payable $122,784 $37,028
Other payables 2,608 -0-
--------- ---
Total Liabilities 125,392 $37,028
------- -------
<PAGE>
STOCKHOLDERS' EQUITY
Share Capital (Note 6)
Authorized 30,000,000 shares ofcommon stock,
$.0001 par value
Issued and outstanding stock
15,440,445 as of March 31, 1997 2,148,270
10,140,000 as of March 31, 1996 641,145
Retained Earnings (Deficit) (1,394,666) (305,603)
---------- ----------
Total Stockholders' Equity 753,604 335,542
Total Liabilities & Stockholders' Equity $878,996 $372,570
======= ========
<PAGE>
PARADIGM ADVANCED TECHNOLOGIES, INC.
STATEMENT OF INCOME
(UNAUDITED)
For the Three
Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
Sales (Note 1 and 3) $ 511,469 $ -0-
Cost of Sales
Inventory - Beginning of Period 354,762 -0-
Purchases 22,091 349,275
Inventory - end of period 254,762 349,275
Total Cost of Sales 122,091 - 0 -
------- -----
Gross Profit $389,378 $- 0 -
======== =====
Expenses
Selling, General and Administration $326,287 $305,354
Research and Development 19,804 - 0 -
Depreciation 2,567 249
$348,658 $305,603
Net earnings (loss) for the period $40,720 $(305,603)
======= ============
Earnings per Share $0.00 ($0.04)
<PAGE>
PARADIGM ADVANCED TECHNOLOGIES, INC.
INTERIM STATEMENT OF CASH FLOW
(UNAUDITED)
For the Three
Months Ended
March 31, 1997 March 31, 1996
Cash provided by (used in) operations
Net gain (loss) for the period $ 40,720 ($305,603)
Items not requiring an outlay of cash:
Depreciation of fixed assets 2,567 249
Net changes in non-cash working
capital items related to operations
Inventory 96,092 (349,275)
Accounts Receivable (465,855) -0-
Miscellaneous Receivable (3,764) (2,626)
Subscriber Receivable 148,500 -0-
Accounts payable 56,403 37,028
($125,337) ($620,227)
Cash provided by financing activities
Proceeds of Common Stock Insurance -0- 641,145
Cash used in investing activities
Acquisition of fixed assets (3,055) (4,978)
Net increase (decrease) in cash for the
period $128,392) $15,940
Cash - beginning of period 154,702 -0-
Cash - end of the period $26,310 $15,940
--------- ---------
Net Change ($128,392) $15,940
<PAGE>
PARADIGM ADVANCED TECHNOLOGIES, INC.
NOTES TO INTERIM STATEMENT
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) FINANCIAL STATEMENTS
The accompanying condensed financial statements are not audited for the
interim period, but include all adjustments (consisting of only normal
recurring accruals) which management considers necessary for the fair
representation of results at March 31, 1997.
These financial statements do not purport to contain complete disclosures
in conformity with generally accepted accounting principles and should be
read in conjunction with the Company's audited financial statements for
the year ended December 31, 1996 contained in the Company's Annual Report
on Form 10-KSB. The results for the three months ended March 31, 1997 are
not neccessarily indications of the results for the fiscal year ending
December 31, 1997.
The Company is a development stage company formed on January 12, 1996 and
does not purport to contain complete disclosures in conformity with
generally accepted accounting principles.
b) INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method)
and net realizable value.
c) CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation.
Depreciation is provided using the declining balance basis at the
following annual rate:
Furniture and fixtures - 20%
d) METHOD OF ACCOUNTING
i)The corporation maintains its books and prepares its financial
statements on the accrual basis of accounting.
ii)There are not any material differences in the determination of net loss
and per share calculations between Canadian and U.S.
generally accepted accounting principles.
<PAGE>
2. INCORPORATION
The company was incorporated on January 12, 1996 in the State of Delaware
and has elected a December 31 fiscal year end for book and tax purposes.
3. REVENUE
The Company recorded a sale of software on the basis of a barter agreement
with Primary Response in Toronto, for $450,000 inclusive of a discount of 10%.
4. CAPITAL ASSETS
Accumulated Net
Cost Depreciation Book-value
Furniture and
fixtures $63,032 $13,544 $49,488
======= ======= =======
5. INVENTORY
The inventory consists of computer security equipment.
6. SHARE CAPITAL
On March 12, 1997, the Loan Payable to PTI Financial Corp. for a total of
$395,000 was converted to 1,316,667 Common Shares at a rate of $.30 per share
along with warrants at a rate of $.30 per share.
<PAGE>
Item 2. Management's Discussion and Analysis of Plan of Operation
Results of Operations
Three Months Ended
The following discussion contains forward-looking statements and
projections. Because these forward-looking statements and projections are based
on a number of assumptions and are subject to significant uncertainties and
contingencies, many of which are beyond the Company's control, there is no
assurance that they will be realized, and actual results may vary significantly
from those shown.
The Company is a development stage company with a limited history of
operations. It was incorporated on January 12, 1996.
Revenues for the three months ended March 31, 1997 increased by $511,469
compared to the three months ended May 31, 1996 in which the Company had no
revenue. Thus, the increase in sales revenues is attributable to start-up of
sales operations of the Company's security and surveillance products.
Cost of sales for the three months ended May 31, 1997 increased to
$122,091 compared to the three months ended May 31, 1996 in which the Company
had no sales. The increase is due to the start-up of sales operations of the
Company's security and surveillance products and the write down of the inventory
to reflect current net realizable value.
Selling, General and Administrative Expenses for the three months ended
May 31, 1997 increased to $326,287 from $305,354 compared to the three months
ended May 31, 1996. The increase is primarily attributable to the Company's
increased advertising, marketing and promotional efforts. This increase is
consistent with management's plans to increase awareness of the Company in the
business and investment community.
Net income for the three months ended May 31, 1997 was $40,720
representing an increase of $346,323 compared to a loss of $305,603 for the
three months ended May 31, 1996. This Company's net increase is due to the
start-up of sales operations of the Company's security and surveillance
products.
Liquidity and Capital Resources
The Company does not beleive that product sales will be sufficient to fund
the Company's operations in fiscal 1997.
The Company believes that the cash and cash equivalents on hand at March
31, 1997 will be sufficient to sustain the Company's operations at budgeted
levels and its needs for liquidity through the first quarter of fiscal 1997. By
that time the Company will be required to raise additional cash either through
<PAGE>
additional sales of products, through sales of securities, by incurring
additional indebtedness or by some combination of the foregoing. If the Company
is unable to raise additional cash by that time, it will be required to reduce
or discontinue its operations.
The Company's efforts during its first fifteen months have centered and
will continue to center on the development, marketing and distribution of its
two principal products, VideoBank and VideoBank-Remote. The Company has worked
on developing and solidifying its manufacturer's representative network by
entering into distribution or sales representation agreements with manufacturers
and developers of software-based video surveillance systems, developing its
advertising and promotional materials and customer database, and planning of a
public relations campaign, and will continue to work on all of these activities.
The Company currently has relationships with High Road Communications, a public
relations company located in Toronto, Canada, and with Adler & Schinkel, an
advertising agency based in Phoenix, Arizona. The Company currently plans to
continue to use its existing marketing and distribution methods, but also is
reviewing and evaluating these methods in order to determine whether better or
more efficient practices may be available. The Company also will continue to
concentrate on generating revenues from existing relationships with businesses
that are already familiar with the Company's products and have expressed a
willingness to buy. The Company will continue to concentrate particularly on
consolidating its distribution networks, cementing its client relationships, and
establishing an image and brand-name recognition for the Company in the
marketplace in which it competes.
The Company does not currently have any intentions to acquire a plant or
any significant equipment as the Company's warehouse and production facility
requirements are minimal. The Company may increase the number of its employees
as it continues to grow and further solidifies and consolidates its distribution
networks.
The foregoing factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
assets carrying amounts or the amount and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule. (filed electronically herewith)
No reports on Form 8-K were filed during the quarter for which this report
is filed.
<PAGE>
SIGNATURES
In accordance with the Exchange Act, the registrant caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PARADIGM ADVANCED TECHNOLOGIES, INC.
Date: May 21, 1996
By: /s/ Jack Y. L. Lee
Jack Y. L. Lee
Chief Executive Officer and
Chief Financial Officer
By: /s/ Jack Y. L. Lee
Jack Y. L. Lee
Chief Executive Officer and
Chief Financial Officer
By: /s/ David Kerzner
David Kerzner
President
<PAGE>
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
27. Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Interim Balance Sheet, Statement of Income and the Interim Statement of cash
flow and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 26,310
<SECURITIES> 54,100
<RECEIVABLES> 535,017
<ALLOWANCES> 0
<INVENTORY> 254,762
<CURRENT-ASSETS> 829,508
<PP&E> 63,032
<DEPRECIATION> 2,567
<TOTAL-ASSETS> 878,996
<CURRENT-LIABILITIES> 125,392
<BONDS> 0
0
0
<COMMON> 15,440,445
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 878,896
<SALES> 511,469
<TOTAL-REVENUES> 40,720
<CGS> 122,091
<TOTAL-COSTS> 470,749
<OTHER-EXPENSES> 2,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
