<PAGE>
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ 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
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
Commission File No. 000-24551
---------
COMPOSITE SOLUTIONS, INC.
(Name of Small Business Issuer in its Charter)
Florida 65-0790758
- ------------------------------ ------------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
7777 Fay Avenue, Suite 112 La Jolla, California 92073
- ----------------------------------------------- --------
Address of principal executive office Zip Code
Issuer's telephone number: (619) 459-4843
--------------
JS Business Works, Inc.
219 Almeria
West Palm Beach, Florida 33405
-----------------------------------------------------
Former name and address, if changed since last report
Check whether the issuer has (1) filed all reports required by Section 13 or
15(d) of the Exchange Act during the past 12 months, and (2) been subject to
such filing requirements for the past ninety (90) days. Yes X No
------ ------
As of August 15, 1999, 14,500,000 shares of Common Stock were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited financial statements contain information
regarding the results of operation and balance sheet of Composite Solutions,
Inc., a Florida corporation formerly known as JS Business Works, Inc., for
the period ending and as of June 30, 1999. On June 30, 1999, the Company
consummated a reverse acquisition pursuant to which the Company acquired
Composite Solutions, Inc., a Nevada corporation ("CSI Nevada"), a developer
of certain construction technology described below. The financial information
set forth below does not reflect or include the results of operations or
balance sheet of CSI Nevada. Financial statements of CSI Nevada and for the
Company and CSI Nevada on a consolidated basis will be filed by amendment to
the Company's Form 8-K dated July 1, 1999 within sixty 60 days following the
filing of such Form 8-K.
-2-
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Balance Sheets.............................................................F-2
Statements of Loss.........................................................F-3
Statements of Changes in Stockholders' Equity..............................F-4
Statements of Cash Flows...................................................F-5
Notes to Financial Statements..............................................F-6
</TABLE>
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS June 30, 1999 September 30,
(Unaudited) 1998
------------------------ -------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 117 $ 379
Note and accrued interest receivable - shareholder 10,934 10,263
------------------------ -------------------------
Total current assets 11,051 10,642
------------------------ -------------------------
OTHER ASSETS
Loan receivable from subsidiary 1,000,000 0
Investment in subsidiary 100 0
------------------------ -------------------------
Total other assets 1,000,100 0
------------------------ -------------------------
Total Assets $ 1,011,151 $ 10,642
======================== =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 862 $ 4,500
Advance from shareholder 4,000
------------------------ -------------------------
Total current liabilities 4,862 4,500
------------------------ -------------------------
Total Liabilities 4,862 4,500
------------------------ -------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000 shares,
0 issued and outstanding 0 0
Common stock, $0.0001 par value, authorized 50,000,000
shares, 14,500,000 issued and outstanding 1,450 230
Additional paid-in capital 1,016,985 18,105
Deficit accumulated during the development stage (12,146) (12,193)
------------------------ -------------------------
Total Stockholders' Equity 1,006,289 6,142
------------------------ -------------------------
Total Liabilities and Stockholders' Equity $ 1,011,151 $ 10,642
======================== =========================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
STATEMENTS OF LOSS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
October 20, 1997
For the nine months ended (Inception)
-------------------------------------- through
June 30, 1999 June 30, 1998 June 30, 1999
------------------- ------------------ -------------------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 0
------------------- ------------------ -------------------
General and administrative expenses 624 126 1,793
Consultant and office expenses - related party 0 2,100 2,100
Professional fees - related party 0 2,635 2,636
Professional fees - other 0 2,985 7,000
------------------- ------------------ -------------------
Total expenses 624 7,846 13,529
------------------- ------------------ -------------------
Loss from operations (624) (7,846) (13,529)
Other income (expense)
Interest income - related party 671 30 1,383
------------------- ------------------ -------------------
Net income (loss) $ 47 $ (7,816)$ (12,146)
=================== ================== ===================
Basic net income (loss) per weighted average
share $ 0 $ ( 0.004)$ (0.001)
=================== ================== ===================
Weighted average number of shares 21,056,183 1,844,555 19,714,775
=================== ================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE TOTAL
NUMBER OF COMMON PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES STOCK CAPITAL STAGE EQUITY
-------------- ----------- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE, October 20, 1997 (Inception) 0 $ 0 $ 0 $ 0 $ 0
October 1997 - services ($0.0001/sh) 1,601,000 160 0 0 160
April 1998 - cash ($0.01/sh) 302,500 30 2,995 0 3,025
April 1998 - cash ($0.05/sh) 343,500 35 17,140 0 17,175
April 1998 - services ($0.05/sh) 49,500 5 2,470 0 2,475
May 1998 - offering costs 0 0 (4,500) 0 (4,500)
Net loss 0 0 0 (12,193) (12,193)
-------------- ----------- ------------- ---------------- --------------
BALANCE, September 30, 1998 2,296,500 230 18,105 (12,193) 6,142
-------------- ----------- ------------- ---------------- --------------
For the nine months ended June 30, 1999 (Unaudited):
6/25 - 9.229876 forward split 18,899,910 1,890 (1,890) 0 0
6/25 - shares contributed (7,896,410) (790) 790 0 0
6/30 - shares issued for acquisition 1,000,000 100 0 0 100
6/30 - subsidiary's note payable converted to shares 200,000 20 999,980 0 1,000,000
Net income 0 0 0 47 47
-------------- ----------- ------------- ---------------- --------------
BALANCE, June 30, 1999 (Unaudited) 14,500,000 $ 1,450 $ 1,016,985 $ (12,146)$ 1,006,289
============== =========== ============= ================ ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From October 20,
For the nine months ended 1997 (Inception)
------------------------------- through
June 30, 1999 June 30, 1998 June 30, 1999
-------------- ---------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net income (loss) $ 47 $ (5,792) $ (12,146)
Adjustments to reconcile net income (loss) to net cash used by development
activities:
Stock issued for services 0 2,636 2,636
Changes in assets and liabilities
Increase in accrued interest on note receivable - related party (671) 0 (934)
Increase (decrease) in accrued expenses (3,638) 0 861
Increase in advance from shareholder 4,000 0 4,000
-------------- ---------------- -----------------
Net cash used by development activities (262) (3,156) (5,583)
-------------- ---------------- -----------------
CASH FLOW FROM INVESTING ACTIVITIES:
Issuance of note receivable - related party 0 (10,000) (10,000)
-------------- ---------------- -----------------
Net cash used by investing activities 0 (10,000) (10,000)
-------------- ---------------- -----------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 0 15,700 15,700
-------------- ---------------- -----------------
Net cash provided by financing activities 0 15,700 15,700
-------------- ---------------- -----------------
Net increase (decrease) in cash (262) 2,514 117
CASH, beginning of period 379 0 0
-------------- ---------------- -----------------
CASH, end of period $ 117 $ 2,514 $ 117
============== ================ =================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(Information with respect to the periods ended
June 30, 1999 and 1998 is unaudited)
(1) THE COMPANY Composite Solutions, Inc, f/k/a JS Business Works, Inc., is
a Florida chartered development stage corporation. The Company was
incorporated on October 20, 1997 and has selected September 30 as its
fiscal year end.
The Company has not yet engaged in its expected operations. On June
30, 1999, the Company consummated a reverse acquisition pursuant to
which the Company acquired Composite Solutions, Inc., a Nevada
corporation ("CSI Nevada"), a developer of construction technology
for use in the retrofitting and repair of buildings and other
structures. The financial information set forth below does not
include the results of operations of CSI Nevada. Current activities
include raising additional equity to complete the development and
testing of its products and technology. There is no assurance that
any benefit will result from such activities. The Company will not
receive any operating revenues until the commencement of operations,
but will nevertheless continue to incur expenses until then.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) USE OF ESTIMATES The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and revenues
and expenses for the year then ended. Actual results may differ
significantly from those estimates.
The financial statements for the six months ended March 31, 1999 and
1998 include all adjustments which in the opinion of management are
necessary for fair presentation.
b) START-UP COSTS Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
c) NET INCOME (LOSS) PER SHARE Basic is computed by dividing the net
income (loss) by the weighted average number of common shares
outstanding during the period.
d) COMPENSATION FOR SERVICES RENDERED WITH STOCK The Company issues
shares of common stock, in exchange for services rendered. The costs of
the services are valued according to generally accepted accounting
principles and have been charged to operations.
(2) NOTE RECEIVABLE-SHAREHOLDER A note in the amount of $10,000 was
advanced to a shareholder of the Company. The note receivable bears
interest at 9.0% interest per annum and is due on demand. Accrued
interest at June 30, 1999 is $934 and is presented in Note and accrued
interest receivable-related party. Interest income for the nine months
ended June 30, 1999 is $671.
(3) STOCKHOLDERS' EQUITY The Company has authorized 50,000,000 shares of
$0.0001 par value common stock. The Company had 2,296,500 shares of
common stock issued and outstanding at June 30, 1999. On October 21,
1997, the Company issued 1,601,000 shares to its President for the
value of services rendered in connection with the organization of the
Company. In April 1998, the Company issued 646,000 shares of common
stock under Regulation D offerings in exchange for $20,200 in cash. The
Company paid $4,500 of legal expenses in connection with these
offerings. Also in April 1998, the Company issued 49,500 shares, to its
Executive Vice president for value of services rendered of $2,475. In
addition, the Company has authorized 10,000,000 shares of $0.0001 par
value preferred stock. The Company had issued none of its shares of
preferred stock at June 30, 1999.
On June 25, 1999, the Company completed a 9.229876 shares for 1 share
forward split. On June 25, 1999, the Company received 7,896,410 shares
contributed back to the Company. On June 30, 1999, the Company issued
1,000,000 shares to acquire 100% of the issued and outstanding common
stock of CSI Nevada. On June 30, 1999, the Company issued 200,000
shares in settlement of a note payable of its subsidiary amounting to
$1,000,000 in cash.
F-6
<PAGE>
COMPOSITE SOLUTIONS, INC.
(F/K/A JS BUSINESS WORKS, INC.)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(4) INCOME TAXES Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company had net operating loss
carry-forwards for income tax purposes of approximately $12,146
expiring at September 30, 2019.
The amount recorded as deferred tax assets as of June 30, 1999 is
$2,398, which represents the amount of tax benefit of the loss
carry-forward. The Company has established a valuation allowance
against this deferred tax asset, as the Company has no history of
profitable operations.
(5) RELATED PARTIES See Note (2) for disclosure of Note receivable -
related party.
During the period ended March 31, 1999, the Company was advanced funds
from the president and majority shareholder of the Company. Unpaid
amounts were $4,000 at March 31, 1999 and are presented in Advance from
shareholder.
The Company had entered into an agreement to pay $100 per month to
Adams, Inc. to cover general office expenses. Adams, Inc. is a company
controlled by the President of the Company. After the first month, the
President chose to suspend this agreement until the Company is
sufficiently capitalized. During the initial formation of the Company,
an officer and shareholder of the Company received compensation of
$2,000 in cash for consulting services rendered. These amounts,
totaling $2,100 are presented in Consulting and office expenses -
related party.
See Note (3) for issuance of stock for services rendered by related
parties. These amounts, totaling $2,635, were charged to Professional
fees - related party.
(6) GOING CONCERN The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company's financial position and operating results raise substantial
doubt about the Company's ability to continue as a going concern, as
reflected by the net loss of $12,146 accumulated from October 20, 1997
(Inception) through June 30, 1999. The ability of the Company to
continue as a going concern is dependent upon commencing operations,
developing sales and obtaining additional capital and financing. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. The
Company is currently seeking additional capital to allow it to begin
its planned operations.
F-7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATIONS
Since its inception, the Company has conducted no business operations
except for organizational and capital raising activities. For the period from
inception (October 20, 1997) through June 30, 1999, the Company had no income
from operations or significant revenues.
On June 30, 1999, the Company consummated a reverse acquisition
pursuant to which the Company acquired Composite Solutions, Inc., a Nevada
corporation ("CSI Nevada"), a developer of certain construction technology
described below. Pursuant to the terms of the Share Exchange Agreement executed
in connection with such transaction, the former stockholders of CSI Nevada were
issued 1,000,000 shares of the Company's Common Stock.
Utilizing the technology of CSI - Nevada Company, the Company intends
to complete CSI - Nevada's development an affordable high technology method for
the retrofit/repair of buildings and other structures. This unique technology is
based upon the application of a composite material that is layered over existing
surfaces. This "composite overlay" is applied to key areas of buildings and
other structures to repair damage or to add structural integrity. The Company
believes that the simplicity of the overlay applications, and the reduced cost
and time to apply, will revolutionize the way retrofit/repairs are done and will
provide a solution to many structures that would have otherwise been torn down
or rebuilt completely. This overlay, which is created by impregnating a carbon
or glass fabric with a chemical resin, and the "wallpapering" this combination
to a structural surface, is appropriate for concrete, masonry, and wood, and can
be used to accomplish a variety of structural objectives including: earthquake
retrofit and damage repair, defect repair, loan capacity increase, and
structural hardening to protect against bomb blasts.
The Company intends to market a method for new construction, called the
Carbon Shell System ("CSS"). CSS combines conventional civil construction
techniques and advanced carbon fiber reinforced polymer matrix composites to
provide a pre-manufactured advanced composite tube which is filled with concrete
depending on the strength, stiffness and stability requirements for the
structural component. In the CSS, the carbon shells are joined and filled with
concrete on site. The lightweight tubes will allow for rapid field construction
without the need for heavy lifting equipment. This, as well as the lack of
cumbersome rebar cages, offers the potential for reduced construction costs and
time. The CSS is applicable fora variety of common structural components,
including columns, girders, and beams.
THE COMPANY'S FINANCIAL POSITION AND OPERATING RESULTS RAISE
SUBSTANTIAL DOUBT ABOUT ITS ABILITY TO CONTINUE AS A GOING CONCERN, AS REFLECTED
BY THE NET LOSSES ACCUMULATED FROM OCTOBER 20, 1997 (INCEPTION) THROUGH JUNE 30,
1999. THE ABILITY OF THE COMPANY TO CONTINUE AS A GOING CONCERN IS DEPENDENT
UPON COMMENCING OPERATIONS, DEVELOPING SALES AND OBTAINING ADDITIONAL CAPITAL
AND FINANCING. THE COMPANY IS CURRENTLY SEEKING
-3-
<PAGE>
ADDITIONAL CAPITAL TO ALLOW IT TO BEGIN ITS PLANNED OPERATIONS. HOWEVER, NO
ASSURANCES CAN BE GIVEN THAT THE COMPANY WILL BE SUCCESSFUL IN RAISING SUCH
FINANCING OR THAT THE COMPANY WILL BE SUCCESSFUL IN IMPLEMENTING ITS BUSINESS
PLAN EVEN IF ADEQUATE FINANCING IS OBTAINED.
To the extent that the Company is successful in its financing
activities, the Company intends to devote substantially all of its financial
resources towards completion of the development and testing of the CSS and
related products and, if development and testing are successfully completed, the
marketing of the CSS and related products and technology. Capital will also be
used for corporate administrative expenses and general working capital.
FORWARD-LOOKING STATEMENTS
This Form 10-QSB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-QSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
the development and completion of the Company's technology, and other such
matters are forward-looking statements. These statements are based on certain
assumptions and analyses made by the Company in light of its experience and its
perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results or developments will conform with
the Company's expectations and predictions is subject to a number of risks and
uncertainties, general economic market and business conditions; the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company; changes in laws or regulation; and other factors, most of which are
beyond the control of the Company. Consequently, all of the forward-looking
statements made in this Form 10-QSB are qualified by these cautionary statements
and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected consequence to or effects on the Company or its
business or operations. The Company assumes no obligations to update any such
forward-looking statements.
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
-4-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated
herein by reference, as follows:
<TABLE>
<S> <C>
27.1 * Financial Data Schedule
</TABLE>
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* Filed herewith
(b) On July 1, 1999, the Company filed a Form 8-K in connection with the
Company's acquisition of CSI Nevada. Financial statements of CSI Nevada
will be filed by amendment to the Form 8-K within 60 days following the
date of such filing along with the requisite pro forma financial
information regarding the Company and CSI Nevada.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMPOSITE SOLUTIONS, INC.
Date: August 20, 1999 /s/ Thomas Burke
-------------------------------------
President and Chief Executive Officer
/s/ Eileen Beattie
-------------------------------------
Treasurer (chief accounting officer)
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 117
<SECURITIES> 0
<RECEIVABLES> 10,934
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,051
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,011,151
<CURRENT-LIABILITIES> 4,862
<BONDS> 0
0
0
<COMMON> 1,450
<OTHER-SE> 1,004,839
<TOTAL-LIABILITY-AND-EQUITY> 1,011,151
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 47
<INCOME-TAX> 0
<INCOME-CONTINUING> 47
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
