U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-52721
MICRO INTERCONNECT TECHNOLOGY, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 72-0497440
(State or other (I.R.S. employer
jurisdiction of indentification No.)
Incorporation or
Organization)
70 Horizon Drive, Bedford, New Hampshire 03110
(Address of principal executive offices)
603-666-0206
(Registrants telephone no., including area code)
No Change
(Former name, former address, and former fiscal year, if changed
since last report.)
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered pursuant to Section 12(g) of the Exchange
Act: None
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
preceding 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
Common Stock outstanding at September 30, 2000 - 1,266,450 shares
of $.001 par value Common Stock.
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MICRO INTERCONNECT TECHNOLOGY, INC.
[ A Development Stage Company ]
INDEX
PART I Financial Information
Item I Condensed Balance Sheets -
September 30, 2000 and December 31, 1999 .................. 4
Condensed Statements of Operations -
three months and nine months ended September 30, 2000
and 1999 and from inception on February 11, 1998 through
September 30, 2000 ....................................... 5
Condensed Statements of Cash Flows -
nine months ended September 30, 2000 and 1999 and
from inception on February 11, 1998 through September 30,
2000 ...................................................... 6
Notes to Condensed Financial Statements .................... 7
Item 2 Management's Plan of Operations ........................... 12
PART II Other Information
Item 1 Legal Proceedings ......................................... 13
Item 2 Changes in 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
Signature page ............................................ 13
<PAGE>
PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
2
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheets,
September 30, 2000 and December 31, 1999 4
- Unaudited Condensed Statements of Operations,
for the three and nine months ended September
30, 2000 and 1999 and from inception on
February 11, 1998 through September 30, 2000 5
- Unaudited Condensed Statements of Cash Flows,
for the nine months ended September 30, 2000
and 1999 and from inception on February 11,
1998 through September 30, 2000 6
- Notes to Financial Statements 7- 11
3
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash in bank $ 237,383 $ 167,272
Accounts receivable - 510
Accrued interest receivable 840 675
___________ ___________
Total Current Assets 238,223 168,457
___________ ___________
PROPERTY, PLANT AND EQUIPMENT, net 3,964 4,990
___________ ___________
OTHER ASSETS:
Refundable deposit 800 800
___________ ___________
Total Other Assets 800 800
___________ ___________
$ 242,987 $ 174,247
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,855 $ 7,052
Accounts payable - related party 73 70
Accrued payroll and payroll taxes 2,244 2,244
___________ ___________
Total Current Liabilities 6,172 9,366
___________ ___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,266,450 and 1,150,000 shares
issued and outstanding,
respectively 1,266 1,150
Capital in excess of par value 563,884 272,915
Deficit accumulated during the
development stage (328,335) (109,184)
___________ ___________
Total Stockholders' Equity 236,815 164,881
___________ ___________
$ 242,987 $ 174,247
___________ ___________
NOTE: The balance sheet at December 31, 1999 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these financial
statements.
4
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the For the From
Three Month Nine Month Inception
Period Ended Period Ended on February 11,
September 30, September 30, 1998, Through
__________________ ____________________ September 30,
2000 1999 2000 1999 2000
________ ________ _________ _________ ____________
REVENUE, net $ - $ 530 $ 300 $ 1,788 $ 7,295
COST OF SALES - - - - 4,635
________ ________ _________ _________ ____________
Gross Profit - 530 300 1,788 2,660
________ ________ _________ _________ ____________
OPERATING EXPENSES:
General and
administrative 16,962 13,903 56,083 22,944 87,400
Research and
development 58,366 30,430 170,433 35,846 257,728
________ ________ _________ _________ ____________
Total expenses 75,328 44,333 226,516 58,790 345,128
________ ________ _________ _________ ____________
LOSS FROM
OPERATIONS (75,328) (43,803) (226,216) (57,002) (342,468)
________ ________ _________ _________ ____________
OTHER INCOME
(EXPENSE):
Interest income 3,276 2,556 7,414 4,944 14,521
Interest expense - - - (39) (39)
________ ________ _________ _________ ____________
Total other
income 3,276 2,556 7,414 4,905 14,482
________ ________ _________ _________ ____________
LOSS BEFORE
INCOME TAXES (72,052) (41,247) (218,802) (52,097) (327,986)
CURRENT TAX
EXPENSE - - 349 - 349
DEFERRED TAX
EXPENSE - - - - -
________ ________ _________ _________ ____________
NET LOSS $(72,052) $(41,247) $(219,151) $(52,097) $ (328,335)
________ ________ _________ _________ ____________
LOSS PER COMMON
SHARE $ (.06) $ (.04) $ (.18) $ (.05) $ (.30)
________ ________ _________ _________ ____________
The accompanying notes are an integral part of these financial
statements.
5
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Nine From Inception
Months Ended on February 11,
September 30, 1998 Through
______________________ September 30,
2000 1999 2000
__________ __________ _____________
Cash Flows Provided by
Operating Activities:
Net loss $(219,151) $ (52,097) $ (328,335)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Amortization expense - 73 486
Depreciation expense 1,026 60 1,628
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable 510 (530) -
(Increase) in accrued
interest receivable (165) - (840)
(Increase) in prepaid
expenses - (800) -
Increase (decrease) in
accounts payable (3,197) (2,312) 3,855
Increase (decrease) in
accounts payable
- related party 3 (468) 73
Increase in accrued payroll
and payroll taxes - 8,971 2,244
__________ __________ _____________
Net Cash (Used) by
Operating
Activities (220,974) (47,103) (320,889)
__________ __________ _____________
Cash Flows Provided by
Investing Activities:
Payments for organization
costs - - (486)
Payments for property,
plant and equipment - (3,289) (5,592)
Payments for refundable asset - (800) (800)
__________ __________ _____________
Net Cash (Used) by
Investing Activities - (4,089) (6,878)
__________ __________ _____________
Cash Flows Provided by
Financing Activities:
Proceeds from common stock
issuance 291,085 300,000 601,085
Payment of stock offering costs - (27,984) (35,935)
__________ __________ _____________
Net Cash Provided by
Financing
Activities 291,085 272,016 565,150
__________ __________ _____________
Net Increase in Cash 70,111 220,824 237,383
Cash at Beginning of Period 167,272 6,200 -
__________ __________ _____________
Cash at End of Period $ 237,383 $ 227,024 $ 237,383
__________ __________ _____________
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period
for:
Interest $ - $ 39 $ 39
Income taxes $ 349 $ - $ 349
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended September 30, 2000
None
For the period ended September 30, 1999
None
The accompanying notes are an integral part of these financial
statements.
6
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Micro Interconnect Technology, Inc. (the Company) was
organized under the laws of the State of Nevada on February 11, 1998.
The Company is considered a development stage company as defined in
SFAS No. 7. The Company engages in the business of developing
proprietary technology to reduce the size of electronic devices that
link electronic components together and to make those devices operate
at higher speeds.
Condensed Financial Statements - The accompanying financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 2000 and for all
the periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
December 31, 1999 audited financial statements. The results of
operations for the periods ended September 30, 2000 are not
necessarily indicative of the operating results for the full year.
Property and Equipment - Property and equipment are stated at cost.
Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized upon being placed in
service. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is computed for financial statement
purposes on a straight-line method over the estimated useful lives of
the assets.
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share". [See Note 6]
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - deferral of the effective date of FASB Statement No. 133 (an
amendment of FASB Statement No. 133.),", SFAS No. 138 "Accounting for
Certain Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No. 53 and
Amendment to SFAS No 63, 89 and 21", and SFAS No. 140, "Accounting to
Transfer and Servicing of Financial Assets and Extinguishment of
Liabilities", were recently issued SFAS No. 136, 137, 138, 139 and 140
have no current applicability to the Company or their effect on the
financial statements would not have been significant.
Research and Development - Research and development costs are expensed as
incurred.
7
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment consisted of the following at September 30,
2000;
Office equipment $ 5,592
Less accumulated
depreciation (1,628)
_________
$ 3,964
_________
During the nine months ended September 30, 2000 depreciation expense
amounted to $1,026.
NOTE 3 - CAPITAL STOCK
Stock Options - On June 15, 1999, the Company granted 30,000 stock
options under the 1998 Stock Option Plan (the Plan). The Company has
adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The market value of the
Company's common stock was the same as the exercise price of the
options on the date of grant; accordingly, no compensation cost has
been recognized for the stock options.
Stock Option Plan - On February 17, 1998, the Board of Directors of
the Company adopted and the stockholders at that time approved the
1998 Stock Option Plan (the Plan). The plan provides for the granting
of awards of up to 1,000,000 shares of common stock to sales
representatives, officers, directors, consultants and employees. The
awards can consist of stock options, restricted stock awards, deferred
stock awards, stock appreciation rights and other stock-based awards
as described in the plan. Awards under the plan will be granted as
determined by the board of directors. At September 30, 2000, total
options available to be granted under the plan amounted to 970,000.
8
<PAGE>
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK [Continued]
A summary of the status of the options granted under the Company's
stock option plan at September 30, 2000 is presented below:
September 30, 2000
__________________________
Weighted Average
Shares Exercise Price
___________ _____________
Outstanding at beginning of period 30,000 $ 2.00
Granted - $ -
Exercised - $ -
Forfeited - $ -
Expired - $ -
___________ _____________
Outstanding at end of Period 30,000 $ 2.00
___________ _____________
Weighted average fair value of
options granted during the year 30,000 $ 2.00
___________ _____________
A summary of the status of the options outstanding under the Company's
stock option plan at September 30, 2000 is presented below:
Options Outstanding Options Exercisable
___________________________________ _________________________________
Average Weighted- Weighted
Range of Remaining -Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
_________ ____________ ___________ _________ ____________ ___________
$2.00 30,000 7.0 years $2.00 - $2.00
_________ ____________ ___________ _________ ____________ ___________
Common Stock - During the three months ended March 31, 2000, proceeds
of $81,475 were received and 32,550 shares were issued; and during the
three months ended June 30, 2000, proceeds of $209,610 were received
and 83,850 shares were issued, through exercise of warrants at $2.50
per share. The period of exercise expired June 10, 2000.
During May 1999 the Company made a public stock offering and issued
150,000 units of its previously authorized, but unissued common stock.
Each unit consists of one share of common stock and two redeemable
common stock purchase warrants. Each warrant allows the holder to
purchase one share of common stock for $2.50; the warrants are subject
to adjustment in certain events and are exercisable for a period of
one year from the date of the offering. The Company may redeem the
warrants at a price of $.01 per warrant, at any time beginning nine
months after the date of the offering upon not less than 30 days prior
written notice, if the closing bid price of the Company's common stock
on the NASDAQ Bulletin Board is at least $3.00 per share for twenty
consecutive trading days, ending not earlier than five days before the
warrants are called for redemption. Gross proceeds from the sale of
stock amounted to $300,000 (or $2 per share). Stock offering costs of
$35,935 were offset against the proceeds of the offering in capital in
excess of par value.
9
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK [Continued]
During February 1998, in connection with its organization, the Company
issued 1,000,000 shares of its previously authorized, but unissued
common stock. Total proceeds from the sale of stock amounted to
$10,000 (or $.01 per share).
Preferred Stock - The Company has authorized 10,000,000 shares of
preferred stock, $.001 par value, with such rights, preferences and
designations and to be issued in such series as determined by the
Board of Directors. No shares are issued and outstanding at September
30, 2000.
Stock Warrants - During 1999, the Company approved the sale of
warrants to purchase 42,750 shares of common stock to various
directors, an employee and an attorney. Each warrant grants the
holder the right to purchase one share of the Company's common stock
at a price of $2.50 per share. The warrants can be purchased for a
period of 120 days from the date of approval. The warrants are
exercisable for five years. During the nine months ended September
30, 2000, $125 was received for the purchase of 12,500 warrants.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - As of May 31, 1999, the Company had not paid
any compensation to its officers and directors. Starting June 1, 1999
the president is being compensated by the Company.
License Agreement - The Company entered into an exclusive licensing
agreement with the officer and shareholder of the Company for the
exclusive rights for patents covering electronic interconnection
manufacturing technologies for the United States and it's territories
and possessions. The agreement expires March 31, 2007. The Company
will pay a 1% royalty of gross sales and receipts for the right
beginning January 1999. As of September 30, 2000, royalties payable
to the officer/shareholder totaled $70. During the year ended
December 31, 1999, the Company incurred costs of $4,071 to register
additional patents owned by the officer and shareholder. According to
the license agreement, incurring these costs extends the license
agreement seven years to expire in 2014.
Rent Agreement - Beginning June 1, 1999, the Company entered into a
one-year lease for research and office space with a related party.
Monthly rent from June 1, 1999 to October 31, 1999 was $800. As of
November 1, 1999, the manufacturing space was expanded, with a new
monthly rent of $1,400. [See Note 7].
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
FASB 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting
methods and any available operating loss or tax credit carryforwards.
At September 30, 2000, the Company has available unused operating loss
carryforwards of approximately $328,000, which may be applied against
future taxable income and which expire in 2018 through 2020.
10
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES [CONTINUED]
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the Company,
and other future events, the effects of which cannot be determined.
Because of the uncertainty surrounding the realization of the loss
carryforwards the Company has established a valuation allowance equal
to the tax effect of the loss carryforwards and, therefore, no
deferred tax asset has been recognized for the loss carryforwards.
The net deferred tax assets are approximately $111,600 and $37,000 as
of September 30, 2000 and December 31, 1999, respectively, with an
offsetting valuation allowance at each period end of the same amount
resulting in a change in the valuation allowance of approximately
$74,600 for the nine months ended September 30, 2000.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for
the periods ended September 30, 2000 and 1999:
For the Three For the Nine From Inception
Months Ended Months Ended on February 11,
September 30, June 30 1998 Through
_________________ _________________ September 30,
2000 1999 2000 1999 2000
_________ _________ _________ _________ ___________
Loss from continuing
operations available
to common shareholders
(numerator) $ (72,052)$ (41,247) $(219,151) $ (52,097) $ (328,335)
_________ _________ _________ _________ ___________
Weighted average
number of common
shares outstanding
used in loss per
share for the period
(denominator) 1,266,450 1,150,000 1,204,905 1,083,516 1,096,407
_________ _________ _________ _________ ___________
At September 20, 2000 the Company had 30,000 stock options and 12,500
warrants that were not included in the calculation of loss per share
because their affect is anti-dilutive.
NOTE 7 - OPERATING LEASE
Beginning June 1, 1999, the Company entered into a one-year lease for
office space with a related party. Space for manufacturing was
expanded as of November 1, 1999. Monthly rent is $1,400. Rent
expense for the period ended September 30, 2000 totaled $12,600.
11
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 2 Management's Plan of Operation.
The Company is currently developing a direct electronic imaging
workstation that can produce in-situ masks that will have high
resolution, accurate alignment, and can be computer compensated for
manufacturing defects. Based on the current state of development of the
direct electronic imaging workstation, the Company believes that the
imaging workstation will open the way for a lower cost production process
for high resolution interconnects. The anticipated changes that can be
made in the production process are proprietary to the Company and may
give the Company a competitive advantage in profitably producing printed
circuit boards. Therefore, the Company's management has decided that
during the next seven months the Company's primary research and
development effort to develop a commercially viable direct electronic
imaging workstation should be expanded to encompass concurrent
development of a prototype facility for producing state-of-the-art
printed circuit boards. The Company anticipates that printed circuit
board sales may generate earnings to help finance the Company's ongoing
technological thrust and product development.
The Company believes that continued development of the direct electronic
imaging workstation and construction and debugging of the prototype
facility for producing printed circuit boards can be accomplished during
2000 and into 2001 without raising additional funds. Without future
earnings from the sale of printed circuit boards produced in the
Company's prototype factory, the Company believes that its present cash
resources (after exercise of outstanding warrants) are sufficient to
satisfy the Company's needs only for approximately nine months.
If the Company is unsuccessful in developing and profitably marketing or
utilizing the direct electronic imaging workstation and the prototype
printed circuit board facility, it may be unable to continue operations
beyond seven months without raising additional funds from other sources.
Even the successful development of a prototype factory will not assure
the Company's ability to generate sufficient revenues from sales or the
ability to obtain any outside financing on favorable terms, if at all.
There can be no guarantees that the market will give financial support to
the direct electronic imaging workstation or products produced by the
prototype printed circuit board production facility, if it becomes fully
functional. There is no assurance that the Company will be able to raise
additional funds from other sources.
If the Company successfully completes development of its direct
electronic imaging workstation and the prototype factory and is able to
market its manufacturing services, the company may hire an additional 4
full-time employees and may purchase additional equipment costing
approximately $50,000. The Company will also continue developing the
Company's proprietary technology to develop additional workstations and
to construct a complete high volume flexible manufacturing cell (factory)
for producing high density electronic interconnects and printed circuit
boards. However, the Company expects that it could take up to three
years to develop a high volume flexible manufacturing cell. The Company
does not believe that revenues generated from future sales of printed
circuit boards from the prototype facility will be sufficient to provide
all of the financial resources needed for planned future product
development. The Company anticipates that it will need additional
financing in approximately nine months to meet its current plan for the
development of additional workstations and a high volume flexible
manufacturing cell. If by then the Company is unable to obtain
additional financing, the Company will not be able to meet its plan for
the development of additional workstations and a high volume flexible
manufacturing cell.
There are no guarantees that the Company will be successfully able to
fund its operations until it can develop a high volume flexible
manufacturing factory.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities
None
ITEM 3 Defaults on Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Information
None
ITEM 6 Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
None
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.
MICRO INTERCONNECT TECHNOLOGY, INC.
/s/ N. Edward Berg November 14, 2000
N. Edward Berg, President Date
13
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