U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-30118
DIRECTION TECHNOLOGIES, INC
- - ---------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 88-0413417
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
PMB 723, 250 "H" St.,
Blaine, WA 98230
---------------------
(Address of Principle Executive Offices)
Issuer's Telephone Number: (604) 683-6648
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 Company was required to file such reports). And (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
---- ---- ---- ----
<PAGE>
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each Issuer's classes of common
equity, as of the latest practicable date:
June 30, 1999: Common Stock - 10,031,000
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item
6 of this report.
Transitional Small Business Issuer Format Yes No X
----- -----
<PAGE>
DIRECTION TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Balance Sheets as of June 30, 1999 and
December 31, 1998 6
Statements of Operations for the three months ended
June 30, 1999 and June 30, 1998 and the six months ended
June 30, 1999 and June 30, 1998 and from Inception through
June 30, 1999 7
Statements of Cash Flow for the three months ended
June 30, 1999 and June 30, 1998 and the six months ended
June 30, 1999 and June 30, 1998 and from Inception through
June 30, 1999 8
Notes to Financial Statements for the three months ended
June 30, 1999 and June 30, 1998 and the six months ended
June 30, 1999 and June 30, 1998 and from Inception through
June 30, 1999 10
Item 2. Management's Plan of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Securities Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8 - K 12
Signatures 12
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Company required to be filed with this 10-QSB
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, these Financial
Statements fairly present the financial condition of the Company, but should be
read in conjunction with the Financial Statements of the Company for the year
ended December 31, 1998 previously filed with the Securities and Exchange
Commission.
<PAGE>
DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS JUNE 30,1999 DEC 31,1998
<S> <C> <C>
CASH $ 936 $ -
PREPAID EXPENSES - 650
-------- --------
TOTAL CURRENT ASSETS $ 936 $ 650
LICENSE FEES $ 50,000 -
INVESTMENT IN QIBLAH TECHNOLOGIES LTD. 1,772 -
-------- --------
TOTAL ASSETS $ 52,708 $ 650
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 59,361 $ 1,500
-------- --------
TOTAL CURRENT LIABILITIES $ 59,361 $ 1,500
-------- --------
NOTES PAYABLE - -
-------- --------
TOTAL LIABILITIES $ 59,361 $ 1,500
-------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL - NOTE 2
AUTHORIZED:
50,000,000 common shares, $0.001 par value
10,000,000 preferred shares, $0.001 par value
ISSUED:
10,031,000 common shares $ 10,031
CONTRIBUTED SURPLUS 15,469
DEFICIT ACCUMULATED DURING THE DEVELOPMENT
STAGE (32,153) $ (850)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (6,653) (850)
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,708 $ 650
-------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 1999 AND JUNE 30,
1998 AND FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
APRIL 30, 1998
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS (DATE OF
ENDED JUNE 30 ENDED JUNE 30 ENDED JUNE 30 ENDED JUNE 30 INCEPTION TO
1999 1998 1999 1998 JUNE 30,1999)
<S> <C> <C> <C> <C> <C>
SALES - - - - -
COST OF SALES - - - - -
------------- ------------- ------------- ------------ --------------
GROSS PROFIT - - - - -
OPERATING EXPENSES $ 11,653 $ 850 $ 28,075 $ 850 $ 28,925
RESEARCH & DEV
------------- ------------- ------------- ------------ --------------
LOSS BEFORE OTHER ITEMS $ (11,653) $ (850) $ (28,075) $ (850) $ (28,925)
OTHER ITEMS
EXCESS VALUE OF SHARES
ISSUED ON INVESTMENT $ - $ - $ (2,500) $ - $ -
SHARE OF LOSS OF
QIBLAH TECH. LTD. (728) (728)
------------- ------------- ------------- ------------ -------------
NET (LOSS) $ (11,653) $ (850) $ (31,303) $ (850) $ (32,153)
------------- ------------- ------------- ------------ -------------
BASIC AND DILUTED
LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 1999 AND JUNE 30,
1998 AND FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
APRIL 30, 1998
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS (DATE OF
ENDED JUNE 30 ENDED JUNE 30 ENDED JUNE 30 ENDED JUNE 30 INCEPTION TO
1999 1998 1999 1998 JUNE 30,1999)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET (LOSS) $ (11,653) $ (850) $ (28,803) $ (850) $ (29,653)
ADD: ITEMS NOT
AFFECTING CASH
SHARE OF QIBLAH
TECH LTD LOSS $ - - 728 - 728
EXCESS VALUE OF
SHARES ISSUED ON
INVESTMENT $ - - 2,500 - 2,500
------------- ------------- ------------- ------------ --------------
$ (11,653) $ (850) $ (25,575) $ (850) $ (26,425)
CHANGES IN NON-CASH
ITEMS
PREPAID EXPENSES $ - - 650 - -
ACCOUNTS PAYABLE $ 9,361 $ 850 $ 57,861 $ 850 $ 59,361
------------- ------------- ------------- ------------ --------------
NET CASH (USED) BY
OPERATING ACTIVITIES $ (2,292) $ - $ 32,936 $ - $ 32,936
------------- ------------- ------------- ------------ --------------
CASH FLOW FROM
INVESTING ACTIVITIES
ACQUISITION OF
LICENSE FEES $ - $ - $ (50,000) $ - $ (50,000)
INVESTMENT IN
QIBLAH TECH LTD $ - $ - $ (5,000) $ - $ (5,000)
------------- ------------- ------------- ------------ --------------
NET CASH (USED) BY
INVESTMENT ACTIVITIES $ - $ - $ (55,000) $ - $ (55,000)
CASH FLOWS FROM
FINANCING ACTIVITIES
PROCEEDS FROM
ISSUANCE OF
COMMON SHARES $ - $ - $ 23,000 $ - $ 23,000
------------- ------------- ------------- ------------ --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES $ - $ - $ 23,000 $ - $ 23,000
------------- ------------- ------------- ------------ --------------
NET INCREASE (DECREASE)
IN CASH $ (2,292) $ - $ 936 $ - $ 936
CASH AT BEGINNING
OF PERIOD $ 3,228 $ - $ - $ - $ -
------------- ------------- ------------- ------------ --------------
CASH AT END
OF PERIOD $ 936 $ - $ 936 $ - $ 936
------------- ------------- ------------- ------------ --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
DIRECTION TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE MONTHS AND SIX MONTHS PERIODS
ENDED JUNE 30, 1999 AND JUNE 30, 1998 AND FOR THE PERIOD APRIL 30, 1998
(INCEPTION) THROUGH JUNE 30, 1999.
1. BASIS OF PRESENTATION
In the opinion of management, the unaudited financial statements reflect all
normally recurring adjustments necessary to fairly present the Company's
financial position and results of operations for the periods indicated. The
accompanying interim financial statements should be read in conjunction with the
financial statements and related notes included in the Company's 10-KSB for the
period ended December 31, 1998, which has been filed with the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in the Company's annual financial statements have been omitted from the
quarterly financial statements based upon Securities and Exchange Commissions
rules and regulations. Net loss per common and common equivalent share was
computed based on the net loss divided by the weighted average number of common
and common equivalent shares outstanding, unless antidilutive, during the year
presented.
2. FINANCING
Common
Shares Additional
# Par Value paid-in Capital
------ --------- ---------------
Balance, December 31,1998 - $ - $ -
Issuance of shares:
- - -pursuant to offering memorandum
-at $0.50 per share 31,000 31 15,469
-at $0.001 per share 5,000,000 5,000 -
- - -pursuant to acquisition of Qiblah
Technologies Limited 5,000,000 5,000 -
---------- --------- ---------------
Balance, June 30, 1999 10,031,000 $ 10,031 $ 15,469
---------- --------- ---------------
The capital raised was used to fund operations. The Company anticipates needing
additional capital to fund operations during the upcoming year. The Company
intends to raise capital through a combination of the private placement of its
securities, establishing operating lines of credit, and through the sale of
product.
3. RELATED PARTY TRANSACTIONS
On January 12, 1999, the company acquired the shares of Qiblah International
Industries Ltd. (Qiblah"). Qiblah was a private company controlled by a
significant shareholder of the Company. On January 19, 1999, two directors of
Qiblah became directors of the company.
4. DESCRIPTION OF SECURITIES
The Company has two class of securities authorized; 50,000,000 shares of $0.001
par value common voting stock and 10,000,000 of $0.001 par value preferred
shares. The holders of the Company's Common Stock are entitled to one vote per
share on each matter submitted to a vote at a meeting of stockholders. The
shares of Common Stock carry cumulative voting rights in the election of
directors. There are no preferred shares issued.
Stockholders of the Company have no pre-emptive rights to acquire additional
shares of Common Stock or other securities. The Common Stock is not subject to
redemption rights and carries no subscription or conversion rights. In the event
of liquidation of the Company, the shares of Common Stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. All shares of
the Common Stock now outstanding are fully paid and non-assessable.
There are no outstanding options.
There is no provision in the Company's Articles of Incorporation, as amended, or
Bylaws that would delay, defer, or prevent a change in control of the Company.
5. YEAR 2000 MATTERS
The inability of computers, software, and other equipment utilizing
microprocessors to recognize and properly process date fields containing a two
digit year reference such as "00" for the year 2000 is commonly referred to as
the Year 2000 issue. Neither of the Company's main two products, the Electric
Car and the Qiblah Locator is Y2K sensitive. There are no electronic timing
devices in the products. The Company's office support system includes network
hardware and operating systems, desktop and laptop computers and servers. As
the majority of the Company's hardware has been replaced or upgraded over the
past two years, critical systems compliance is not expected to be a major issue
and associated future costs to be minimal.
The primary Y2K risk to the Company's operations is service disruption from
third party providers that supply parts to the assembly process of the products.
Any disruption to these services would hinder the Company's ability to operate.
Therefore, efforts are currently under way to obtain Y2K compliance
certification from the Company's major parts providers. Concern about potential
problems has been raised, but commitment to compliance is beyond the Company's
control.
The Company has not yet approved a formal contingency plan for Y2K issues,
however, a formal contingency plan is expected to be completed and approved
during 1999.
Item 2. Management's Plan of Operations
The Company is in its initial stages of development with no revenues or income
and is subject to all the risks inherent in the creation of a new business.
Since the Company's principal activities to date have been limited to
organizational activities, prospect development, and acquisition of interests,
it has no record of any revenue-producing operations. Consequently, there is no
operating history upon which to base an assumption that the Company will be able
to achieve its business plans.
PRINCIPAL PRODUCT.
One of the specific reasons the Company was founded is for the purpose of
entering into a world-wide license agreement with E.T.C. Industries Ltd. of
Vancouver, British Columbia, Canada to license certain technology, and obtain
advice in facilitating the production of electric vehicles using certain
technology developed by the licensor and currently licensed in the State of
California. The other specific reason for formation of the Company is to
purchase certain assets of Qiblah International Industries Ltd. a British
Columbia corporation, of Vancouver, British Columbia, Canada (a
non-operational holding company). Qiblah International Industries Ltd. Owns
50% of Qiblah Technologies Ltd. a duly registered non-reporting, non-listed
South African public corporation.
This firm has developed a state-of-the art electronic device called the Qiblah
Locator, a battery-operated hand-held device that indicates the direction of the
Muslim religious center Mecca from any location in the world. The Qiblah Locator
is designed to be of assistance to the more than 1.5 billion adherents of the
Muslim faith in the performance of their religious observations.
LIQUIDITY.
During the next 12 months, the Company will need significant working capital to
fund its marketing efforts and to manufacture product. The Company intends to
obtain working capital from the sale of product and through private investments
made by third parties.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item.2. Changes in Securities and Use of Proceeds.
During the second quarter of 1999, the Company did not issue any
securities.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit
(a) Exhibits.* Number
None.
(b) Reports on Form 8-K.
* A summary of any Exhibit is modified in its entirety by reference
to the actual Exhibit.
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.
DIRECTION TECHNOLOGIES, INC
Date: 9/8/99 By: /s/ Rolf Papsdorf
President and Director
Date: 9/8/99
By: /s/ Dieter Schindelhauer
Secretary/Treasurer and Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS FOR DIRECTION TECHNOLOGIES, INC. A DEVELOPMENT
STAGE COMPANY, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 936
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 936
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,708
<CURRENT-LIABILITIES> 59,361
<BONDS> 0
0
0
<COMMON> 10,031
<OTHER-SE> 15,469
<TOTAL-LIABILITY-AND-EQUITY> 52,708
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,653<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,653)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,653)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,653)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)<F2>
<FN>
<F1>OPERATING EXPENSE 11,653; R&D 0
<F2>DILUTIVE EFFECT LESS THAN REPORTABLE LEVEL
</FN>
</TABLE>
