SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended December 31, 1999 Commission File No. 0-28315
AZONIC CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 84-1517404
(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
6521 W. Calhoun Place
Littleton, Colorado 80123
(Address of Principal Executive Offices) (Zip Code)
(303) 794-8102
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
at least the past 90 days.
Yes ___ No X
The number of shares outstanding of each of the Registrant's classes of common
equity, as of December 31, 1999 are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, $.001 par value 6,000,000
<PAGE>
INDEX
Page of
Report
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements ............................................. 3
Balance Sheets:
As of December 31, 1999 (Unaudited) and March 31, 1999 ........... 3
Statement of Operations (Unaudited):
For the nine months ended December 31, 1999 and 1998
and Cumulative from inception (May 1, 1996)
through December 31, 1999 ........................................ 4
Comparison of quarter ended December 31, 1999
with quarter ended December 31, 1998 ............................. 5
Statements of Cash Flows (Unaudited):
For the nine months ended December 31, 1999 and 1998
and Cumulative from inception (May 1, 1996)
through December 31, 1999 ........................................ 6
For the three months ended December 31, 1999 and 1998 ............ 7
Statement of Changes in Stockholders' Equity (Unaudited):
From inception (May 1, 1996) through December 31, 1999 .......... 8
Notes to Financial Statements (Unaudited) ........................ 9
Item 2. Management's Discussion and Analysis or Plan of Operation ........ 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................. 13
Signatures ....................................................... 13
2
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
Dec 31 Mar 31
1999 1999
---- ----
Current Assets: $ -0- $ -0-
Plant, Property and Equipment: -0- -0-
Other Assets:
Organization costs - net- -0- -0-
------ -----
TOTAL ASSETS $ -0- $ -0-
====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ -0- $ -0-
Stockholders' Equity:
Preferred Stock: 5,000,000 shares
Authorized; $.001 par value; -0- -0-
none issued and outstanding
Common Stock: 50,000,000 shares
Authorized; $.001 par value;
1,000,000 shares outstanding 3/31/99 -0- 1,000
6,000,000 shares outstanding 12/31/99 6,000 -0-
Paid in Capital (deficit) (5,700) (950)
Deficit accumulated during
The development stage (300) (50)
------ -----
Total Stockholders' Equity -0- -0-
------ -----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ -0- $ -0-
====== =====
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Periods as Noted
(Unaudited) (Unaudited) May 1, 1996
9 Months 9 Months (Inception)
Ended Ended to
12-31-99 12-31-98 Dec 31, 1999
-------- -------- ------------
Revenues: $ -0- $ -0- $ -0-
---------- ----------- -----------
Costs and Expenses:
Amortization -0- 7 50
Management 250 -0- 250
---------- ----------- -----------
Net (Loss) from Operations (250) (7) (300)
Other Income (Expense) -0- -0- -0-
---------- ----------- -----------
Net (Loss) for the Period $ (250) $ (7) $ (300)
========== =========== ===========
(Loss) per common share $ (.00) $ (.00)
========== ===========
Weighted Average
Shares Outstanding 3,600,000 1,000,000
========== ===========
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Periods as Noted
(Unaudited) (Unaudited)
3 Months 3 Months
Ended Ended
12-31-99 12-31-98 Change
-------- -------- ------
Revenues: $ -0- $ -0- $ -0-
----------- ----------- -----------
Costs and Expenses:
Amortization -0- 2 (2)
Management -0- -0- -0-
----------- ----------- -----------
Net (Loss) from Operations -0- (2) 2
Other Income (Expense) -0- -0- -0-
----------- ----------- -----------
Net (Loss) for the Period $ -0- $ (2) $ 2
=========== =========== ===========
(Loss) per common share $ (.00) $ (.00)
=========== ===========
Weighted Average
Shares Outstanding 6,000,000 1,000,000
=========== ===========
5
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Periods as Noted
(Unaudited) (Unaudited) May 1, 1996
9 Months 9 Months (Inception)
Ended Ended to
12-31-99 12-31-98 Dec 31, 1999
-------- -------- ------------
Cash Flows from
Operating Activities $ -0- $ -0- $ -0-
Cash Flows from
Investing Activities -0- -0- -0-
Cash Flows from
Financing Activities -0- -0- -0-
------- ------ -------
Net Increase (Decrease) -0- -0- -0-
Beginning Cash Balance -0- -0- -0-
------- ------ -------
Cash Balance - End of Period $ -0- $ -0- $ -0-
======= ====== =======
Supplemental disclosure of noncash investing and financing activities:
Common Stock issued for
Organizational costs $ -0- $ -0- $ 50
======= ====== =======
Common Stock issued for services $ 250 $ -0- $ 250
======= ====== =======
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Periods as Noted
(Unaudited) (Unaudited)
3 Months 3 Months
Ended Ended
12-31-99 12-31-98
-------- --------
Cash Flows from
Operating Activities $ -0- $ -0-
Cash Flows from
Investing Activities -0- -0-
Cash Flows from
Financing Activities -0- -0-
----- -----
Net Increase (Decrease) -0- -0-
Beginning Cash Balance -0- -0-
----- -----
Cash Balance - End of Period $ -0- $ -0-
===== =====
Supplemental disclosure of noncash investing and financing activities:
Common Stock issued for
Organizational costs $ -0- $ -0-
===== =====
Common Stock issued for services $ -0- $ -0-
===== =====
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period May 1, 1996 (Inception) to December 31, 1999
Common Stock Deficit
--------------------------------- Accumulated
Paid-in from
Shares Amount (Deficit) Inception
------ ------ --------- ---------
Balances May 1, 1996 -0- $ -0- $ -0- $ -0-
Common stock issued
For services & costs 1,000,000 1,000 (950)
Net Loss 3-31-97 -0- -0- -0- (9)
--------- --------- --------- ---------
Balance 3-31-97 1,000,000 1,000 (950) (9)
Net loss 3-31-98 -0- -0- -0- (10)
--------- --------- --------- ---------
Balance 3-31-98 1,000,000 1,000 (950) (19)
Net loss 3-31-99 -0- -0- -0- (31)
--------- --------- --------- ---------
Balance 3-31-99 1,000,000 1,000 (950) (50)
Common stock issued
For services 5,000,000 5,000 (4,750)
Net loss for Nine Months
Ended 12-31-99 -0- -0- -0- (250)
--------- --------- --------- ---------
Balance 12-31-99 6,000,000 $ 6,000 $ (5,700) $ (300)
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
AZONIC CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
December 31, 1999
NOTE 1: THE COMPANY
- -------------------
Organization and Nature of Operations - The financial statements presented are
those of Azonic Corporation. The Company is a development stage company with no
operations. The Company is a "blank check" company which intends to enter into a
business combination with one or more as yet unidentified privately held
businesses. Its principal executive offices are located at 6521 W. Calhoun
Place, Littleton, Colorado 80123.
Condensed Financial Statements - The financial statements dated 12-31-99
included herein have been prepared by Azonic Corporation (the "Company") without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations. The Company believes that the disclosures are adequate to make
the information presented not misleading. While management believes the
procedures followed in preparing these financial statements are reasonable, the
accuracy of the amounts are, in some respects, dependent upon the facts that
will exist, and procedures that will be accomplished by the Company in the
future.
Use of 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
Income Taxes - The Company provides for income taxes using the asset and
liability method as prescribed by Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Loss per Common Share - Loss per common share is computed using the weighted
average number of common shares outstanding during each period.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid instruments with an original maturity of
three months or less cash equivalents.
Comprehensive Income - The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130 Reporting Comprehensive Income, effective April 1,
1998. SFAS No. 130 establishes standards for reporting comprehensive income and
its components (revenues, expenses, gains and losses). Components of
comprehensive income are net income and all other non-owner changes in equity.
SFAS No. 130 requires an enterprise to (a) classify items of other comprehensive
income by their nature in a financial statement, and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. The Company has no items of comprehensive income at December 31, 1999.
9
<PAGE>
NOTE 2: INCOME TAXES
- --------------------
As of December 31, 1999 the Company had net operating loss carryforwards of
$300, which expire in varying amounts from 2012 to 2014. Generally, these
operating losses are available to offset future federal and state taxable
income.
NOTE 3: RELATED PARTY TRANSACTIONS
- ----------------------------------
The Company's corporate offices are located in the personal residence of a
stockholder and board member on a rent-free basis.
NOTE 4: STOCKHOLDERS' EQUITY
- ----------------------------
Capital Structure - The Company was originally incorporated under Colorado law
on May 1, 1996, under the name of Grand Canyon Ventures Two, Incorporated. In
June 1998, the Company amended its Articles of Incorporation and changed its
name to Azonic Engineering, Incorporated. On September 17, 1999, Azonic
Corporation was formed in Nevada. On November 23, 1999 Azonic Engineering,
Incorporated was merged into Azonic Corporation. The Company's authorized stock
now consists of 55 million shares of $.001 par value stock, of which 50 million
shares are designated as common stock and 5 million shares are designated as
preferred stock. Stockholders' equity has been restated from inception to
conform to the current capital structure.
Preferred Stock - No shares of the Company's preferred stock have been issued as
of December 31, 1999. Dividends, voting rights and other terms, rights and
preferences have not been designated. The Company's board of directors may
establish these provisions from time to time.
Common Stock - 1,000,000 shares of common stock have been issued at $0.00005 in
exchange for services performed and costs advanced to organize the Company in
May 1996.
On August 10, 1999, the board of directors authorized the issuance of 5,000,000
shares of common stock at $0.00005 per share to the Company's president in
exchange for services valued at $250.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information
relating to Azonic that are based on the beliefs of its management as well as
assumptions made by and information currently available to its management. When
used in this report, the words "anticipate", "believe", "estimate", "expect",
"intend", "plan" and similar expressions, as they relate to Azonic or its
management, are intended to identify forward-looking statements. These
statements reflect management's current view of Azonic concerning future events
and are subject to certain risks, uncertainties and assumptions, including among
many others: a general economic downturn; a downturn in the securities markets;
a general lack of interest for any reason in going public by means of
transactions involving public blank check companies; federal or state laws or
regulations having an adverse effect on blank check companies, Securities and
Exchange Commission regulations which affect trading in the securities of "penny
stocks," and other risks and uncertainties. Should any of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this report as
anticipated, estimated or expected. Readers should realize that Azonic is in the
development stage, with only very limited assets, and that for Azonic to succeed
requires that it either originate a successful business (for which it lacks the
funds) or acquire a successful business. Azonic's realization of its business
aims as stated herein will depend in the near future principally on the
successful completion of its acquisition of a business, as discussed below.
Item 2. Management's Discussion and Analysis or Plan of Operation.
BACKGROUND. Azonic was incorporated in the state of Colorado on May 1, 1996
as Grand Canyon Ventures Two, Incorporated. The Company changed its name to
Azonic Engineering Corporation on June 23, 1998. On November 12, 1999, it was
redomiciled to the state of Nevada by merging into its wholly owned subsidiary
Azonic Corporation ("Company"), a Nevada corporation, which now is the name of
the Company.
The Company is in the development stage in accordance with Financial
Accounting Standards Board Standard No. 7. The Company has not been operational,
other than occasionally searching for a business or venture to acquire, as
described below, nor had revenues other than interest income since its
inception.
PLAN of OPERATION
Azonic is a blank check company whose plan of operation over the next
twelve months is to seek and, if possible, acquire an operating business or
valuable assets by entering into a business combination. Azonic will not be
restricted in its search for business combination candidates to any particular
geographical area, industry or industry segment, and may enter into a
combination with a private business engaged in any line of business, including
service, finance, mining, manufacturing, real estate, oil and gas, distribution,
transportation, medical, communications, high technology, biotechnology or any
other. Management's discretion is, as a practical matter, unlimited in the
selection of a combination candidate. Management of Azonic will seek combination
candidates in the United States and other countries, as available time and
resources permit, through existing associations and by word of mouth. This plan
of operation has been adopted in order to attempt to create value for Azonic's
shareholders. For further information on Azonic's plan of operation and
business, please consult Azonic's registration statement on Form 10SB-12G
available on the EDGAR system of the U.S. Securities and Exchange Commission.
Azonic does not intend to do any product research or development. Azonic
does not expect to buy or sell any real estate, plant or equipment except as
such a purchase might occur by way of a business combination that is structured
as an asset purchase, and no such asset purchase currently is anticipated.
Similarly, Azonic does not expect to add additional employees or any full-time
employees except as a result of completing a business combination, and any such
employees likely will be persons already then employed by the company acquired.
COMPETITION. Azonic will be in direct competition with many entities in its
efforts to locate suitable business opportunities. Included in the competition
will be business development companies, venture capital partnerships and
corporations, small business investment companies, venture capital affiliates of
industrial and financial companies, broker-dealers and investment bankers,
management and management consultant firms and private individual investors.
Most of these entities will possess greater financial resources and will be able
to assume greater risks than those which Azonic, with its limited capital, could
11
<PAGE>
consider. Many of these competing entities will also possess significantly
greater experience and contacts than Azonic's Management. Moreover, Azonic also
will be competing with numerous other blank check companies for such
opportunities.
EMPLOYEES. Azonic has no full-time employees, and its only employees
currently are its officers. It is not expected that Azonic will have additional
full-time or other employees except as a result of completing a combination.
RESULTS OF OPERATIONS
THIRD QUARTER 1999 - During the third fiscal quarter ended December 31,
1999, Azonic incurred a net loss of $-0-. The Company paid no rent or salaries
and had no operations during the quarter.
THIRD QUARTER 1998 - During the third fiscal quarter ended December 31,
1998, Azonic incurred a net loss of $-0-. The Company paid no rent or salaries
and had no operations during the quarter.
LIQUIDITY and CAPITAL RESOURCES
Azonic had $-0- cash on hand at the end of the quarter and had no other
assets to meet ongoing expenses or debts that may accumulate. Since inception,
Azonic has accumulated a deficit (net loss) of $300.
Azonic has no commitment for any capital expenditure and foresees none.
However, Azonic will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur expenses in finding and
investigating possible acquisitions and other fees and expenses in the event it
makes an acquisition or attempts but is unable to complete an acquisition.
Azonic's cash requirements for the next twelve months are relatively modest,
principally accounting expenses and other expenses relating to making filings
required under the Securities Exchange Act of 1934 (the "Exchange Act"), which
should not exceed $10,000 in the fiscal year ending March 31, 2001. Any travel,
lodging or other expenses which may arise related to finding, investigating and
attempting to complete a combination with one or more potential acquisitions
could also amount to thousands of dollars.
Azonic's current management and its counsel have informally agreed to
continue rendering services to Azonic and to not demand payment of sums owed
unless and until Azonic completes an acquisition. The terms of any such payment
will have to be negotiated with the principals of any business acquired. The
existence and amounts of Azonic debt may make it more difficult to complete, or
prevent completion of, a desirable acquisition. In addition, offices are
provided to Azonic without charge.
Azonic will only be able to pay its future debts and meet operating
expenses by raising additional funds, acquiring a profitable company or
otherwise generating positive cash flow. As a practical matter, Azonic is
unlikely to generate positive cash flow by any means other than acquiring a
company with such cash flow. Azonic believes that management members or
shareholders will loan funds to Azonic as needed for operations prior to
completion of an acquisition. Management and the shareholders are not obligated
to provide funds to Azonic, however, and it is not certain they will always want
or be financially able to do so. Azonic shareholders and management members who
advance money to Azonic to cover operating expenses will expect to be
reimbursed, either by Azonic or by the company acquired, prior to or at the time
of completing a combination. Azonic has no intention of borrowing money to
reimburse or pay salaries to any Azonic officer, director or shareholder or
their affiliates. There currently are no plans to sell additional securities of
Azonic to raise capital, although sales of securities may be necessary to obtain
needed funds. Azonic's current managment and its counsel have agreed to continue
their services to Azonic and to accrue sums owed them for services and expenses
and expect payment reimbursement only
Should existing management or shareholders refuse to advance needed funds,
however, Azonic would be forced to turn to outside parties to either loan money
to Azonic or buy Azonic securities. There is no assurance whatever that Azonic
will be able at need to raise necessary funds from outside sources. Such a lack
of funds could result in severe consequences to Azonic, including among others:
12
<PAGE>
(1) failure to make timely filings with the SEC as required by the Exchange
Act, which also probably would result in suspension of trading or quotation
in Azonic's stock and could result in fines and penalties to Azonic under
the Exchange Act;
(2) curtailing or eliminating Azonic's ability to locate and perform
suitable investigations of potential acquisitions; or
(3) inability to complete a desirable acquisition due to lack of funds to
pay legal and accounting fees and acquisition-related expenses.
Azonic hopes to require potential candidate companies to deposit funds with
Azonic that it can use to defray professional fees and travel, lodging and other
due diligence expenses incurred by Azonic's management related to finding and
investigating a candidate company and negotiating and consummating a business
combination. There is no assurance that any potential candidate will agree to
make such a deposit.
YEAR 2000 ISSUES
Azonic has not suffered any Y2K related problems and does not anticipate
that it will suffer any losses as a result of Y2K problems. However, if general
economic problems resulting from Y2K issues were to be severe and prolonged,
demand for blank check companies such as Azonic could be reduced or eliminated
for an unknown period of time. Because Azonic regularly backs up its records and
documents maintained on computer, any computer failure should not directly cause
Azonic more than a modest inconvenience at worst.
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. Exhibit 27 - Financial Data Schedule.
(b) REPORTS ON FORM 8-K. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: February 9, 2000
AZONIC CORPORATION
By /s/ J.R. Nelson
------------------
J.R. Nelson, Chief Executive Officer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THIS PERIOD ENDED 12/31/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
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<OTHER-EXPENSES> 250
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