U.S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment 2
to
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended: March 31, 2000
Commission file no. 000-29201
ELVA, INC.
--------------------------------------------
(Name of small business registrant in its charter)
Florida 65-0790761
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 415
West Palm Beach, Florida 33401
- ------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (561) 659-6530
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None
----------------------------- -------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value
-----------------------------------
(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
<PAGE>
Indicate by 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 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 March 31, 2000, there are 21,500,000 shares of voting stock of the
registrant issued and outstanding.
This Amendment is being filed to reflect consistent edits to the
financial statements and to Management's Discussion and Analysis or Plan of
Operation pursuant to the Company's recently filed 10 SB Amendment 3.
<PAGE>
PART I
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheets................................................F-2
Consolidated Statements of Operations and Comprehensive Income (Loss)......F-3
Consolidated Statements of Stockholders' Equity (Deficiency)...............F-4
Consolidated Statements of Cash Flows......................................F-5
Notes to Consolidated Financial Statements.................................F-6
F-1
<PAGE>
<TABLE>
<CAPTION>
Elva, Inc.
Consolidated Balance Sheets
December 31, March 31,
1999 2000
------------------- -------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 97,476 $ 79,374
Accounts receivable 55,958 6,527
VAT tax receivable 42,251 11,125
------------------- -------------------
Total current assets 195,685 97,026
------------------- -------------------
PROPERTY AND EQUIPMENT
Computers and equipment 72,036 71,436
Less accumulated depreciation (28,843) (31,801)
------------------- -------------------
Net property and equipment 43,193 39,635
------------------- -------------------
OTHER ASSETS
Deposits and other assets 16,134 30,256
Income tax credit receivable 111,791 110,226
Patent 313,092 423,148
Less accumulated amortization (43,931) (47,895)
------------------- -------------------
Net other assets 397,086 515,735
------------------- -------------------
Total Assets $ 635,964 $ 652,396
=================== ===================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $ 46,006 $ 54,692
Accrued Expenses
Trade 34,919 44,361
Salaries and payroll taxes 126,644 121,629
Current portion of long-term debt 2,450 0
Advances from shareholders 0 185,960
Conditional government subsidy 95,365 77,750
------------------- -------------------
Total current liabilities 305,384 484,392
------------------- -------------------
LONG-TERM DEBT
Conditional government subsidy 190,729 198,894
Other long-term debt 9,802 8,886
Long-term debt - related party 509,341 570,163
------------------- -------------------
Total long-term debt 709,872 777,943
------------------- -------------------
Total Liabilities 1,015,256 1,262,335
------------------- -------------------
Minority interest in consolidated subsidiary 0 0
------------------- -------------------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.0001 par value, authorized 10,000,000 shares;
none issued and outstanding 0 0
Common stock, $0.0001 par value, authorized 50,000,000 shares;
21,500,000 issued and outstanding shares 2,150 2,150
Additional paid-in capital 828,401 828,401
Accumulated comprehensive income (loss) (53,525) (10,284)
Deficit (1,156,318) (1,430,206)
------------------- -------------------
Total stockholders' deficiency (379,292) (609,939)
------------------- -------------------
Total Liabilities and Stockholders' Deficiency $ 635,964 $ 652,396
=================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
Elva, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
Three Months Ended March 31,
(unaudited)
2000 1999
-------------------- ---------------------
REVENUES $ 74,013 $ 62,696
-------------------- ---------------------
<S> <C> <C>
OPERATING EXPENSES
Salaries 164,845 120,930
Advertising 2,734 9,373
Royalty expense - related parties 0 24,363
Depreciation and amortization 9,329 5,855
General and administrative 171,085 220,652
Research and development 0 0
-------------------- ---------------------
Total operating expenses 347,993 381,173
-------------------- ---------------------
Operating Loss (273,980) (318,477)
-------------------- ---------------------
OTHER INCOME (EXPENSE):
Interest income 351 5,383
Interest expense (5,985) (1,394)
Foreign currency transaction gain (loss) 3,538 4,749
-------------------- ---------------------
Total other income (expense) (2,096) 8,738
-------------------- ---------------------
Net loss before tax credit and minority interest (276,076) (309,739)
Foreign income tax credit 2,188 0
Minority interest in consolidated subsidiary income (loss) 0 0
-------------------- ---------------------
Net loss (273,888) (309,739)
Other comprehensive income (loss):
Foreign currency translation gain (loss) 43,240 (22,839)
-------------------- ---------------------
Comprehensive loss $ (230,648) $ (332,578)
==================== =====================
Net loss per common share $ (0.01) $ (0.01)
==================== =====================
Weighted average number of common shares outstanding 21,500,000 21,500,000
==================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
Elva, Inc.
Consolidated Statements of Stockholders' Equity (Deficiency)
Accumulated Total
Additional Comprehensive Stockholders'
Number of Common Paid-in Income Equity
Shares Stock Capital (Loss) Deficit (Deficiency)
------------ ----------- ------------ ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE,
December 31, 1998 21,500,000 $ 2,150 $ 828,401 $ (52,349)$ (432,606)$ 345,596
Year ended December 31, 1999:
Other comprehensive income (loss) 0 0 0 (1,175) 0 (1,175)
Net loss 0 0 0 0 (723,712) (723,712)
------------ ----------- ------------ ---------------- --------------- ---------------
BALANCE, December 31, 1999 21,500,000 2,150 828,401 (53,524) (1,156,318) (379,291)
Three months ended March 31, 2000:
----------------------------------
(unaudited)
Other comprehensive income (loss) 0 0 0 43,240 0 43,240
Net loss 0 0 0 0 (273,888) (273,888)
------------ ----------- ------------ ---------------- --------------- ---------------
BALANCE, March 31, 2000 (unaudited) 21,500,000 $ 2,150 $ 828,401 $ (10,284)$ (1,430,206)$ (609,939)
============ =========== ============ ================ =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Elva, Inc.
Consolidated Statements of Cash Flows
Three Months Ended March 31,
(unaudited)
2000 1999
------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (273,888) $ (309,739)
Adjustments to reconcile net loss to net cash used by operating activities:
Minority interest in consolidated subsidiary income 0 0
Depreciation 4,018 1,656
Amortization 5,311 4,199
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 48,892 (16,834)
(Increase) decrease in VAT receivable 30,548 63,682
(Increase) decrease in deposits and other assets (15,058) (17,578)
(Increase) decrease in income tax credit receivable (2,188) 0
Increase (decrease) in accounts payable 10,487 10,717
Increase (decrease) accrued expense - trade 10,886 8,221
Increase (decrease) salaries and payroll taxes (855) 36,243
------------------ -------------------
Net cash provided (used) by operating activities (181,847) (219,433)
------------------ -------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,828) (30,236)
(Increase expenditure) decrease application patent (123,708) (6,536)
------------------ -------------------
Net cash provided (used) by investing activities (125,536) (36,772)
------------------ -------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Shareholder advances 197,640 0
Shareholder advance repayments 0 (7,117)
Receipt of conditional government subsidy 0 4,083
Proceeds of long term debt - related party 97,455 206,005
Debt payments (3,043) (3,422)
------------------ -------------------
Net cash provided by financing activities 292,052 199,549
------------------ -------------------
Effect of exchange rates on cash (2,771) (20,351)
------------------ -------------------
Net increase (decrease) in cash and equivalents (18,102) (77,007)
CASH and equivalents, beginning of period 97,476 293,604
------------------ -------------------
CASH and equivalents, end of period $ 79,374 $ 216,597
================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid in Cash: $ 5,985 $ 1,394
================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
Elva, Inc.
Notes to Consolidated Financial Statements
(Information with respect to the three months
ended March 31, 2000 and 1999 is unaudited)
(1) Summary of Significant Accounting Principles
TheCompany Elva, Inc., (the "Company"), is a Florida chartered
corporation which conducts business from its offices in West Palm
Beach, Florida, Los Angeles, California, Paris, France and Singapore.
The Company was incorporated on August 15, 1997 as Computer Research
Technologies, Inc., and changed its name to Elva, Inc. on January 25,
1999. Prior to the acquisition of ELVA, SA, the Company was
principally seeking financing to allow it to begin its planned
operations. The Company is principally involved in the smart card
technology industry through its French subsidiary, ELVA, SA. The
following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Use of estimates In preparing the consolidated 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.
b) Significant acquisition In December 1998, Elva, Inc. issued
14,160,000 shares of common stock to acquire substantially all the
issued and outstanding shares of the common stock of ELVA, SA, a
French corporation, in a reverse merger, which was accounted for as a
reorganization of ELVA, SA. There remains a four-tenths of one percent
minority interest in ELVA, SA, which is owned by two of the major
stockholders of Elva, Inc. as a result of this acquisition. This
minority interest is required under French corporate law. As a result
of this reverse merger, the former stockholders of ELVA, SA now
control Elva, Inc. Prior to this reverse merger, Elva, Inc. had
nominal assets and liabilities. Elva, Inc. accounted for the reverse
merger as an issuance of stock for the net monetary assets of Elva,
Inc. or, in this case, as a capitalization of the accumulated deficit
of Elva, Inc. to the date of the merger.
c) Principles of consolidation The consolidated financial statements
include the accounts of Elva, Inc. and its wholly owned subsidiary.
Inter-company balances and transactions have been eliminated. The
historical financial statements of ELVA, SA have been presented for
the period prior to the reverse merger.
d) Net loss per common share Basic net loss per weighted average
common share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period.
e) Property and equipment All property and equipment are recorded at
cost and depreciated over their estimated useful lives, using the
straight-line method. Upon sale or retirement, the costs and related
accumulated depreciation are eliminated from their respective
accounts, and the resulting gain or loss is included in the results of
operations. Repairs and maintenance charges which do not increase the
useful lives of the assets are charged to operations as incurred.
Depreciation expense was $4,018 and $1,656 for the three months ended
March 31, 2000 and 1999, respectively.
f) Cash and equivalents The company considers investments with an
initial maturity of three months or less as cash equivalents.
g) Patents The Company acquired two French patents, Nos. 95-15735 and
96-01872, from the founders of ELVA, SA. The Company is amortizing the
cost of these patents over the remaining life of the patents. Patents
in France have a 20 year life. Amortization expense was $5,311 and
$4,199 for the three months ended March 31, 2000 and 1999,
respectively.
F-6
<PAGE>
Elva, Inc.
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Principles (Continued)
h) Revenue recognition The Company's sole source of revenue has been
from licensing its patented technology. The Company records revenue
when earned under its licensing agreement. The Company intends to
license its technology to others as well, rather than to manufacture
the VOCALID cards for sale. The Company believes that it would be
prohibitively expensive for it to establish its own manufacturing
facilities and to do so would distract it from its efforts at getting
its technology accepted as the world standard.
i) Foreign currency transaction and translation gains(losses) The
principal operating entity of the Company is its subsidiary, ELVA, SA,
which is located in France. The Company opened a sales office in Los
Angeles, California in April 2000. The functional currency of ELVA, SA,
as well as on a consolidated basis is the French Franc, (FF). ELVA, SA
has only one customer which is located in the US. ELVA, SA bills this
customer in FF and is paid in US Dollars, (USD). ELVA, SA records a
transaction gain or loss at the time of receipt of payment consisting
of the difference between the amount of FF billed and the amount of FF
the USD payment is converted into. On a consolidated basis the
Company's reporting currency is the US Dollar. The Company translated
the income statement items using the average exchange rate for the
period and balance sheet items using the end of period exchange rate,
except for equity items, which are translated at historical rates, in
accordance with SFAS 52
j) Research & development Research & development expenses are expensed
in the period incurred.
k) Software development costs The software developed by the Company is
used exclusively by licensors of the Company's technology. As such,
the Company is not selling the software. Costs incurred in developing
the software have been expensed in the period in which incurred.
l) VAT tax receivable In France, as in many other countries, the
government charges a Value Added Tax, (VAT), that is similar in nature
to sales tax in the US. There are three major differences. First is
that VAT is charged at each point of sale. Second is that there are no
exemptions from the collection of VAT. Finally, each company files a
VAT return with the government monthly reflecting the gross VAT
collected and VAT paid. If the VAT paid is greater than the amount
collected, the Company receives a refund from the government
approximately five months later.
m) Interim financial information The financial statements for the
three months ended March 31, 2000 and 1999 are unaudited and include
all adjustments which in the opinion of management are necessary for
fair presentation, and such adjustments are of a normal and recurring
nature. The results for the three months are not indicative of a full
year results.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock
are to be determined by the Board of Directors prior to issuance. The
Company has 21,500,000, shares of common stock issued and outstanding
at December 31, 1998 and September 30, 1999.
In September 1997, the Company issued 9,000,000 shares to its founder
for services rendered to the Company valued at $9,000. In April 1998,
the Company completed a Regulation D Rule 504 Placement for 1,757,376
shares in exchange for $17,574 cash. In April 1998, a majority
shareholder donated 9,000,000 shares of common stock to the Company.
In June 1998, 9,000,000 shares were issued for $32,500 in cash. During
the third quarter of 1998, the Company issued 2,700,000 shares of
common stock for $54,000 in cash. In December 1998, 9,557,376 shares
were donated to the Company. In December 1998, the Company issued
14,160,000 shares for 26,326 of the 26,336 shares issued and
outstanding of ELVA, SA, a French corporation. Additionally, in
conjunction with this acquisition, the Company issued 3,440,000 shares
to a third party in settlement of a $204,550 loan the third party had
made to ELVA, SA. As the common stock of the Company was not listed at
the date of acquisition, the fair value of the stock issued to settle
this debt was not determinable and the Company elected to use the loan
amount outstanding to value this transaction.
F-7
<PAGE>
Elva, Inc.
Notes to Consolidated Financial Statements
(3) 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 $1,430,000,
which expire $68,000 on December 31, 2011, $132,000 on December 31,
2117, $232,000 on December 31, 2118, $724,000 on December 31, 2119 and
$274,000 on December 31, 2020. The amount recorded as a deferred tax
asset, cumulative as of March 31, 2000 and 1999 is approximately
$572,000 and $297,000, respectively, which represents the amount of
tax benefits of the loss carry-forwards. The Company has established a
valuation allowance for this deferred tax asset of $572,000 and
$297,000, as the Company has no history of profitable operations.
The significant components net deferred tax asset as of March 31, 2000,
are:
Net operating losses $ 572,000
Valuation allowance (572,000)
------------------
Net deferred tax asset $ 0
==================
The Company's subsidiary, ELVA, SA, applied for research and
development income tax credits with the French government for the years
ended December 31, 1999, 1998 and 1997. The credits are applied for on
the Company's annual income tax return in mid-1998, 1999 and 2000. The
amounts applied for were approximately $94,800, $15,300 and $94,400 for
1999, 1998 and 1997, respectively. In the 4th quarter of 1999, ELVA, SA
was notified by the French government of the approval of the
application for 1997, and that payment by the government would occur in
late 2000. The Company sold this receivable to its bank on a
nonrecourse basis, in exchange for cash in the amount of $94,400. It is
now expected that the government will approve the 1998 and 1999
credits. They are expected to be paid $15,300 in 2001 and $94,800 in
2002. In 1996, ELVA, SA entered its technology in an annual technology
competition. This competition is administered by ANVAR, a french
quasi-governmental agency established to reward technology advances by
French commercial enterprises. Elva received one of the awards from
ANVAR for its technology. The Company believes, based on the foregoing,
that it is morelikely than not that the Company will receive these
ongoing tax credits from the French government. These credits reduce
the income tax benefit of its net operating loss carry-forwards for the
French subsidiary on a one for one basis.
(4) Going Concern As shown in the accompanying consolidated financial
statements, the Company incurred net losses totaling $274,000 for the
three months ended March 31, 2000, and reflects a stockholders'
deficiency of approximately $610,000 as of March 31, 2000. These
conditions raise substantial doubt as to the ability of the Company to
continue as a going concern. The ability of the Company to continue as
a going concern is dependent upon increasing sales and obtaining
additional capital and financing. The Company has retained a
registered broker/dealer to raise additional funds for the Company in
an amount up to $5,000,000. The financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern.
(5) Related Party Transactions
(a) Patents The Company acquired two French patents, Nos. 95-15735 and
96-01872, from the founders of ELVA, SA for 21,069 shares of common
stock of ELVA, SA valued at $320,700, based on their historical cost,
and approximately $3,333 per month, for the life of the patents as
royalty payments, beginning in March 1997. These ELVA, SA shares were
part of the original issue shares of ELVA, SA, and accordingly had no
fair market value at that time. After approximately 8 months, the
principals realized that the Company did not have the cash flow to
continue to make the payments to them and continue to develop the
marketing efforts and suspended the payments. In February 1999, the
Company and the founders entered into a new agreement which called for
total additional payment of approximately $116,700, with an initial
payment of approximately $25,000, and quarterly payments of
approximately $11,500, beginning on February 1, 2000. This new
agreement also encompassed the international patent application filed
with the World Organization of Intellectual Property, principally for
the US, Canada, Europe and Japan. It also encompasses the trademark
"VOCALID," No. 96-605347, registered at INPI in January 11, 1996.
F-8
<PAGE>
Elva, Inc.
Notes to Consolidated Financial Statements
(5) Related Party Transactions (Continued)
(b) Long-term debt In 1998, ELVA, SA received approximately $204,500
from a third party as a loan. In December 1998, as part of the reverse
merger, Elva, Inc. issued 3,440,000 shares of common stock in
settlement of this debt. In March, May and September 1999 and March
2000, ELVA received additional traunches of this loan from the now
related party, in the total amount of approximately $570,000. This
loan is payable in full on January 1, 2002. The Company can, at its
option, prepay all or part of this amount without penalty. The loan
agreement does not carry a stated interest rate, although it
references accrued interest. The Company is accruing interest at a
rate of 10%, until it can get documentation from the lender as to the
correct rate. The Company also received a $16,000 conditional loan
from an unrelated company, under which the Company would not be liable
for repayment if the Company hired at least one former technical
employee of the other company. The Company has not done so and is
repaying this loan at a rate of $3,000 per year. The repayment
schedule is per the original agreement.
(6) Commitments The Company is committed under two operating leases, one
for its office space and the other for an automobile. Under the
automobile lease the Company is obligated to pay approximately $4,000
in 2000. The Company is obligated under the lease for its office space
for payments of $33,000 and $16,600 in 2000 and 2001, respectively.
The Company can, at its option, elect to extend this lease for up to
two additional three- year periods. The Company leases its office
space in Los Angeles and Singapore on a month-to-month basis. The
Company's rent expense was approximately $62,250 and $25,000 for the
years ended December 31, 1999 and 1998 respectively.
(7) Concentration of customers The Company's sole source of revenue to
date has been one customer, a US based company. Accordingly, its
revenue and related accounts receivable at all periods presented are
all related to this single source. The Company is endeavoring to
expand its customer base.
(8) Conditional government subsidies The Company has received several
government grants which are conditional as to repayment. The grants
are to be applied as reductions of salaries and employment taxes paid
to new employees. They are intended by the government to induce
increases in employment, as France has experienced high unemployment
over the last few years. To date the Company has been increasing
employment and applying accumulated grants as offsets to salary
expense and at present is not yet obligated to repay any of these
grants. The Company does not expect to have to repay any of the grant
amounts. These grants, if required to be repaid, do not require the
payment of interest. The term for adding the required employees under
these grants is three years. The Company has amortized approximately
$15,500 and $35,000 of the grants against salary expense for the years
ending December 31, 1999 and 1998, respectively.
F-9
<PAGE>
12 Month Plan of Operations
The Company's plan of operations for the next twelve (12) months is for it to
further refine its marketing and sales strategy (See Part I, Item 1) and to
develop a web site for its primary VocaliD(R) Smart Card System product. An
average initial funding of $ 400,000 has been committed for suchwork. The
Company plans to continually refine its strategy for capitalizing on recent
trends within the Smart Card industry and to exploit such trends to its
advantage. The Company plans to develop new and varied VocaliD(R) Smart Card
systems, concepts and ventures in addition to its current VocaliD(R) Smart Card
development plans.
The Company plans believes it can capitalize on the general Internet trend of
increasing consumer usage and increasing levels of e-commerce transactions
through providing the market the Company's VocaliD(R) Smart Card, which the
Company believes will increase levels of person-to-person communication and
which may directly increase levels of advertising and Web site linkage revenues.
The Company believes that it is well positioned to profit from such
opportunities.
The Company's business strategy is to develop its VocaliD(R) Smart Card system
to provide consumers with versatile high quality, easy to use, personal and
secure communications. The Company believes the ease of use and versatility of
its online Smart Card system will differentiate itself among the array of off
line smart card options. The Company believes that this differentiation strategy
will allow it to carve out a profitable market niche. In addition to the primary
revenue stream derived from fees earned through the usage of the Company's
VocaliD(R) Smart Card, the Company believes that its market niche will allow it
to successfully gain consumer "hits" to its VocaliD(R) Smart Card system Web
site; such "hits" are the major factor in determining advertising revenue over
the Internet (through banner ad sales) and will allow the Company to realize an
additional revenue stream through charging advertising fees for banner ad
placements. Therefore, while the Company plans to generate its primary revenue
by charging fees for the use of its VocaliD(R) Smart Card system, it may also
generate significant revenue by attracting interest ("hits") to its VocaliD(R)
Smart Card Web site.
The Company plans to seek out strategic alliances, joint venture partners, and
business partners with other high-technology firms in which shared resources of
such could provide enhanced shareholder value. The Company plans to continually
scan the environment for such partnering opportunities.
Particular attention will be paid to the possibilities of developing
international corporate strategic alliances, partnering with successful U.S.
technology start-ups, and finding merger and acquisition candidates or
counter-parties with firms operating in the U.S. and/or abroad.
Results of Operations -For the Three Months Ending March 31, 2000
Financial Condition, Capital Resources and Liquidity
For the 1st quarter ended March 31, 1999 and 2000 the Company recorded revenues
of $62,696 and $74,013. The increase of $11,304 is due to increasing licensing
revenue from ATMEL. For the 1st quarter ended March 31, 1999 and 2000 the
Company had salary expenses of $120,930 and $164,845. This increase of $43,915
was due to an increase in the number of personnel employed by the Company.
For the 1st quarter ended March 31, 1999 and 2000, the Company had on a
consolidated unaudited basis general and administrative expenses of $220,652 and
$171,085, respectively. The decrease of $ 49,567 is due primarily to a one time
consulting fee related to the Company's reverse merger, paid in 1999.
<PAGE>
For the 1st quarter ended March 31, 1999 and 2000, the Company had on a
consolidated unaudited basis total operating expenses of $381,173 and $347,993
of which approximately $5,652 is attributable to decrease in general,
administrative and an increase in salaries by the Company, eliminating royalty
payments to stockholders in the amount of $24,363.
Net Losses
For the 1st quarter ended March 31, 1999 and 2000, the Company reported a net
loss from operations of $309,739 and $273,888 respectively.
The ability of the Company to continue as a going concern is dependent upon its
ability to obtain clients who will utilize the Company's VocaliD(R) product and
whether the Company can attract an adequate number of clients. The Company
believes that in order to be able to expand its initial operations in terms of
sales and marketing, it must rent new offices in USA and abroad, hire staff and
acquire through purchase or lease computer and office equipment to maintain
accurate financial accounting and client data. Further, the Company believes
that the type of equipment necessary for the operation is readily accessible at
competitive rates. The Company is already registered with the Secretary of State
of California to do business and is anticipating the penetration of the North
American market from its Californian office.
To implement such plan, also during this initial phase, the Company intends to
initiate a self-directed private placement under Rule 506 in order to raise the
funds required by its development among which the financial means related to new
staff, equipment and offices. Those needs are currently estimated by the
management staff. The Company expects to accomplish its fund raising objective
before June 1, 2000. No underwriters have been contacted and no known investors
have been contacted with respect to such fund raising. In the event such
placement is successful, the Company believes that it will have sufficient
operating capital to meet the initial expansion goals and operating costs for a
period of one (1) year.
Employees
Next year, ELVA intends to hire new persons in North America, Asia and Europe in
order to widen its marketing worldwide and to ensure the evolution of the
technology.
As of March 31, 2000, ELVA had a total of 15 employees, of which 6 are employed
in sales and marketing, 6 are employed in product development, 1 is employed in
professional services and customer support, 1 is employed in internal operations
support, and 1 is employed in administration and finance. Our future performance
depends in significant part upon the continued service of our key technical and
management personnel, and our continuing ability to attract and retain highly
qualified and motivated personnel in all areas of our operations. Competition
for such personnel is intense. We provide no assurance that we can retain key
managerial and technical employees or that we can attract, assimilate or retain
other highly qualified personnel in the future. Our employees are not
represented by a labor union. We have not experienced any work stoppages and
consider our employee relations to be good.
The Company will attempt to maintain diversity within its customer and
advertising base in order to decrease its exposure to downturns or volatility in
any particular market segment. As part of this selection strategy, the Company
intends to offer its services to those consumers and strategic partners which
have a reputation for reputable dealings and, eliminating customers and
advertisers that it believes present a higher credit risk. Where feasible, the
Company will evaluate beforehand each customer, supplier, partner, strategic
partner, and advertiser for their creditworthiness.
<PAGE>
Research and Development Plans
For the next twelve months there is a plan for funding extensive research and
development efforts. Our goal is to enhance the technology features in terms of
personalization and security. For that purpose, the chip capabilities and the
software environment will both be enlarged and improved in order to supply a
more efficient access to the technology for each end user and for any
application.
Other investments related to the manufacturing process are scheduled, too.
Therefore, the Company foresees significant changes in the number of employees.
Impact of the Year 2000 Issue
The Company did not experience any material impact to its operations as
a result of the Year 2000 calendar change. The Company does not anticipate any
material disruption in its operations as a result of any failure by the Company
to be in compliance.
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), finding
suitable merger or acquisition candidates, expansion and growth of the Company's
business and operations, 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.
Item 2. Changes in Securities and Use of Proceeds
Beginning on February 1, 2000 the Company commenced making quarterly royalty
payments of approximately $11,500 to the founders of ELVA, SA for two French
patents, Nos. 95-15735 and 96-0182, which were transferred to the Company.
<PAGE>
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending March 31, 2000, covered by
this report to a vote of the Company's shareholders, through the solicitation of
proxies or otherwise.
Item 5. Other Information
None.
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:
Exhibit No. Description
-------------------------------------------------------------------------------
Item 1. Index to Exhibits
--------- -----------------------
3(i).1 Articles of Incorporation of ELVA, INC. f/k/a/ Computer Research
Technology, Inc., effective August 15, 1997 (1)
3(i).1 Amended Articles of Incorporation of ELVA, INC. f/k/a/ Computer
Research Technology, Inc., filed January 29, 1999. (1)
3(ii).1 Bylaws of ELVA, INC. f/k/a/ Computer Research Technology, Inc (1)
10.1 Letter of Intent dated December 19, 1998 between Computer Research
Technologies, Inc. and ELVA,SA. (1)
27.1* Financial Data Schedule
--------------
* filed herewith
(1) Incorporated herein by reference to the Registration Statement on Form
10-SB Amendment 1 of ELVA , Inc., filed with the U.S. Securities and
Exchange Commission.
(b) No Reports on Form 8-K were filed during the fiscal year ended December 31,
1999, covered by this Annual Report on Form 10-KSB.
<PAGE>
SIGNATURES
-------------------
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ELVA, INC.
(Registrant)
Date: 14th April, 2000 /s/ Cedric Colnot
---------------------
Cedric Colnot, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date: Signature Title
------ ------------ -----
June 20, 2000 By: /s/ Cedric Colnot
--------------------------
Cedric Colnot President & Director
June 20, 2000 By: /s/ Patrick Misko
--------------------------
Patrick Misko Vice-President & Director
