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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended _______________________________
OR
[X] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from July 1, 2000 to September 30, 2000
Commission file number 0-30756
QUESTEC.COM, INC.
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(Name of Small Business Issuer in Its Charter)
Wyoming 13-1713318
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160B West Industry Court, Deer Park, New York 11729
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(Address of principal executive office) (Zip Code)
Issuer's telephone number, including area code (631) 243-1880
The number of shares outstanding of registrant's common stock, as of
September 30, 2000, was 31,571,643.
Transitional Small Business Format: Yes [X] No [ ]
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained under "Description of Business", and elsewhere in
this Registration Statement on Form 10-QSB, regarding matters that are not
historical facts, are "forward-looking statements". Because such forward-looking
statements include risks and uncertainties, actual results may differ materially
from those expressed in or implied by such forward-looking statements. There are
several important factors that could cause actual results to differ materially
from those anticipated by the forward-looking statements contained in such
discussions. We undertake no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date of this Form 10-QSB or to reflect the occurrence
of unanticipated events.
The issuer has elected to follow Form 10-QSB, Disclosure Alternative 2.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
QUESTEC. COM INC.
CONTENTS
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Page
UNAUDITED FINANCIAL STATEMENTS
Balance Sheets as of September 30, 2000 and June 30, 2000 F-2
Statements of Operations - For the Three Months Ended
September 30, 2000 and 1999 F-3
Statements of Cash Flows - For the Three Months Ended
September 30, 2000 and 1999 F-4
Notes To Financial Statements F-5
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QUESTEC. COM INC.
BALANCE SHEETS
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ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
(Unaudited) (Audited)
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<S> <C> <C>
CURRENT ASSETS:
Cash $ -- $ 3,007
Accounts receivable, net 233,452 51,175
Note receivable -- 10,000
Prepaid expenses and other current assets 5,960 6,467
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Total Current Assets 239,412 70,649
PROPERTY AND EQUIPMENT, Net 184,330 183,416
OTHER ASSETS:
Software development Costs, net of accumulated amortization of $162,552
and $135,254, respectively 274,215 301,513
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TOTAL ASSETS $ 697,957 $ 555,578
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 189,904 $ 195,072
Accrued liabilities, current portion 992,128 864,873
Note payable, bank 101 9,980
Advances from stockholders 223,748 79,320
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Total Current Liabilities 1,405,881 1,149,245
OTHER LIABILITIES:
Accured liabilities, non-current portion 66,067 68,667
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TOTAL LIABILITIES 1,471,948 1,217,912
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COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value, 20,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $0.0001 par value, 80,000,000 shares authorized,
31,721,643 and 31,571,643 shares issued and outstanding, respectively 3,172 3,157
Additional paid-in capital 9,892,780 9,844,295
Retained earnings (10,669,943) (10,509,786)
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TOTAL STOCKHOLDERS' EQUITY (773,991) (662,334)
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 697,957 $ 555,578
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</TABLE>
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QUESTEC. COM INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
NET SALES $ 256,450 $ 45,130
COST OF GOODS SOLD 91,217 37,208
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GROSS PROFIT 165,233 7,922
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OPERATING EXPENSES:
Depreciation and amortization 44,221 27,927
Sales and marketing 43,095 46,567
General and administrative 222,533 141,827
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TOTAL OPERATING EXPENSES 309,849 216,321
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OPERATING INCOME (LOSS) (144,616) (208,399)
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OTHER INCOME (EXPENSES)
Interest income, net (6,789) (60)
Other income (expenses) (8,752) (61)
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TOTAL OTHER INCOME (EXPENSES) (15,541) (121)
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INCOME (LOSS) BEFORE INCOME TAXES (160,157) (208,520)
INCOME TAXES -- --
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NET INCOME (LOSS) $ (160,157) $ (208,520)
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Net Loss Per Share (Basis and Diluted) $ (0.01) $ (0.01)
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Weighted Average Common Shares Outstanding 31,690,532 29,033,637
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</TABLE>
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QUESTEC. COM INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(160,157) $(208,520)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amoritzation 44,221 27,927
Changes in operating assets and liabilities:
Accounts receivable (182,277) (4,668)
Note receivable
10,000 --
Accounts payable (5,168) 16,071
Accrued expenses 173,155 77,918
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CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES (120,226) (91,272)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (17,330) (11,091)
Costs incurred in software development
-- (30,793)
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CASH FLOW PROVIDED BY (USED IN) INVESTING ACTIVITIES (17,330) (41,884)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock
-- 11,949
Net changes in due to stockholders 144,428 118,817
Proceeds from (repayments of) note payable, bank, net (9,879) 2,390
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CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES 134,549 133,156
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NET INCREASE (DECREASE) IN CASH (3,007) --
CASH, Beginning 3,007 --
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CASH, Ending $ -- $ --
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest $ 4,352 $ 60
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Taxes $ -- $ --
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Non-cash investing and financing activities:
Exercise of options by reducing liabilities $ 48,500 $ 192,085
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Conversion of debt to equity $ -- $ 212,000
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</TABLE>
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1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements of Questec. Com Inc. (the
"Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
prepare them for inclusion as part of the Form 10QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The financial
statements for the periods ended September 30, 2000 and 1999 are unaudited and
include all adjustments necessary to a fair statement of the results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. The results of the Company's operations for any interim period
are not necessarily indicative of the results of the Company's operations for a
full fiscal year. For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report (Form 10KSB) filed
with the Securities and Exchange Commission for the year ended June 30, 2000.
2. THE COMPANY:
The Company designs, develops and markets proprietary software and hardware
systems, with shared technology bases, which present three-dimensional computer
analyzed images for sports entertainment, business and industrial markets.
3. INCOME (LOSS) PER SHARE:
The Company adopted SFAS No. 128, "Earnings per Share". SFAS No. 128 eliminates
the presentation of primary and fully dilutive earnings per share ("EPS") and
requires presentation of basic and diluted EPS. Basic EPS is computed by
dividing income (loss) available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS is based on the
weighted-average number of shares of common stock and common stock equivalents
outstanding for the period. Common stock equivalents are not included in the
computation of diluted EPS for the periods ended September 30, 2000 and 1999 as
such inclusion is antidiluted.
4. EQUITY TRANSACTION:
During the three months ended September 30, 2000, options to purchase 150,000
shares of common stock were exercised by reducing liabilities owed to the option
holders. The exercise price of the options are ranging from $0.21 to $0.38 per
share.
5. GOING CONCERN:
As shown in the accompanying unaudited financial statements, the Company
incurred a net loss of $160,157 during the period ended September 30, 2000 and,
as of that date, the Company's current liabilities exceeded its current assets
by $1,166,469 and its total liabilities exceeded its total assets by $773,991.
These factors, as well as the uncertain conditions that the Company faces
relative to capital raising activities, create an uncertainty as to the
Company's ability to continue as a going concern. The Company is working on
raising more capital through public and/or private placement offering, setting
up strategic partners to reduce future development costs, expansion of revenue
earnings for customers utilizing its existing systems and setting up additional
sources of revenue, such as internet services, which require little capital but
potentially generate additional revenue. The ability of the Company to continue
as a going concern is dependent upon the success of the offering or alternative
financing arrangements and expansion of its operations. The unaudited financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Within the next twelve months, the Company anticipates that it will complete
installation of SuperVision in all 30 Major League ballparks (20 ballparks are
presently cabled and 14 systems are in operation), establish internet baseball
production service as a standard per game feature, (to date, this has been a
special event package for All-Star Game and World Series productions), expand
TennisProView production service through contracts with major world-wide
providers of tennis coverage, establish internet tennis production service as a
standard per match feature (which the Company launched this summer during ISL
Worldwide's coverage of ATP Tour Master Series Tennis tournament from Toronto,
Canada), complete development and deployment of a new Ski Jumping system (the
Company has worked extensively with RTL Television, Cologne, Germany to develop
a real-time tracking and 3-D virtual replay system), and complete development
and deploy a new version of GolfProView.
During the most recent Quarter, the Company announced that it has completed
preliminary testing and development of its newest product offering, HitTrax.
This is a direct result of the continued relationship between the Company and
AAEC. The introduction of HitTrax takes the Company one step closer to meeting
its goal of measuring all relevant action on the field of play. The Company and
AAEC continue to develop new applications of the Company's core technology for
new and existing sports. This new application is currently being marketed as a
new broadcast enhancement for television, Internet and interactive Television,
and also as an analysis tool for team training and player evaluation.
The Company's revenue presently is derived from a number of relatively small
projects, such as contributions to Fox Sports Network's regional and national
baseball broadcasts and ISL Worldwide's world feed television coverage of ATP
Tour's Master Series Tennis tournament, the majority of which originate in
Europe..
The Company recently terminated discussions with a proposed investor involving a
potential $4,000,000 private placement financing. Management determined that
conditions placed by the proposed investor in connection with the transaction
did not merit continuation of negotiations, and believes that on-going business
opportunities will negate the necessity of such financing for a minimum of three
to six months.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
On November 15, 2000, the Company's Annual Meeting of Shareholders took place.
Immediately prior thereto, Michael W. Russo, President of the Company, tendered
his resignation as both President of the Company and as a Director. Mr. Russo
agreed to continue in his capacity as Acting President of the Company until the
appointment of his successor or the expiration of three (3) months, whichever
shall sooner occur. At such meeting, Steven B. Greenfield, Bruce L. Nesenger,
Philip Albanese, Paul Baim, William E. Cavanaugh, Derek L. Donaldson and Stephen
A. Ehrlich were elected Directors of the Company. Shareholders also approved the
merger of the Company into a wholly owned Delaware subsidiary and gave the Board
of Directors the authority to change the name of the Company to Questec, Inc. or
such other similar name as deemed appropriate by the Board of Directors.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Index to Exhibits
2. Charter and By-Laws*
6. Material Contracts*
6a. Agreements with Atlantic Aerospace Electronics Corporation dated
September 9, 1998*
6b. Agreement with Live Motion Company dated June 9, 1999*
15. Private Placement Memorandum dated October 1, 1997*
21. Subsidiaries
27. Financial Disclosure Statement
* Incorporated by reference from Form 10-SB filed on March 2, 2000
(b) Reports on Form 8-K.
None.
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.
QUESTEC.COM, INC.
November 20, 2000 By: /s/ Michael W. Russo
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Michael W. Russo,
Acting President
November 20, 2000 /s/ Deirdre Gallagher
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Deirdre Gallagher,
Secretary
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EXHIBITS
Exhibit 21. Subsidiaries
Questec.com, Inc., a Delaware corporation, 100% owned by Questec.com, Inc., the
Registrant, a Wyoming company.
