UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended July 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) FOR THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Transition Period From ____________________ to __________________.
Commission File Number: 0 -13628
_________________________________
TRIDON CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 13-3183646
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
136 South Palm Drive #105, Beverly Hills CA. 90212
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(310) 858-7123
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Shares, par value $.001 per share
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by section 12 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]. As of July 31, 1997,
there were 31,825,734 shares outstanding of the Registrant's common stock, $.001
par value.
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TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Balance Sheets
July 31, 1997 And April 30, 1997
<S> <C> <C>
July 31, 1997 April 30, 1997
(Unaudited) (Audited)
Assets
Current Assets:
Cash $ 772 $ 18,936
Advances to Officers/Stockholders 125,949 121,555
Notes Receivable 250,000 250,000
Less Allowance for Bad Debt (266,667) (266,667)
Interest Receivable 22,917 16,667
Inventory 5,325 0
------- -------
Total Current Assets 138,296 140,491
Furniture and Equipment - at Cost 7,576 7,576
Accumulated Depreciation 5,246 (4,846)
------- -------
Net Furniture and Equipment 2,330 2,730
------- -------
Marketable Equity Securities 107,451 107,451
Note Receivable - Related Party 6,000 6,000
------- -------
Total Assets $ 254,077 $ 256,672
------- -------
Liabilities And Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses $ 85,754 $ 76,711
Advances from Stockholder 5,000 5,000
------- -------
Total Current Liabilities 90,754 81,711
Commitments And Contingencies - -
------- -------
Total Liabilities 90,754 81,711
Stockholders' Equity:
Common Stock, $.001 Par Value, 100,000,000
Shares Authorized, 31,765,734 and
31,625,734 Shares Issued And
Outstanding, Respectively 31,766 31,626
Preferred Stock, 7% Cumulative Convertible,
Par Value $.001, 20,000,000 Shares
Authorized, 83,300 Shares Issued
And Outstanding 83 83
Additional Paid-In Capital 7,326,576 7,318,316
Common Stock Subscribed (225,000) (225,000)
Deficit Accumulated During
Development Stage (6,970,102) (6,950,064)
--------- ---------
Total Stockholders' Equity 163,323 174,961
--------- ---------
Total Liabilities And
Stockholders' Equity $ 254,077 $ 256,672
--------- ---------
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TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Operations
<S> <C> <C> <C>
Three Three
Inception Months Months
To Ended Ended
July 31, July 31, July 31,
1997 1997 1996
Revenue:
Net Sales $ 151,729 $ 0 $ 0
Cost of Sales 182,581 0 0
---------- --------- ---------
Gross Loss (30,852) 0 0
---------- --------- ---------
Operating Expenses:
General and Administrative 3,297,389 25,488 171,341
Research and Development 132,697 0 0
Computer Software Development Costs 630,066 0 0
Interest 869,166 0 0
---------- --------- ---------
Total Operating Expenses 4,929,318 25,488 171,341
---------- --------- ---------
Net Loss from Operations (4,960,170) (25,488) (171,341)
---------- --------- ---------
Other Income (Expense)
Consulting Fees Related to
Common Stock Issued (810,000) 0 0
Officer's Salary Related to
Common Stock Issued (409,023) 0 0
Interest 92,016 6,250 0
Casualty Loss - Boat (3,000,000) 0 0
Gain on Settlement 411,495 0 0
Forgiveness of Interest 8,901 0 0
Forgiveness of Debt 123,994 0 0
Loss on Disposition of
Marketable Securities (52,332) 0 0
Loss on Permanent Impairment
of Securities (92,550) 0 0
Miscellaneous 3,420 0 0
Bad Debt Expense (351,422) 0 0
---------- --------- ---------
Total Other Income (Loss) (4,075,501) 6,250 0
---------- --------- ---------
(Loss) from Continuing Operations
Before Income Tax Benefit (Expense) (9,035,671) (19,238) (171,341)
Income Tax Benefit (Expense) 82,605 (800) (800)
---------- --------- ---------
(Loss) from Continuing Operations (8,953,066) (20,038) (172,141)
Gain on Disposal of Segment 3,836,964 0 0
(Loss) on Discontinued Operations (1,854,000) 0 0
---------- --------- ---------
Net Income (Loss) $ (6,970,102) $ (20,038) $ (172,141)
---------- --------- ---------
Loss Per Share $ (Nil) $ (.01)
---------- --------- ---------
Weighted Average Number of Shares Outstanding 31,719,067 14,211,209
---------- --------- ---------
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<TABLE>
TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Cash Flows
<S> <C> <C> <C>
Three Three
Inception Months Months
To Ended Ended
July 31, July 31, July 31,
1997 1997 1996
Cash Flows From Operating Activities:
Net Income (Loss) $(6,970,102) $ (20,038) $ (172,141)
Adjustments to Reconcile Net (Loss)
to Net Cash Used by Operations:
(Loss) on Disposal of Segment (3,836,964) 0 0
Loss on Permanent Impairment
of Marketable Securities 92,550 0 0
Loss on Sale of Marketable
Securities 47,585 0 0
Write-Down of Investment 25,000 0 0
Depreciation 5,411 400 379
Increase in Allowance for
Bad Debts 362,305 0 49,755
Professional Fees 12,885 0 0
Outside Services Paid by
Issuance of Common Stock 266,035 0 0
Officers' Salaries Related
to Common Stock Issued 409,023 0 0
Loan Fees Related to
Common Stock Issued 810,000 0 0
Write-Down of Screenplays 49,860 0 0
Loss on Fixed Asset Disposal 1,253 0 0
Research and Development 88,000 0 0
Interest Expense 349,745 0 0
Forgiveness of Interest (8,901) 0 0
Maritime Loss 3,462,825 0 0
Forgiveness of Debt (123,994) 0 0
(Increase) Decrease in:
Inventory (5,325) (5,325) 0
Notes Receivable (3,000) 0 (84,755)
Interest Receivable (22,917) (6,250) 0
Increase (Decrease) in:
Accounts Payable and Accrued
Expenses 162,760 8,243 (2,590)
Income Tax Payable 800 800 800
Preferred Stock Subscription 10,000 0 0
Estimated Future Cost of
Discontinued Operations 3,125 0 0
Accounts Payable -
Vintage Group, Inc. 45,574 0 0
---------- --------- ---------
Net Cash (Used) by Operating
Activities (4,766,467) (22,170) (208,552)
---------- --------- ---------
Cash Flows From Investing Activities:
Loans Made (340,757) 0 0
Investments in Marketable Equity Securities (238,550) 0 0
Proceeds from Sale of Securities 329,615 0 0
Sale of Common Stock 13,550 0 0
Investment in Screenplays (40,000) 0 0
Purchase of Furniture and Equipment (8,994) 0 0
Advances to Related Party/Officer (85,502) (4,394) (27,673)
Investment in Production (1,925) 0 0
---------- --------- ---------
Net Cash (Used) by Investing
Activities (372,563) (4,394) (27,673)
---------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from Issuance of Common Stock 4,728,871 8,400 300,450
Proceeds from Issuance of Convertible
Preferred Stock 135,003 0 0
Increase in Paid-In Capital 99,866 0 0
Proceeds from Issuance of Convertible
Notes Payable 59,025 0 0
Advances from Officer 158,735 0 25,820
Repayments of Advances from Officer (41,702) 0 0
---------- --------- ---------
Net Cash Provided By Financing
Activities 5,139,798 8,400 326,270
---------- --------- ---------
Net Increase (Decrease) in Cash 768 (18,164) 90,045
Cash at Beginning of Period 4 18,936 55,277
---------- --------- ---------
Cash at End of Period $ 772 $ 772 $ 145,322
/TABLE
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Tridon Enterprises Incorporated
(A Company in the Development Stage)
UNAUDITED
Notes to Consolidated Financial Statements
In the opinion of management, the accompanying unaudited financial
statements contain all the normal recurring adjustments necessary to present
fairly the financial position of the Company as of July 31, 1997, the results of
its operation for the three month periods ended July 31, 1997, and its cash
flows for the three month periods ended July 31,1997. Operating results for the
three month period ended July 31, 1997, are not necessarily indicative of the
results that may be expected for the year ended April 30, 1998.
1. Organization and Summary of Significant Accounting Policies:
Organization:
Tridon Enterprises Incorporated (the Company) was incorporated in the state
of Colorado on October 7, 1983 as Turco Computer Systems, Inc. The Company
changed its name to Hammer Computer systems, Inc. on September 27, 1984. On
October 10, 1989 the shareholders voted to merge with Tridon Development
Company, HCSI being the surviving Corporation. The Articles of Incorporation
were amended to change the Company name, new directors were elected and the Plan
of Merger was approved by shareholders voting in person or by proxy. As a
result of the merger effective October 10, 1989 Hammer computer Systems, Inc.
exchanged 600 shares of common stock in HCSI for each of the 30,000 shares of
outstanding common stock of Tridon Development Corporation. This increased the
outstanding shares of common stock in Tridon Enterprises Corporation from
17,270,433 to 35,270,433. Authorized shares of common stock remain at
100,000,000.
On October 10, 1989 Paul Ebeling was elected by the Board of Directors;
President, Chief Executive Officer & Chairman of the Board of the Corporation.
Kevin Welch was elected Secretary/Treasurer of the Corporation on February 23,
1996.
All of the assets of the Company have been presented at the lower of their
cost or estimated realizable value.
Common Shares and Earnings per Share
The computation of income per share is based on the weighted average number
of shares outstanding during each fiscal period. To calculate earnings per
share, a base of 31,825,734 shares was used for July 31, 1997 and a base of
31,625,734 was used for April 30, 1997.
2. Related Party Transactions
Vintage Group Inc., as a condition set forth in the Agreement and Plan of
Merger, canceled and forgave all debts and obligations owed Vintage by HCSI.
The Company advanced $5,000 to Vintage Group, Inc. During the quarter ending
October 31, 1994.
Beginning in September of 1991, CEO and Director, Paul Ebeling, began
advancing the Corporation funds to purchase equipment and pay for minimal office
expenses including rent for office space. In April 1995 Paul Ebeling converted
$150,000 of his loan to the Company to Series A 7% cumulative convertible
preferred stock at the full offering price of $10.00 per share.
The son of Paul Ebeling, Nicholas Ebeling, purchased $2,500 of convertible
notes payable. He has converted his note into the Series A 7% cumulative
preferred stock.
Income Taxes:
On April 30, 1987, HCSI and its subsidiary, Certified Software, had a net
operating loss carry forward, which may or may not be utilized for tax purposes,
for financial reporting purposes of approximately $4,024,000. Due to timing
differences in recording financial reporting and taxable income, HCSI and
Certified had net operating loss carry forwards available to reduce future
federal taxable income of approximately $3,914,000, expiring as follows:
Year of Expiration HCSI Certified Total
1998 119,000 0 119,000
1999 625,000 293,000 918,000
2000 118,000 357,000 475,000
2001 1,241,000 160,000 1,401,000
2002 608,000 393,000 1,001,000
Totals: $2,711,000 $1,203,000 $3,914,000
Subsequent to the merger of HCSI and Tridon. Development Corporation, the
Company accumulated a loss carry forward of approximately $524,000 for federal
income tax purposes an a $259,000 tax loss carry forward for California tax
purposes. Federal net operating losses (NOL's) are carried forward fifteen
years and expire between 2004 and 2009. State NOL's are carried forward for
five years and expire between 1997 and 2000. All loss carry forward amounts are
subject to review by tax authorities.
4. Notes Receivable
Madera International, Inc. Unsecured Negotiable Promissory Note, unsecured,
receivable interest only, quarterly beginning December 31, 1996 at 10% per
annum. As of the date of this report interest in the amount of $16,667 is past
due. The principal and accrued interest is reserved for and is also include
inbad debt expense on the statement of operations.
5. Furniture and Equipment
Furniture and equipment is recorded at purchase cost and depreciation is
calculated over 5 years using the straight line method. For the quarter ended
July 31, 1997 there were no purchases of furniture and equipment by the
Corporation.
Item 2. Management's Discussion and Analysis.
The Board Of Directors on February 10, 1992, authorized the issuance of
convertible promissory notes to develop a suitable reliable marketable product,
and for operating capital. Notes totaling $48,000 in principle have been issued
as of July 31, 1994. Interest accrued on these notes on a monthly basis. At
January 31 1996, all notes were converted to preferred stock.
The Company is developing a process for manufacturing a hair prosthesis,
Vertex(R) and if applicable will apply for patents of its own.
The Company announced on September 21, 1993, the appointment of Harold A.
Lancer, M.D. as Medical Director. Dr. Lancer attending staff dermatologist at
Cedars-Sinai Medical Center in Los Angeles, the Assistant Clinical Professor of
Dermatology at U.C.L.A. Medical Center, Los Angeles, and a fellow of the
American Academy of Dermatology. A native of Montreal, Quebec, Canada, he was
educated at Brandies University, University of California at San Diego Medical
School, Harvard University Medical School, Tel Hashomen Hospital, Israel and St.
Johns Hospital for Diseases of the Skin, London, England. Dr. Lancer has
international experience in the specialities of dermatology and cosmetic
surgery. Dr. Lancer presented a paper on the Vertex to the Pacific
Dermatological Society in Monterey, California on September 10, 1994. Dr.
Lancer heads the medical and scientific team developing the Vertex and its
attendant products.
The Company contracted with California Cybernetics Corporation for the
implementation of its design, engineering, manufacturing and software
applications for its computer aided flexible manufacturing process. All
patentable aspects, including software and programming, of California
Cybernetics' work for the Company's Vertex products are the sole property of
Tridon Enterprises Incorporated. As of July 31, 1995 the Company has deposited
$98,000 with California Cybernetics Corporation for research and development.
Vertex has no base as used in normal hairpieces, but the hair appears to be
growing directly from the scalp and there is no feeling of an object on one's
head. Vertex(R) has 100% adhesion and can remain on for approximately one month
with no special maintenance, after which it is replaced by a new one. Through
Vertex's(R) unique locking system, human hair fibers are attached directly to
transparent and breathable synthetic skin. The material is transparent.
Substrate is also moisture vapor permeable, which means the moisture, gases and
heat (including perspiration) can exit while a one-way screen prevents bacteria
from entering. It also may reduce the effect of the sun's damaging ultraviolet
rays. Using advancements in computer robotics, the Vertex(R) can be made
consistently and less expensively than competitive products. With programmed
information about a person's skin, natural hair, age and body chemistry,
robotics manufacturing will allow an individual to obtain the Vertex(R) on short
notice, from anywhere in the world.
Management believes that it can successfully develop the non surgical
Vertex(R) hair replacement system. The company began and 18 month comprehensive
testing program in February 1997.
On January 20, 1994, the stockholders of the Company in a special meeting
approved the issuance of 7% cumulative convertible preferred stock. On June 7,
1994, the Company issued a private placement memorandum for the offering.
Through July 31, 1995 the Company has received $188,000 for the purchase of the
preferred stock including $48,000 notes converted into preferred stock. The
proceeds of this offering was used to further develop the manufacturing process
for Vertex(R). As of January 31, 1996 the Company raised $188,000 from this
offering. The offering is closed.
In the quarter ended July 31,1994 the Company expended $31,081 on research
and development. These expenditures were used to complete the development of
the process of attaching the Vertex(R) to the scalp and documentation. This
work was done by Dr. Lancer. Total research and development costs are estimated
to be approximately $60,000 and was for the most part completed in December
1996. An 18 Month testing program began in February 1997.
On September 20, 1994, the Company engaged Robert Miles Runyan and
Associates, Marina Del Rey, CA. Runyan & Associates specializes in the field of
strategic planning and point of sale advertising, providing the Company advise
and planning on all media matters for the development and marketing of Tridon's
Vertex(R) products. This work is completed.
On June 6, 1993, Tridon Enterprises Incorporated issued 2,000,000 shares of
its common stock in exchange for 100% of the common shares (10,000,000) of
Polaris Pictures Corporation, a California Corporation. The primary assets of
Polaris were six screen plays suitable for television or motion pictures and its
interest in a pleasure yacht. The Company valued these screen plays at $40,000
in total or about $6,700 per script because of the uncertainty of future value.
On April 29, 1995 the Board of Directors irrevocably transferred in trust 100%
of the stock of Polaris Pictures Corporation.
There have been no material changes in the operations. Tridon Enterprises
Incorporated does not have operating activity and therefore has no revenue. For
the Company to continue as a going concern it will seek an acquisition or merger
partner, place its Vertex(R) technology in a wholly-owned subsidiary and raise
the additional capital to successfully market Vertex(R). For the three months
ended July 31, 1997 the net loss was $25,488 resultant of general and
administrative expenses.
Merger Negotiations:
The Company entered into negotiations to acquire a privately held company.
On February 24, 1996 the Company entered into a letter of intent to acquire
Maingate Entertainment, Inc., a Beverly Hills, CA based motion picture
producer/distributer of moderate to low budget feature motion pictures. On
March 31, 1996 a definitive Agreement and Plan of Acquisition was entered into
by the parties, subject to certain conditions precedent. The Company agreed to
advance certain operating expense to Maingate pending the completion of the Plan
of Acquisition. Subsequently it was determined that Maingate Entertainment,
Inc. misrepresented its assets and as such was not able to present a certified
audit of its business. Therefore, management unwound its Plan of Acquisition of
Maingate Entertainment, Inc.
Subsequent Events:
On October 25, 1996 the Company determined that Maingate Entertainment,
Inc. was not able to satisfy various material conditions president to the
acquisition. The Maingate shareholders were notified and the relationship
terminated.
PART II-OTHER INFORMATION
Items 1 through 3. No response required.
Item 4. Submission of Matters to a Vote of Security Holders.
On October 10, 1989, a special meeting of the shareholders of Hammer
Computer Systems, Inc. (HCSI), a Colorado Corporation incorporated in 1983, was
held to approve the Agreement and Plan of Merger, signed on February, 1989, to
merge HCSI with Tridon Development Corporation, a Missouri Corporation organized
in 1988. In connection with the proposed merger, all the then-existing officers
and directors of HCSI tendered their resignations. The shareholders, voting in
person or by proxy, (a) approved the merger of Tridon Development Corporation
into Hammer computer Systems, Inc. (b) elected three new Directors, Paul
Ebeling, Harold Antoine, and Frances Schmoker, to the Board of Directors, and
(c) approved an amendment to the articles of incorporation to change the name of
the Company from Hammer Computer Systems, Inc. to Tridon Corporation.
On January 20, 1994, the stockholders of the Company in a special meeting
approved a $1,000,000 offering of 7% cumulative convertible preferred stock. On
June 7, 1994, the Company issued a private placement memorandum for the
offering. To January 31, 1996, the Company has received $140,000 for the sale
of preferred stock and an additional $48,000 of notes payable have been
converted into preferred stock. Paul Ebeling, Company CEO has converted $150,000
of his loan to the company to 15,000 shares of convertible preferred stock at
$10.00 per share, the offering price.
On February 22, 1996, the stockholders of the Company approved an amendment
to the Company's Articles of Incorporation: that the officers and directors of
the Company liability be limited to the full extent as provided for in Colorado
Corporations Code, Section 7, Article 9, as amended. The stockholders voted to
amend the Articles of Incorporation to change the name of the Corporation
toTridon Enterprises Incorporated and to split the shares of the company one for
ten. The stockholders voted to form a wholly-owned subsidiary for the
continuing development of Vertex(R). Vertex Corporation, a Nevada corporation,
was incorporated on February 25, 1997 as a wholly-owned subsidiary.
Item 5. Exhibits and Reports of Form 8-K.
Form 8-K dated October 17, 1989, Items 1,5, and 6 to report merger.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIDON ENTERPRISES INCORPORATED
Registrant
Date: July 27, 1998 /s/Paul Ebeling
CEO and Director
<TABLE> <S> <C>
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<S> <C>
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