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 June 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)
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 June 30, 2000 - 1,266,350 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 1 Condensed Balance Sheets -
June 30, 2000 and December 31, 1999 3
Condensed Statements of Operations -
three months and six months ended
June 30, 2000 and 1999 and from
inception on February 11, 1998
through June 30, 2000 4
Condensed Statements of Cash Flows -
three months and six months ended
June 30, 2000 and 1999 and from
inception on February 11, 1998
through June 30, 2000 5
Notes to Condensed Financial Statements 6
Item 2 Management's Plan of Operations 11
PART II Other Information
Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a vote of
Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
Signature page 12
2
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PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements
MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash in bank $ 320,337 $ 167,272
Accounts receivable - 510
Accrued interest receivable 1,130 675
___________ ___________
Total Current Assets 321,467 168,457
___________ ___________
PROPERTY, PLANT AND EQUIPMENT, net 4,306 4,990
___________ ___________
OTHER ASSETS:
Refundable asset 800 800
___________ ___________
Total Other Assets 800 800
___________ ___________
$ 326,573 $ 174,247
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,418 $ 7,052
Accounts payable - related party 73 70
Accrued payroll and payroll taxes 11,215 2,244
___________ ___________
Total Current Liabilities 17,706 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,
1,266,400 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 (256,283) (109,184)
___________ ___________
Total Stockholders' Equity 308,867 164,881
___________ ___________
$ 326,573 $ 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.
3
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the For the
Three Month Six Month From Inception
Period Ended Period Ended on February 11,
June 30, June 30, 1998, Through
___________________ ____________________ June 30,
2000 1999 2000 1999 2000
_________ _________ _________ _________ _________
REVENUE, net $ 300 $ - $ 300 $ - $ 7,295
COST OF SALES - 1,258 - 1,258 4,635
_________ _________ _________ _________ _________
Gross Profit 300 1,258 300 (1,258) 2,660
_________ _________ _________ _________ _________
OPERATING EXPENSES:
General and
administrative 22,675 7,533 39,120 9,041 70,437
Research and
development 64,999 5,416 112,068 5,416 199,363
_________ _________ _________ _________ _________
Total expenses 87,674 12,949 151,188 14,457 269,800
_________ _________ _________ _________ _________
LOSS FROM
OPERATIONS (87,374) (11,691) (150,888) (13,199) (267,140)
_________ _________ _________ _________ _________
OTHER INCOME
(EXPENSE):
Interest income 2,364 2,342 4,138 2,388 11,245
Interest expense - (39) - (39) (39)
_________ _________ _________ _________ _________
Total other
income 2,364 2,303 4,138 2,349 11,206
_________ _________ _________ _________ _________
LOSS BEFORE
INCOME TAXES (85,010) (9,388) (146,750) (10,850) (255,934)
CURRENT TAX
EXPENSE - - 349 - 349
DEFERRED TAX
EXPENSE - - - - -
_________ _________ _________ _________ _________
NET LOSS $ (85,010)$ (9,388) $(147,099) $ (10,850) $ (256,283)
_________ _________ _________ _________ _________
LOSS PER COMMON
SHARE $ (.07)$ (.01) $ (.12) $ (.01) $ (.24)
_________ _________ _________ _________ _________
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 CASH FLOWS
For the Six From Inception
Months Ended on February 11,
June 30, 1998 Through
______________________ June 30,
2000 1999 2000
__________ _________ ___________
Cash Flows Provided by
Operating Activities:
Net loss $ (147,099) $ (10,850) $ (256,283)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Amortization expense - 49 486
Depreciation expense 684 30 1,286
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable 510 (1,258) -
(Increase) in accrued
interest receivable (455) - (1,130)
Increase (decrease) in
accounts payable (634) (2,312) 6,418
Increase (decrease) in
accounts payable - related
party 3 (473) 73
Increase in accrued payroll
and payroll taxes 8,971 6,142 11,215
__________ _________ ___________
Net Cash (Used)
by Operating
Activities (138,020) (8,672) (237,935)
__________ _________ ___________
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 - (25,149) (35,935)
__________ _________ ___________
Net Cash Provided by
Financing Activities 291,085 274,851 565,150
__________ _________ ___________
Net Increase in Cash 153,065 262,090 320,337
Cash at Beginning of Period 167,272 6,200 -
__________ _________ ___________
Cash at End of Period $ 320,337 $ 268,290 $ 320,337
__________ _________ ___________
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ 39
Income taxes $ - $ - $ 349
Supplemental Schedule of
Noncash Investing and
Financing Activities:
For the Period Ended June 30, 2000
None
For the Period Ended June 30, 1999
None
The accompanying notes are an integral part of these financial
statements.
5
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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 June 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 June 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.
Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of
revenues and expenses during the reported period. Actual
results could differ from those estimated.
Research and Development - Research and development costs are
expensed as incurred.
6
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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 June
30, 2000;
Office equipment $ 5,592
Less accumulated depreciation (1,286)
_________
$ 4,306
_________
During the six months ended June 30, 2000 depreciation expense
amounted to $684.
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 June 30, 2000, total
options available to be granted under the plan amounted to
970,000.
A summary of the status of the options granted under the
Company's stock option plan at June 30, 2000 is presented
below:
June 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
_________ _____________
7
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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 outstanding under the
Company's stock option plan at June 30, 2000 is presented
below:
Options Outstanding Options Exercisable
______________________________ ________________________________
Average Weighted-
Range of Remaining Weighted- Average
Exercise Number Average Exercise Number Exercise
Prices Outstanding Contractual LifePrice 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 six 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.
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, 1999.
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 three months ended March 31, 2000, $100 was
received for the purchase of 10,000 warrants.
8
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 June 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 June
30, 2000, the Company has available unused operating loss
carryforwards of approximately $256,000, which may be applied
against future taxable income and which expire in 2018 through
2020.
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 $87,000 and $37,000
as of June 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 $50,000 for the six months ended June 30,
2000.
9
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MICRO INTERCONNECT TECHNOLOGY, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share for the periods ended June 30, 2000 and 1999:
For the Three For the Six
Months Ended Months Ended From Inception on
June 30, June 30 February 11, 1998
___________________ _________________Through June 30,
2000 1999 2000 1999 2000
_________ _________ _________ _________ ____________
Loss from continuing
operations available
to common shareholders
(numerator) $ (85,010)$ (9,388) $(147,099) $(10,850) $ (256,283)
_________ _________ _________ _________ ____________
Weighted average
number of common shares
outstanding used in
loss per share for the
period (denominator) 1,187,941 1,098,091 1,173,794 1,049,724 1,078,426
_________ _________ _________ _________ ____________
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 June 30,
2000 totaled $8,400.
10
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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 ten 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 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 twelve 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 ten 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 twelve 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.
11
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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.
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 August 18, 2000
N. Edward Berg, President Date
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