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 Quarter Ended: September 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No.000-28883
Halifax International, Inc.
(Exact name of registrant as specified in its charter)
Nevada 58-2212465
(State of incorporation) (I.R.S. Employer
Identification No.)
7 Piedmont Center, Suite 500
Atlanta, Georgia 30305
(404) 816-6100
(Address and telephone number of principal executive offices and
principal place of business)
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 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 [ ]
As of October 23, 2000, the Registrant had a total of 8,990,221 shares of
common stock issued and outstanding.
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TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements...............................................3
Item 2: Management's Discussion and Analysis or Plan of Operations.........10
PART II: OTHER INFORMATION
Item 2: Changes in Securities...............................................11
Item 5: Other Information ..................................................12
Item 6: Exhibits and Reports filed on Form 8-K ............................12
Signatures..................................................................13
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PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
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HALIFAX INTERNATIONAL, INC.
Balance Sheet
September 30, 2000
ASSETS
------
Current Assets
Cash $ 950
Other Assets
Investment in Truscom, Inc. 275,000
Deposits 60,000
-------------
Total Other Assets 335,000
TOTAL ASSETS $ 335,950
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accrued Interest $ 6,720
Notes Payable 135,000
-------------
Total Current Liabilities $ 141,720
Stockholders' Equity
Common Stock - 20,000,000 shares authorized $ 4,277,199
9,315,221 issued and outstanding
Preferred Stock - 10,000,000 shares authorized 976,500
976,500 issued and outstanding
Retained earnings (5,059,469)
-------------
Total Stockholders' Equity $ 194,230
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 335,950
=============
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HALIFAX INTERNATIONAL, INC.
Statement of Income and Expense
For the Nine Months Ended September 30,2000 and 1999
2000 1999
----------- -----------
Income
Fees $ - $ -
Expenses
Acquisition expenses 63,000 -
Automobile expenses 12,158 5,238
Bank charges 2,380 3,045
Consulting fees 386,335 263,190
Contributions 710 2,892
Entertainment and Promotion 21,860 22,293
Insurance 587 6,610
Interest 6,720 -
Miscellaneous 1,142 1,599
Office supplies 6,910 -
Professional fees 185,348 65,558
Rent 54,780 22,141
Subscriptions 70 -
Telephone 4,140 7,890
Travel 313,814 23,147
------------ ------------
Total Expenses 1,059,954 423,603
Net Income $ (1,059,954) $ (423,603)
============= ============
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HALIFAX INTERNATIONAL, INC.
Statement of Income and Expense
For the Three Months Ended September 30, 2000 and 1999
2000 1999
----------- -----------
Income
Fees $ - $ -
Expenses
Acquisition expenses - -
Automobile expenses 1,720 2,372
Bank charges 892 775
Consulting fees 81,184 109,726
Contributions - -
Entertainment and Promotion 7,233 12,396
Insurance 587 -
Interest 6,720 -
Miscellaneous 139 -
Office supplies 6,525 -
Professional fees 26,550 17,826
Rent 12,816 2,975
Subscriptions - -
Telephone 1,836 1,356
Travel 45,548 649
------------ ------------
Total Expenses 191,750 148,075
Net Income $ (191,750) $ (148,075)
============= ============
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HALIFAX INTERNATIONAL, INC.
Statement of Retained Earnings
For the Nine Months Ended September 30, 2000
Retained Earnings - January 1, 2000 $ (3,999,875)
-----------------------------------
Net Income (1,059,594)
---------- -------------
Retained Earnings - September 30, 2000 $ (5,059,469)
-------------------------------------- =============
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HALIFAX INTERNATIONAL, INC.
Statement of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
2000 1999
------------- ------------
Cash Flows from Operating Activities $ (1,059,594) $ (423,603)
Net income
Changes in:
Accounts receivable - 290,200
Accrued expenses 6,720 -
Investment in Midcorp Development Contract - (400,000)
------------- ------------
Net cash used by operating activities (1,052,874) (533,403)
Cash Flows From Investing Activities
Investment in Truscom, Inc. (275,000) -
Cash Flows From Financing Activities
Proceeds from Notes Payables 470,750 31,500
Conversion of Notes Payable (1,351,500) -
Issuance of Common Stock 1,546,560 398,805
Issuance of Preferred Stock 976,500 -
------------- ------------
Net cash provided by financing activities 1,642,310 430,305
Net Increase (Decrease) In Cash 314,436 (103,098)
Cash - Beginning of the Period (313,486) (90,395)
-------------- ------------
Cash - End of Period $ 950 $ (193,493)
============== ============
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HALIFAX INTERNATIONAL, INC.
Notes to Financial Statements
September 30, 2000
NOTE 1 - PLAN OF ORGANIZATION AND ACQUISITION
On February 26,1999, Halifax International, Inc. (formerly Silver Strike
Mining Company, "the Company") acquired Christopher Partners, Inc. through the
issuance of 5,414,111 shares of common stock. Shareholders of Silver Striker
Mining Company received a total of 1,022,500 shares of Halifax International,
Inc. common stock and $125,000. The Company also authorized a name change to
Halifax International, Inc. upon the effective date of the merger. This merger
is treated as a reverse acquisition and, therefore, all historical information
is that of the accounting survivor Christopher Partners, Inc.
NOTE 2 - ACQUISITION POLICY
These consolidated financial statements include the books of Halifax
International, Inc. (formerly Silver Strike Mining Company) and its wholly
owned subsidiary Christopher Partners, Inc. All intercompany transactions and
accounts have been eliminated.
NOTE 3 - RELATED PARTY TRANSACTIONS
Fees and expenses paid to related parties (officers and shareholders) for the
nine months ended September 30, 2000 consisted of the following:
Payee Amount
----- ----------
Victor J. Hinojosa $ 271,226
Philip E. Lundquist 135,552
Lundquist Advisory Corporation 32,122
NOTE 4 - INVESTMENT IN TRUSCOM, INC.
Truscom, Inc. is a wholly-owned subsidiary of Halifax International, Inc.
Truscom, Inc. owns an exclusive sales representation agreement for Japan with
XTEC, Inc. of Miami, Florida and is valued at cost.
NOTE 5 - NOTES PAYABLE
Notes payable bear interest at the annual rate of 12% and have a maturity of
12 months.
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In this report references to "Halifax," "we," "us," and "our" refer to
Halifax International, Inc.
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-QSB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Halifax's control. These factors include but are not limited to economic
conditions generally and in the industries in which Halifax may participate;
competition within Halifax's chosen industry, including competition from much
larger competitors; technological advances and failure by Halifax to
successfully develop business relationships.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
We are a holding company with two wholly-owned subsidiaries, Truscom,
Inc. and Total Cash Card Systems, Inc. Neither subsidiary has launched
operations at this time and both are currently developing business models and
securing management. See Part II, Item 5: "Other Information," for further
details about these subsidiaries.
We have had no revenues and have an accumulated loss of $5,059,469 since
inception. We have financed our operations primarily through the sale of our
common stock. As of September 30, 2000, we had $950 in cash and $335,950 in
total assets. Our total current liabilities were reduced to $141,720 from
$1,015,750 notes payable on June 30, 2000. The reduction in total current
liabilities was the result of converting $976,500 of notes payable into
preferred shares. See Part II, Item 2: "Changes in Securities."
Net cash used by operations was $1,052,874 and was primarily related to
the costs and expenses of acquisitions. Net cash provided by financing
activities was $1,642,310 for the nine months ended September 30, 2000 and
came primarily from the sale of common and preferred stock.
Currently our material commitments consist of approximately $26,570 for
office space for the next twelve months, notes payable on demand of $135,000
and preferred stock dividends of approximately $19,530 due January 1, 2001 and
$39,060 due June 1, 2001. The notes payable bear an annual interest rate of
12% and have a maturity of 12 months. In addition, Truscom is obligated to
pay a monthly fee of $60,000 under the XTec representative agreement.
We believe that our cash needs for the next twelve months can be met by
revenues from Truscom, sales of our common shares and, if necessary, loans
from our directors, officers and shareholders. Management anticipates that we
will continue private placements of our common stock. We have no plans to
make a public offering of our common stock at this time. However, we cannot
assure that private placements will provide sufficient funds needed for the
development of our new subsidiaries. We also note that if we issue more
shares of our common stock our shareholders may experience dilution in the
value per share of their common stock.
If we fail to raise necessary funds through stock sales, we anticipate we
will require debt financing. We continue to investigate the availability,
source and terms for external financing, but have not entered in to any
agreements at this time for such financing. We can not assure that funds will
be available from any source, or, if available, that we will be able to obtain
the funds on terms agreeable to us. Any additional debt could result in a
substantial portion of our cash flows from operations, if any, being dedicated
to the payment of principal and interest on the indebtedness, and could render
us more vulnerable to competitive and economic downturns.
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Our management intends to actively develop our subsidiaries during the
next twelve months. Potential investors must recognize that because of
limited capital available for such development we may be unsuccessful in these
endeavors. Acquisitions of complementary service product lines, technologies
or businesses may adversely affect our operations. These acquisitions may
result in a potentially dilutive issuance of equity securities, the incurrence
of debt and contingent liabilities, and amortization of expenses related to
goodwill and other intangible assets. In addition, acquisitions involve
numerous risks, including difficulties in the assimilation of the operations,
technologies, services, and products of the acquired companies, along with the
diversion of management's attention from other business concerns, risks of
entering markets in which we have no or limited direct prior experience and
the potential loss of key employees of the acquired company.
It is emphasized that our management may effect transactions having a
potentially adverse impact upon our shareholders pursuant to the authority and
discretion of our management to complete acquisitions without submitting any
proposal to the stockholders for their consideration.
PART II: OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
Changes to Rights of Shareholders
Our articles of incorporation authorize 10,000,000 shares of preferred
stock, par value $.001, and provide that our board of directors has the
prerogative to set the preferences, limitations and voting rights of the
preferred stock. In September 2000 we issued 976,500 shares of preferred
stock to five individuals to satisfy demand notes payable of $976,500, with
principal and interest. The preferred stock is entitled to receive cumulative
dividends at the rate of eight dollars ($8) per share per annum, payable on
the first day of January and July each year. No dividends shall be paid to
common shareholders until the accumulated dividends have been paid. Upon
dissolution or liquidation, the preferred stock is entitled to $100 per share
and, in the case of voluntary liquidation, a premium equal to five dollars
($5) per share. The preferred stock is convertible for three years at the
holder's option into one share of common stock at $1.00.
The preferred stock does not have voting rights, except in the event the
board of directors has defaulted on three semiannual dividends. Then the
preferred stock has the sole and exclusive right to vote at any shareholders
meetings and common shareholders shall have no voting rights. Upon
satisfaction of the default, the preferred stock loses voting power and the
common shareholders regain voting power.
Sales of Unregistered Securities
The following discussion describes sales of unregistered securities from
June 30, 2000 through September 30, 2000.
On July 6, 2000 we sold 270,000 common shares to Yoshihiko Komatsubara
for $270,000. We relied on an exemption for the registration requirements of
the Securities Act of 1933 provided by reason of Section 4(2) as a private
transaction not involving a public distribution.
On September 28, 2000 we issued 375,000 common shares to Don and Reda
Beard to convert a note payable of $375,000, with principal and interest. We
relied on an exemption for the registration requirements of the Securities Act
of 1933 provided by reason of Section 4(2) as a private transaction not
involving a public distribution.
In September 2000 we sold an aggregate of 257,000 shares of common stock
to fourteen investors for $229,500 in cash. The shares were issued in a
private placement to thirteen accredited investors and one non-accredited
investor. The aggregate offering was for $5 million in a twelve month period.
We relied on
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an exemption from the registration requirements of the Securities Act of 1933
by reason of Section 3(b) and Regulation D as a Rule 505 limited offering.
On September 29, 2000 we issued 976,500 shares of preferred stock to five
holders of notes payable totaling $976,500 in principal and interest. The
preferred stock is convertible for three years at the holder's option into one
share of common stock at $1.00. We relied on an exemption from the
registration requirements of the Securities Act of 1933 provided by reason of
Section 4(2) as a private transaction not involving a public distribution.
ITEM 5: OTHER INFORMATION
Total Cash Card Systems, Inc.
Total Cash Card Systems, Inc. ("Total Cash") was incorporated in the
state of Georgia on October 10, 2000 and is a development stage company. We
anticipate that Total Cash will seek business opportunities through
acquisitions or forming strategic alliances with operating companies,
including distribution businesses, in the cash-based transaction services
market. These types of services are targeted to those individuals who do not
use bank accounts and/or credit cards. They include services such as
electronic money transfers, check verification, bill payment services, prepaid
phone cards and prepaid wireless, payroll card systems, electronic benefits
transfer, gift cards, stored value cards and e-commerce payment systems.
Truscom, Inc.
Truscom has entered into an exclusive distributorship agreement with XTec
Incorporated, a Florida corporation. XTec develops, produces and licenses
security solutions for electronic commerce access, control and information
systems. Truscom will distribute XTec's tamper resistant Mediametric Secure
Application Modules in the territory of Japan. XTec's modules were designed
for use in Internet banking and for e-commerce privacy and security. As of
September 30, 2000 we have invested $275,000 in the development of Truscom.
According to the terms of the XTec Exclusive Sales Representative
Agreement, dated October 11, 2000, Truscom has agreed to use its best efforts
to solicit orders for XTec's modules, however the orders must be approved by
XTec. Truscom will be paid commissions on a sliding scale ranging from 3.5%
to 10% on all completed orders. It is obligated to pay a monthly fee of
$60,000 for the first year of the agreement, which escalates at a rate of 1.5%
per year every subsequent year thereafter with a cap of $303,750 per month
after the fifth year of the agreement. The initial term of the agreement is
five years with automatic renewal. The agreement may be terminated for cause
as defined in the document. Truscom is an independent contractor, not an
employee of XTec and is responsible for its employees and agents and
satisfying all regulatory matters and taxes. Truscom has agreed not to
disclose proprietary information of XTec. XTec may modify change or
discontinue the modules and or change the prices of the modules with 45 days
notice.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Part I Exhibits.
Exhibit Description
-------- ------------
4.1 Preferred Stock Document
10.1 Exclusive Sales Representative Agreement between Truscom and
XTec, dated October 11, 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
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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 who are duly authorized.
Halifax International, Inc.
11/13/00 /s/ Victor Hinojosa
Date: ____________________ By: ______________________________________
Victor Hinojosa, President
11/13/00 /s/ Philip Lundquist
Date: ____________________ By: _______________________________________
Philip Lundquist,
Secretary/Treasurer, Chairman
of the Board
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