<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
X Quarterly report under section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 1999 or
___ Transition report under section 13 or 15(d) of the Exchange Act for the
transition period from _______ to _______
Commission file number: 000-21811
TORQUE ENGINEERING CORPORATION
(Exact Name of Small Business Issuer as Specified In Its Charter)
Delaware 83-0317306
(State of Incorporation) (I.R.S. Employer Identification No.)
2932 Thorne Drive, Elkhart, Indiana 46514
(Address of Principal Executive Offices)
(219) 264-2628
(Issuer's Telephone Number, Including Area Code)
Quintessence Oil Company
(Former Name, Former Address and Former fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) has 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 September 30, 1999 the Issuer had 7,831,540 shares of Common Stock, par
value $0.00001, outstanding.
Transitional Small Business Disclosure Format (check one): Yes ____ No X
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TORQUE ENGINEERING CORPORATION
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
Table of Contents
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet at September 30, 1999 (unaudited)
Statements of Operations for the nine months
ended September 30, 1999 and 1998 (unaudited)
Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operations
General
Results of Operations
Liquidity and Capital Resources
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Change in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature
Exhibit Index
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TORQUE ENGINEERING CORPORATION
A DELAWARE CORPORATION
BALANCE SHEET
ASSETS
September 30, December 31,
1999 1998
---- ----
(unaudited) (audited)
CURRENT ASSETS
Cash & Marketable Securities $ 1,390,759 $ 25,791
Accounts Receivable 22,928 -0-
Inventory 1,055,011 -0-
PROPERTY, EQUIPMENT & GOODWILL 12,072,339 2,000
OTHER ASSETS (Note 2)
Organization costs - net 3,000 4,125
------------ -----------
Total Assets $14,544,036 $ 31,916
------------ -----------
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts Payable $ 146,777 $ -0-
Notes Payable 21,600 -0-
OTHER LIABILITIES 60,000 -0-
STOCKHOLDERS EQUITY (Notes 1,2 and 3)
Common Stock - $0.00001 per value,
7,831,540 shares issued and outstanding 78 10
Additional paid in capital 14,683,956 42,490
Retained earnings (deficit) (368,376) (10,584)
------------ -----------
Total Liabilities and Stockholders' Equity $14,544,036 $ 31,916
------------ -----------
See accompanying notes to financial statements
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<TABLE>
TORQUE ENGINEERING CORPORATION
A DELAWARE CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30 September 30 September 30 September 30
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCOME $ 119,880 $ -0- $ 206,417 $ -0-
OPERATING EXPENSES
General &
Administrative Expenses 135,766 616 295,611 1,822
Depreciation & Amortization 201,581 375 268,599 1,125
NET (LOSS) $ (217,466) $ (991) $ (357,792) $ (2,947)
NET (LOSS) PER SHARE $ (0.029) $ (0.001) $ (0.048) $ (0.003)
WEIGHTED AVERAGE
NUMBER SHARES
OUTSTANDING 7,446,923 1,000,000 7,446,923 1,000,000
</TABLE>
The Company commenced operations May 28, 1999.
See accompanying notes to financial statements.
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TORQUE ENGINEERING CORPORATION
A DELAWARE CORPORATION
STATEMENT OF CASH FLOW
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, 1999 September 30, 1998
CASH FLOW PROVIDED (USED)
IN OPERATIONS
$ (357,792) $ (2,947)
Adjustments to reconcile net income
to net cash provided by operating
activities 136,090 1,125
----------- -----------
(221,702) (1,822)
CASH FLOW PROVIDED (USED) IN
INVESTING ACTIVITIES
None
CASH FLOW PROVIDED (USED) IN
FINANCING ACTIVITIES 1,500,005 -0-
NET (DECREASE) IN CASH (1,278,303) (1,822)
CASH BEGINNING OF PERIOD 25,791 27,983
CASH END OF PERIOD $1,304,094 $ 26,161
----------- -----------
INTEREST PAID
INCOME TAXES PAID
See accompanying notes to financial statements
<PAGE>
TORQUE ENGINEERING CORPORATION
A DELAWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial information is unaudited, but, in the opinion of the
management, reflects all adjustments (which included only normally recurring
adjustments) necessary to present fairly the Company's financial position,
operating results and cash flows for the periods presented. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial information should be read in conjunction with the
audited financial statements and notes thereto for the year ended December 31,
1998 included in the Company's Annual Report on Form 10-KSB filed with the
Securities and Exchange Commission. The results of operations for the nine month
period ended September 30, 1999 are not necessarily indicative of the results to
be expected for the full year.
2. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization: Quintessence Oil Company was incorporated on June 26, 1996. Under
the laws of the State of Wyoming. The Company has adopted a year ending of
December 31.
The Company was organized to engage in the development, production and sale of
oil and gas. Since its inception, the Company has been largely inactive and has
conducted no significant operations. The Company does not own any operating oil
and gas leases.
Because of the speculative nature of the Company, there are significant risks
which are summarized as follows:
Newly formed company with no operating history.
Limited funds available for development and production.
The Company was considered to be in the development stage as defined in
Statement of Financial Accounting Standards No. 7, prior to May 28, 1999. There
had been no operations since incorporation. On May 28th, the company entered the
transportation technology industry where its core business is the manufacturing
and marketing of marine pleasure boat engines.
On October 18, 1999, the registrant re-incorporated in the State of Delaware and
changed its name to Torque Engineering Corporation.
Summary of Significant Accounting Principles:
---------------------------------------------
Registration costs included fee payments for legal expenses relating to public
stock offering. The offering was successful, and $7,500 of legal fees were
charged to additional paid-capital.
The Company amortizes organization costs over 60 months using the straight line
method.
<PAGE>
TORQUE ENGINEERING CORPORATION
A DELAWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
3. STOCKHOLDERS' EQUITY
Public Stock Offering:
----------------------
On July 2nd 1996 and October 9th 1996 the company issued a total of 1,000,000
shares pursuant to an exemption from registration contained in Regulation 504 of
the Securities Act of 1933, as amended, (the "Act"). Regulation 504 provides
that the Company can sell securities with an aggregate offering price not
exceeding $1,000,000 within a twelve (12) month period without registration with
the Securities and Exchange Commission.
On March 25th, 1999, the Company sold 4,870,000 shares in a private placement at
$0.001 per share.
On May 28th, 1999, the company issued 1,500,000 shares of its common stock in
exchange for 100% of the outstanding stock of IPSL, Inc. The acquisition of IPSL
brought to the company the rights, patents, tooling, designs, machinery,
inventory and facilities to commence production of the Torque V-12 Engine. The
engine, designed especially for the pleasure boating industry, is a 14-liter, 90
degree, sequentially fuel injected, advanced V-12, all aluminum, light weight,
powerful engine that delivers 900 horsepower and 1100 foot pounds of torque on
pump gasoline.
On September 15, 1999 the Registrant raised an aggregate of $1,500,005.00 by
selling 461,540 shares of Restricted Common Stock at $3.25 per share. Such
shares were sold in a private placement to persons theretofore unaffiliated with
the company.
On October 7, 1999 the shareholders voted the 1999 Stock Option Plan allowing
500,000 shares of common stock be available for the issuance of options.
4. OFFICES AND EMPLOYEES
The Company's office is located at 2932 Thorne Drive, Elkhart, Indiana. The
Company currently has 11 employees other than certain of its officers and
directors and anticipates a need to engage more full-time employees.
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Torque Engineering Corporation
A Delaware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The following is Management's discussion and analysis of significant factors
which have affected the Registrant's liquidity, capital resources and results of
operations.
RESULTS OF OPERATIONS
There were no revenues or operations for the periods ended September 30, 1998
and minimal revenues or operations for the period ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Current assets at September 30, 1999 and 1998 were $2,468,698 and $25,791
respectively.
There were $168,377 of current liabilities at September 30, 1999 and no
liabilities at September 30, 1998
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On or about October 18, 1999 the Quintessence Oil Company completed a
re-incorporation merger with and into its wholly-owned subsidiary Torque
Engineering Corporation, a Delaware Corporation, (the "Registrant"). The
re-incorporation from Wyoming to Delaware and the change of the name to Torque
Engineering Corporation was approved at a shareholders meeting that was held on
October 7, 1999. In addition, the shareholders approved the 1999 Stock Option
Plan allowing 500,000 shares of common stock be available for issuance of
options.
Item 5. Other Information.
------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits:
None
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TORQUE ENGINEERING CORPORATION
By: /s/ Raymond B. Wedel
----------------------------
Name: Raymond B. Wedel
Title: President
Date: November 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,390,759
<SECURITIES> 0
<RECEIVABLES> 22,928
<ALLOWANCES> 0
<INVENTORY> 1,055,011
<CURRENT-ASSETS> 2,468,698
<PP&E> 12,072,339
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,544,036
<CURRENT-LIABILITIES> 168,377
<BONDS> 0
0
0
<COMMON> 78
<OTHER-SE> 14,315,580
<TOTAL-LIABILITY-AND-EQUITY> 14,544,036
<SALES> 206,417
<TOTAL-REVENUES> 206,417
<CGS> 0
<TOTAL-COSTS> 564,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (357,792)
<INCOME-TAX> 0
<INCOME-CONTINUING> (357,792)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (357,792)
<EPS-BASIC> (.048)
<EPS-DILUTED> (.048)
</TABLE>
